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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 15, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INHALE THERAPEUTIC SYSTEMS, INC.
(Exact Name Of Registrant As Specified In Its Charter)
DELAWARE 94-3134940
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
INHALE THERAPEUTIC SYSTEMS, INC.
150 INDUSTRIAL ROAD
SAN CARLOS, CA 94070
(650) 631-3100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ROBERT B. CHESS AND AJIT S. GILL
CO-CHIEF EXECUTIVE OFFICERS
INHALE THERAPEUTIC SYSTEMS, INC.
150 INDUSTRIAL ROAD
SAN CARLOS, CA 94070
(650) 631-3100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF SECURITIES TO BE AMOUNT TO PROPOSED PROPOSED AMOUNT OF
REGISTERED BE MAXIMUM MAXIMUM REGISTRATION
REGISTERED OFFERING PRICE AGGREGATE FEE
(2) PER SHARE(1) OFFERING PRICE(1)
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<S> <C> <C> <C> <C>
Common Stock, $.0001 par value per share............. 180,099 $114.50(1) $20,621,335.50(1) $5,445.00(1)
</TABLE>
(1) Estimated in accordance with Rule 457(c) of the Securities Act solely for
the purpose of computing the amount of the registration fee based on the
average of the high and low prices of the Company's Common Stock as
reported on the Nasdaq National Market on March 13, 2000.
(2) Pursuant to Rule 416 of the Securities Act, this Registration Statement
also covers such indeterminable additional shares as may become issuable as
a result of any future stock splits, stock dividends or similar
transaction.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION
PROSPECTUS DATED MARCH 15, 2000
P R O S P E C T U S
INHALE THERAPEUTIC SYSTEMS, INC.
180,099 Shares
Common Stock
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The selling stockholder, Alliance Pharmaceutical Corp., a New York
Corporation, may sell up to 180,099 shares of common stock of Inhale Therapeutic
Systems, Inc., a Delaware corporation. The selling security holder may sell the
common stock described in this prospectus in a number of different ways and at
varying prices. We will not receive any proceeds from the sale of these shares
by Alliance.
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Our common stock is listed on the Nasdaq National Market under the symbol
"INHL".
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We will not be paying any underwriting commissions or discounts in the
offering of these shares.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
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ABOUT OUR BUSINESS
THE FOLLOWING IS A SHORT SUMMARY OF OUR BUSINESS. YOU SHOULD CAREFULLY READ
THE "RISK FACTORS" SECTION OF THIS PROSPECTUS AND OUR ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED 1999 FOR MORE INFORMATION ON OUR BUSINESS AND THE RISKS
INVOLVED IN INVESTING IN OUR STOCK. IN ADDITION TO THE HISTORICAL INFORMATION
CONTAINED IN THIS PROSPECTUS, THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION
21E OF THE EXCHANGE ACT THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM OUR EXPECTATIONS. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES ARE DISCUSSED IN "RISK FACTORS" BEGINNING AT PAGE
3 OF THIS PROSPECTUS AND IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS" IN OUR ANNUAL REPORT.
We are creating a drug delivery system to easily and painlessly deliver a
wide range of drugs, including peptides, proteins, nucleic acids and other
molecules, by inhalation to the deep lung for treatment of systemic and
respiratory diseases. We are using this system principally to enable
non-invasive delivery of protein drugs currently administered by injection.
Our most advanced program, which is sponsored by Pfizer Inc., is
inhaleable insulin. Pfizer commenced dosing for its Phase III human clinical
trials in June 1999. In addition to its insulin program with Pfizer, we have
development collaborations with Biogen, Inc., Aventis Behring L.L.C. (formerly
Centeon L.L.C., a joint venture of Hoechst AG and Rhone-Poulenc S.A., which have
now merged to form Aventis S.A.), and Eli Lilly & Co. we also have early
stage feasibility and research collaborations with several other companies and
has tested seven drugs in human clinical trials.
Currently there are approximately 35 macromolecule drugs marketed in the
United States and about 120 other such drugs in clinical trials. Sales of the
top 15 genetically engineered protein drugs (a subset of macromolecule drugs)
were estimated at $14 billion worldwide in 1997. Most of these drugs are
currently delivered by injection. Injections are undesirable for numerous
reasons including patient discomfort, inconvenience and risk of infection. Poor
patient acceptance of, and compliance with, injectable therapies can lead to
increased incidence of medical complications and higher disease management
costs. Alternatives to injection such as oral, transdermal and nasal delivery
have to date been commercially unattractive due to low natural bioavailability
- --the amount of drug absorbed from the delivery site into the bloodstream
relative to injection. As an alternative to the invasiveness of injection,
we believe a deep lung inhalation delivery system could expand the market
for protein drug therapies by increasing patient acceptance and improving
compliance and may enable new therapeutic uses of certain protein drugs.
We are creating a proprietary platform integrating customized
formulation, dry powder processing and packaging with a proprietary inhalation
device to enable efficient, reproducible delivery of drugs for systemic and
local lung indications. For specific drug products, we formulate and
processes bulk drugs supplied by collaborative partners into dry powders which
are packaged into individual dosing units referred to as blister packs. The
blister packs are designed to be loaded into our device, which patients
then activate to inhale the aerosolized drugs. We have developed an
inhalation device that is being used several times per day for several months in
outpatient trials for insulin. In addition, we have demonstrated room
temperature stability of a year or more for a number of protein drugs, and has
scaled-up its powder processing and packaging for late stage clinical trials and
small scale production for certain drugs.
As an alternative to invasive delivery techniques, we believe that a
deep lung delivery system could potentially expand the market for protein drug
therapies by increasing patient acceptance and improving compliance, which in
turn could decrease medical complications and the associated costs of disease
management. Additionally, deep lung delivery may enable new therapeutic uses of
certain protein drugs. We are focusing development efforts on applying its
pulmonary delivery system primarily to drugs for systemic and local lung
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diseases that either have proven efficacy and are approved for delivery by
injection or are in late stage clinical trials.
A cornerstone of our business strategy is to work with
collaborative partners to develop and commercialize drugs for deep lung
delivery. In a typical collaboration, our partner will support the
application of our technology to a particular drug by providing the
drug, funding clinical development, and marketing the resulting commercial
product. We typically will supply the delivery system and receive
research and development and progress payments during development, and
receive revenues from powder manufacturing, device supply, and royalties from
sales of any commercial products.
In addition to Pfizer's sponsorship of the inhaleable insulin program,
we have active development programs with several other corporate partners.
Our most recent collaboration is with Biogen for pulmonary delivery of
Interferon-Beta-1a, sold under the trade name AVONEX-Registered Trademark-,
the leading drug worldwide for the treatment of Multiple Sclerosis. We are
also engaged in development collaborations with Aventis Behring on alpha-1
proteinase inhibitor for genetic emphysema, and with Lilly for an undisclosed
protein drug. We are also engaged in early stage feasibility and research
programs with respect to other compounds. We anticipate that any product
that may be developed would be commercialized with a collaborative partner
and believe our partnering strategy will enable us to reduce the investment
required to develop a large and diversified potential product portfolio.
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RISK FACTORS
ANY OF THE FOLLOWING RISKS COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS,
OPERATING RESULTS AND FINANCIAL CONDITION AND COULD RESULT IN A COMPLETE LOSS OF
YOUR INVESTMENT.
WE DO NOT KNOW IF OUR DEEP LUNG DRUG DELIVERY SYSTEM IS COMMERCIALLY FEASIBLE.
We are in an early stage of development. There is a risk that our deep lung drug
delivery technology will not be commercially feasible. Even if our deep lung
delivery technology is commercially feasible, it may not be commercially
accepted across a range of large and small molecule drugs. We have tested seven
deep lung delivery formulations in humans, but many of our potential
formulations have not been tested in humans.
Many of the underlying drug compounds contained in our deep lung formulations
have been tested in humans by other companies using alternative delivery routes.
Our potential products require extensive research, development and pre-clinical
(animal) and clinical (human) testing. Our potential products also may involve
lengthy regulatory review before they can be sold. We do not know if and cannot
assure you that, any of our potential products will prove to be safe and
effective or meet regulatory standards. There is a risk that any of our
potential products will not be able to be produced in commercial quantities at
acceptable cost or marketed successfully. Our failure to achieve commercial
feasibility, demonstrate safety, achieve clinical efficacy, obtain regulatory
approval or, together with partners, successfully market products will
negatively impact our revenues and results of operations.
WE DO NOT KNOW IF OUR DEEP LUNG DRUG DELIVERY SYSTEM IS EFFICIENT.
We may not be able to achieve the total system efficiency needed to be
competitive with alternative routes of delivery. Total system efficiency is
determined by the amount of drug loss during manufacture, in the delivery
device, in reaching the site of absorption, and during absorption from that site
into the bloodstream. Deep lung bioavailability is the percentage of a drug that
is absorbed into the bloodstream when that drug is delivered directly to the
lungs as compared to when the drug is delivered by injection. Bioavailability is
the initial screen for whether deep lung delivery of any systemic drug is
commercially feasible. We would not consider a drug to be a good candidate for
development and commercialization if its drug loss is excessive at any one stage
or cumulatively in the manufacturing and delivery process or if its deep lung
bioavailability is too low.
WE DO NOT KNOW IF OUR DEEP LUNG DRUG FORMULATIONS ARE STABLE.
We may not be able to identify and produce powdered versions of drugs that
retain the physical and chemical properties needed to work with our delivery
device. Formulation stability is the physical and chemical stability of the drug
over time and under various storage, shipping and usage conditions. Formulation
stability will vary with each deep lung formulation and the type and amount of
ingredients that are used in the formulation. Problems with powdered drug
stability would negatively impact our ability to develop and market our
potential products or obtain regulatory approval.
WE DO NOT KNOW IF OUR DEEP LUNG DRUG DELIVERY SYSTEM IS SAFE.
We may not be able to prove potential products to be safe. Our products require
lengthy laboratory, animal and human testing. Most of our products are in
preclinical testing or the early stage of human testing. If we find that
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any product is not safe, we will not be able to commercialize the product.
The safety of our deep lung formulations will vary with each drug and the
ingredients used in its formulation.
WE DO NOT KNOW IF OUR DEEP LUNG DRUG DELIVERY SYSTEM PROVIDES CONSISTENT DOSES
OF MEDICINE.
We may not be able to provide reproducible dosages of stable formulations
sufficient to achieve clinical success. Reproducible dosing is the ability to
deliver a consistent and predictable amount of drug into the bloodstream over
time both for a single patient and across patient groups. Reproducible dosing
requires the development of:
- an inhalation device that consistently delivers predictable amounts of dry
powder formulations to the deep lung;
- accurate unit dose packaging of dry powder formulations; and
- moisture resistant packaging.
We may not be able to develop reproducible dosing of any potential product. The
failure to do so means that we would not consider it a good candidate for
development and commercialization.
WE DEPEND ON PARTNERS FOR REGULATORY APPROVALS AND COMMERCIALIZATION OF OUR
PRODUCTS.
Because we are in the business of developing technology for delivering drugs to
the lungs and licensing this technology to companies that make and sell drugs,
we do not have the people and other resources to do the following things:
- make bulk drugs to be used as medicines;
- design and carry out large scale clinical studies;
- prepare and file documents necessary to obtain government approval to sell
a given drug product; and
- market and sell our products when and if they are approved.
When we sign a collaborative development agreement or license agreement to
develop a product with a drug company, the drug company agrees to do some or all
of the things described above. If our partner fails to do any of these things,
we cannot complete the development of the product.
WE MAY NOT OBTAIN REGULATORY APPROVAL FOR OUR PRODUCTS ON A TIMELY BASIS, OR AT
ALL.
There is a risk that we will not obtain regulatory approval for our products on
a timely basis, or at all. Our product must undergo rigorous animal and human
testing and an extensive review process mandated by the United States Food and
Drug Administration ("FDA") and equivalent foreign authorities. This process
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generally takes a number of years and requires the expenditure of substantial
resources; although the time required for completing such testing and obtaining
such approvals is uncertain. We have not submitted any of our products to the
FDA for marketing approval. We have no experience obtaining such regulatory
approval.
In addition, we may encounter delays or rejections based upon changes in FDA
policy, including policy relating to good manufacturing practice compliance,
during the period of product development. We may encounter similar delays in
other countries.
Even if regulatory approval of a product is granted, the approval may limit the
indicated uses for which we may market our product. In addition, our marketed
product, our manufacturing facilities and Inhale, as the manufacturer, will be
subject to continual review and periodic inspections. Later discovery from such
review and inspection of previously unknown problems may result in restrictions
on our product or on us, including withdrawal of our product from the market.
The failure to obtain timely regulatory approval of our products, any product
marketing limitations or a product withdrawal would negatively impact our
revenues and results of operations.
WE DO NOT KNOW IF OUR TECHNOLOGIES CAN BE INTEGRATED SUCCESSFULLY TO BRING
PRODUCTS TO MARKET.
We may not be able to integrate all of the relevant technologies to provide a
deep lung drug delivery system. Our integrated approach to systems development
relies upon several different but related technologies:
- dry powder formulations;
- dry powder processing technology;
- dry powder packaging technology; and
- deep lung delivery devices.
At the same time we must:
- establish collaborations with partners;
- perform laboratory and clinical testing of potential products; and
- scale-up our manufacturing processes.
We must accomplish all of these steps without delaying any aspect of technology
development. Any delay in one component of product or business development could
delay our ability to develop, obtain approval of or market therapeutic products
using our deep lung delivery technology.
WE MAY NOT BE ABLE TO MANUFACTURE OUR PRODUCTS IN COMMERCIAL QUANTITIES.
POWDER PROCESSING. We have no experience manufacturing products for commercial
purposes. We have only performed powder processing on the small scale needed for
testing formulations and for early stage and larger clinical trials. We may
encounter manufacturing and control problems as we attempt to scale-up powder
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processing facilities. We may not be able to achieve such scale-up in a timely
manner or at a commercially reasonable cost, if at all. Our failure to solve any
of these problems could delay or prevent late stage clinical testing and
commercialization of our products and could negatively impact our revenues and
results of operations.
To date, we have relied on one particular method of powder processing. There is
a risk that this technology will not work with all drugs or that the cost of
drug production will preclude the commercial viability of certain drugs.
Additionally, there is a risk that any alternative powder processing methods we
may pursue will not be commercially practical for aerosol drugs or that we will
not have, or be able to acquire the rights to use, such alternative methods.
POWDER PACKAGING. Our fine particle powders and small quantity packaging require
special handling. We have designed and qualified automated filling equipment for
small and moderate quantity packaging of fine powders. We face significant
technical challenges in scaling-up an automated filling system that can handle
the small dose and particle sizes of our powders in commercial quantities. There
is a risk that we will not be able to scale-up our automated filling equipment
in a timely manner or at commercially reasonable costs. Any failure or delay in
such scale-up would delay product development or bar commercialization of our
products and would negatively impact our revenues and results of operations.
INHALATION DEVICE. We face many technical challenges in further developing our
inhalation device to work with a broad range of drugs, to produce such a device
in sufficient quantities and to adapt the device to different powder
formulations. In addition, we are attempting to develop a smaller inhalation
device, which presents particular technical challenges. There is a risk that we
will not successfully achieve any of these challenges. Our failure to overcome
any of these challenges would negatively impact our revenues and results of
operations.
For late stage clinical trials and initial commercial production, we intend to
use one or more contract manufacturers to produce our drug delivery device.
There is a risk that we will not be able to enter into or maintain arrangements
with any potential contract manufacturers or effectively scale-up production of
our drug delivery devices through contract manufacturers. Our failure to do so
would negatively impact our revenues and results of operations.
WE DEPEND ON SOLE OR EXCLUSIVE SUPPLIERS FOR OUR INHALATION DEVICE AND BULK
DRUGS.
We plan to subcontract the manufacture of our pulmonary delivery device before
commercial production of our first product. We have identified contract
manufacturers that we believe have the technical capabilities and production
capacity to manufacture our devices and which can meet the requirements of good
manufacturing practices. We cannot be assured that we will be able to obtain and
maintain satisfactory contract manufacturing on commercially acceptable terms,
if at all. Our dependence on third parties for the manufacture of our inhalation
device may negatively impact our cost of goods and our ability to develop and
commercialize products on a timely and competitive basis.
We obtain the bulk drugs we use to formulate and manufacture the dry powders for
our deep lung delivery system from sole or exclusive sources of supply. For
example, with respect to our source of bulk insulin, we have entered into a
collaborative agreement with Pfizer which has, in turn, entered into an
agreement with Aventis to manufacture biosynthetic recombinant insulin. Under
the terms of their agreement, Pfizer and Aventis agreed to construct a jointly
owned manufacturing plant in Frankfurt, Germany. Until its completion, Pfizer
will provide us with insulin from Aventis's existing plant. If our sole or
exclusive source
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suppliers fail to provide bulk drugs in sufficient quantities when required,
our revenues and results of operations will be negatively impacted.
WE DO NOT KNOW IF THE MARKET WILL ACCEPT OUR DEEP LUNG DRUG DELIVERY SYSTEM.
The commercial success of our potential products depends upon market acceptance
by health care providers, third-party payors like health insurance companies and
Medicare, and patients. Our products under development use a new method of drug
delivery and there is a risk that our potential products will not be accepted by
the market. Market acceptance will depend on many factors, including:
- the safety and efficacy of our clinical trials;
- favorable regulatory approval and product labeling;
- the frequency of product use;
- the availability of third-party reimbursement;
- the availability of alternative technologies; and
- the price of our products relative to alternative technologies.
There is a risk that health care providers, patients or third-party payors will
not accept our deep lung drug delivery system. If the market does not accept our
potential products, our revenues and results of operations would be
significantly and negatively impacted.
IF OUR PRODUCTS ARE NOT COST EFFECTIVE, GOVERNMENT AND PRIVATE INSURANCE PLANS
MAY NOT PAY FOR OUR PRODUCTS.
In both domestic and foreign markets, sales of our products under development
will depend in part upon the availability of reimbursement from third-party
payors, such as government health administration authorities, managed care
providers, private health insurers and other organizations. In addition, such
third-party payors are increasingly challenging the price and cost effectiveness
of medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. Legislation and
regulations affecting the pricing of pharmaceuticals may change before our
proposed products are approved for marketing. Adoption of such legislation and
regulations could further limit reimbursement for medical products. A government
or third-party payor decision to not provide adequate coverage and
reimbursements for our products would limit market acceptance of such products.
WE EXPECT TO CONTINUE TO LOSE MONEY FOR THE NEXT SEVERAL YEARS.
We have never been profitable and, through December 31, 1999, we have an
accumulated deficit of approximately $94.5 million. We expect to continue to
incur substantial and increasing losses over at least the next several years as
we expand our research and development efforts, testing activities and
manufacturing operations, and as we further expand our late stage clinical and
early commercial production facility. All of our potential products are in
research or in the early stages of development except for our insulin
collaboration. We have generated no revenues from approved product sales. Our
revenues to date have consisted primarily of payments under short-term research
and feasibility agreements and development contracts. To achieve and
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sustain profitable operations, we must, alone or with others, successfully
develop, obtain regulatory approval for, manufacture, introduce, market and
sell products using our deep lung drug delivery system. There is a risk that
we will not generate sufficient product or contract research revenue to
become profitable or to sustain profitability.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE.
We anticipate that our existing capital resources will enable us to maintain
currently planned operations through at least the next 24 months. However, this
expectation is based on our current operating plan, which is expected to change
as a result of many factors, and we may need additional funding sooner than
anticipated. In addition, we may choose to raise additional capital due to
market conditions or strategic considerations, even if we believe we have
sufficient funds for our current or future operating plans. To the extent that
additional capital is raised through the sale of equity or convertible debt
securities, the issuance of such securities could result in dilution to our
stockholders.
We have no credit facility or other committed sources of capital. To the extent
operating and capital resources are insufficient to meet future requirements, we
will have to raise additional funds to continue the development and
commercialization of our technologies. Such funds may not be available on
favorable terms, or at all. In particular, our substantial leverage may limit
our ability to obtain additional financing. If adequate funds are not available
on reasonable terms, we may be required to curtail operations significantly or
to obtain funds by entering into financing, supply or collaboration agreements
on unattractive terms. Our inability to raise capital could negatively impact
our business.
OUR PATENTS MAY NOT PROTECT OUR PRODUCTS AND OUR PRODUCTS MAY INFRINGE ON
THIRD-PARTY PATENT RIGHTS.
We have filed patent applications covering certain aspects of our device, powder
processing technology, and powder formulations and deep lung route of delivery
for certain molecules, and we plan to file additional patent applications. We
currently have 49 issued U.S. and foreign patents that cover certain aspects of
our technology and we have a number of patent applications pending. There is a
risk that many of the patents applied for will not issue, or that any patents
that issue or have issued will not be valid and enforceable. Enforcing our
patent rights would be time consuming and costly.
Our access or our partners' access to the drugs to be formulated will affect our
ability to develop and commercialize our technology. Many drugs, including
powder formulations of certain drugs that are presently under development by us,
are subject to issued and pending U.S. and foreign patents that may be owned by
our competitors. We know that there are issued patents and pending patent
applications relating to the deep lung delivery of large molecule drugs,
including several for which we are developing deep lung delivery formulations.
This situation is highly complex, and the ability of any one company, including
Inhale, to commercialize a particular drug is unpredictable.
We intend generally to rely on the ability of our partners to provide access to
the drugs that are to be formulated by us for deep lung delivery. There is a
risk that our partners will not be able to provide access to such drug
candidates. Even if such access is provided, there is a risk that our partners
or we will be accused of, or determined to be, infringing a third-party's patent
rights and will be prohibited from working with the drug or be found liable for
damages that may not be subject to indemnification. Any such restriction on
access to drug candidates or liability for damages would negatively impact our
revenues and results of operations.
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OUR COMPETITORS MAY DEVELOP AND SELL BETTER DRUG DELIVERY SYSTEMS.
We are aware of other companies engaged in developing and commercializing
pulmonary drug delivery systems and enhanced injectable drug delivery systems.
Many of these companies have greater research and development capabilities,
experience, manufacturing, marketing, financial and managerial resources than we
do and represent significant competition for us. Acquisitions of or
collaborations with competing drug delivery companies by large pharmaceutical
companies could enhance our competitors' financial, marketing and other
resources. Accordingly, our competitors may succeed in developing competing
technologies, obtaining regulatory approval for products or gaining market
acceptance before us. Developments by others could make our products or
technologies uncompetitive or obsolete. Our competitors may introduce products
or processes competitive with or superior to ours.
INVESTORS SHOULD BE AWARE OF INDUSTRY-WIDE RISKS.
In addition to the risks associated specifically with Inhale described above,
investors should also be aware of general risks associated with drug development
and the pharmaceutical industry. These include, but are not limited to:
- changes in and compliance with government regulations;
- handling of hazardous materials;
- hiring and retaining qualified people; and
- insuring against product liability claims.
WE EXPECT OUR STOCK PRICE TO REMAIN VOLATILE.
Our stock price is volatile. In the last twelve months, based on closing prices
on the Nasdaq National Market, our stock price ranged from $23.00 to $126.62. We
expect it to remain volatile. A variety of factors may have a significant effect
on the market price of our common stock, including:
- fluctuations in our operating results;
- announcements of technological innovations or new therapeutic products;
- announcement or termination of collaborative relationships by Inhale or
our competitors;
- governmental regulation;
- clinical trial results or product development delays;
- developments in patent or other proprietary rights;
- public concern as to the safety of drug formulations developed by Inhale
or others; and
- general market conditions.
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Any litigation brought against us as a result of this volatility could result in
substantial costs and a diversion of our management's attention and resources,
which could negatively impact our financial condition, revenues and results of
operations.
OUR OUTSTANDING INDEBTEDNESS HAS INCREASED SUBSTANTIALLY.
As of December 31, 1999, we had approximately $113.3 million in long-term debt.
Upon the closing of our sale of 5.0% convertible subordinated notes in early
2000, we incurred additional long-term indebtedness of $230.0 million. In early
2000, we entered into agreements with certain holders of the October 2006
debentures to reduce the principal amount of debentures outstanding by
approximately $94.2 million. Upon closing of the offering of the notes, our
long-term debt was approximately $249.2 million. This increased indebtedness has
and will continue to impact us by:
- significantly increasing our interest expense and related debt service
costs;
- making it more difficult to obtain additional financing; and
- constraining our ability to react quickly in an unfavorable economic
climate.
Currently, we are not generating sufficient cash flow to satisfy the annual debt
service payments that will be required as a result of the consummation of sale
of the notes. This may require us to use a portion of the proceeds from the
sales of the notes to pay interest or borrow additional funds or sell additional
equity to meet our debt service obligations. If we are unable to satisfy our
debt service requirements, substantial liquidity problems could result, which
would negatively impact our future prospects.
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WHERE YOU CAN FIND MORE INFORMATION
Our principal executive offices are located at 150 Industrial Road, San
Carlos, CA 94070. Our telephone number is (650) 631-3100. We maintain an
Internet home page at www.Inhale.com The contents of our web page are not a part
of this prospectus.
We have filed with the SEC a registration statement on Form S-3 to register
the common stock offered by this prospectus. However, this prospectus does not
contain all of the information contained in the registration statement and the
exhibits and schedules to the registration statement. We strongly encourage you
to carefully read the registration statement and the exhibits and schedules to
the registration statement. We also file annual, quarterly and special reports,
proxy statements and other information with the SEC.
You may inspect and copy such material at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the SEC's regional offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048. You may also obtain copies of such material from the SEC
at prescribed rates by writing to the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
Website at www.sec.gov.
The SEC allows us to "incorporate by reference" the information contained
in documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act :
1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 1999,
filed on March 10, 2000, including all material incorporated by reference
therein;
2. Our Current Report on Form 8-K, filed on February 1, 2000;
3. Our Current Report on Form 8-K, filed on February 9, 2000;
4. Our Current Report on Form 8-K, filed on February 24, 2000;
5. All other reports filed by us pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1999, including all material incorporated
by reference therein; and
6. The description of the common stock contained in our Registration Statement
on Form 8-A as filed on May 2, 1994.
11
<PAGE>
You may request a copy of these filings, at no cost to you, by writing or
telephoning us at:
Inhale Therapeutic Systems, Inc.
Attention: Investor Relations
150 Industrial Road, San Carlos, CA 94070
Telephone (650) 631-3100.
Our common stock is quoted on the Nasdaq National Market under the symbol
"INHL". The last reported sales price of the common stock on the Nasdaq National
Market ("Nasdaq") on March 13, 2000 was $114.0625 per share. You may inspect
reports and other information concerning us at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered hereby.
DIVIDEND POLICY
We have never paid cash dividends. We currently intend to retain any
earnings for use in our business and do not anticipate paying any cash dividends
in the foreseeable future.
SELLING STOCKHOLDER
All of the shares of our common stock offered pursuant to this prospectus
are held by Alliance. The shares are being registered to permit public trading
of the shares, and Alliance may offer the shares for resale from time to time.
Alliance may sell the shares offered through this Prospectus from time to time
at prevailing prices in the over-the-counter market or in privately negotiated
transactions. We agreed to prepare and file such amendments and supplements to
the Registration Statement as may be necessary to keep the Registration
Statement effective until the earlier of November 4, 2000 or the date on which
such shares are no longer, by reason of Rule 144 under the Securities Act or any
rule of similar effect, required to be registered for the sale thereof by
Alliance.
The following table sets forth the number of shares of common stock owned
beneficially by Alliance as of the date of this Prospectus and the number of
shares that may be offered pursuant to this Prospectus. This information is
based upon information provided to us by Alliance. Applicable percentage of
ownership is based on 20,588,388 shares of common stock outstanding on March 1,
2000. There are currently no agreements, arrangements or understandings with
respect to the sale of any of the shares. Because Alliance may offer all or some
portion of the common stock, no estimate can be given as to the amount of common
stock that will be held by Alliance upon termination of any sales.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY MAXIMUM NUMBER SHARES BENEFICIALLY OWNED
NAME OWNED PRIOR TO THE OF SHARES BEING AFTER THE OFFERING
- ---- OFFERING OFFERED
NUMBER PERCENT NUMBER PERCENT
-------------------- --------------------
12
<PAGE>
<S> <C> <C> <C> <C> <C>
Alliance Pharmaceutical Corp. 180,099 0.87% 180,099 - -
</TABLE>
Neither Alliance nor any of its affiliates, officers, directors or
principal equity holders has held any position or office or has had any
material relationship with us within the past three years. Alliance acquired
the common stock from us in a private transaction on November 4, 1999. All of
the shares of common stock purchased by Alliance were "restricted securities"
under the Securities Act prior to this registration.
13
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereunder may be sold from time to time by Alliance in
one or more transactions at fixed prices, at market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices.
Alliance may offer their shares of common stock in one more of the following
transactions:
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including
the Nasdaq National Stock Market;
- in the over-the-counter market;
- in private transactions;
- by pledge to secure debts and other obligations; or
- a combination of any of the above transactions.
Under the Securities Exchange Act, any person engaged in the distribution
of the shares may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days prior to the
commencement of such distribution. In addition, Alliance will be subject to
applicable provisions of the Securities Exchange Act, which provisions may limit
the timing of purchases and sales of shares of common stock by Alliance
Pharmaceutical Corp. or any other such person.
If Alliance notifies Inhale of any material arrangement that it has entered
into with a broker or dealer for selling shares through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, Inhale will file a supplemental prospectus, if required,
pursuant to Rule 424 (c) under the Securities Act. In that supplemental
prospectus, Inhale will disclose:
- the name of each such broker-dealer;
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid of discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, as supplemented; and
- any other facts material to the transaction.
Alliance may from time to time offer shares of common stock to or through
underwriters, broker/dealers or agents. Alliance and any underwriters,
broker/dealers or agents that participate in the distribution of the shares of
common stock may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. Any profits on the resale of shares of common stock and
any compensation received by any underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
14
<PAGE>
Any or all of the sales or other transactions involving the shares
described above, whether effected by Alliance, any broker-dealer or others, may
be made pursuant to this Prospectus. In addition, any shares that qualify for
sale pursuant to Rule 144 under the Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
To comply with the securities laws of certain jurisdictions, if applicable,
the common stock must be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the common stock may not be sold unless it has been registered or qualified for
sale or an exemption is available and is complied with.
We will pay substantially all of the expenses incurred by Alliance incident
to the preparation and filing with the SEC of the registration statement.
Alliance will bear essentially all of the expenses incurred incident to the sale
of the common stock.
We entered into a registration rights agreement for the benefit of Alliance
to register its common stock under applicable federal and state securities laws
under specific circumstances and at specific times. The registration rights
agreement provides for cross-indemnification of the Alliance and us and their
and our respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the common stock, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for us
by Cooley Godward LLP, Menlo Park, California.
ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in this registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
15
<PAGE>
WE HAVE AUTHORIZED NO ONE TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
THAT ARE NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD RELY ONLY ON THE
INFORMATION PROVIDED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE THEREIN.
YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES OF COMMON STOCK IN ANY
JURISDICTION WHERE IT IS UNLAWFUL. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THE DOCUMENT.
-----------
TABLE OF CONTENTS
PAGE
----
About Inhale............................................................ 1
Risk Factors............................................................ 3
Where You Can Find More Information..................................... 11
Use of Proceeds......................................................... 12
Dividend Policy......................................................... 12
Selling Stockholder..................................................... 12
Plan of Distribution.................................................... 14
Legal Matters........................................................... 15
Ernst & Young LLP, independent auditors
180,099
SHARES
OF COMMON STOCK
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All the amounts shown are estimates except
for the registration fee and the filing fee.
Registration fee.................................................... $5,445.00
Legal fees and expenses............................................. $10,000.00
Accounting fees and expenses........................................ $6,390.00
Printing and engraving.............................................. $3,000.00
Nasdaq National Market filing fee................................... $1,801.00
Miscellaneous....................................................... $2,000.00
----------
TOTAL............................................................... $28,636.00
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify our directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
The Registrant's Certificate of Incorporation, as amended provides for the
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. These provisions
do not eliminate the directors' duty of care and, in appropriate circumstances,
equitable remedies such an injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its affiliated enterprises, provided such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
II-1
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
2.1(1) Agreement and Plan of Merger between Inhale Therapeutic Systems, a
California corporation, and Inhale Therapeutic Systems (Delaware),
Inc., a Delaware corporation.
3.1(1) Certificate of Incorporation of Registrant.
3.2(1) Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2(2) Restated Investor Rights Agreement among the Registrant and certain
other persons named therein, dated April 29, 1993, as amended
October 29, 1993.
4.3(2) Specimen stock certificate.
4.4(3) Stock Purchase Agreement between the Registrant and Pfizer Inc.,
dated January 18, 1995.
4.5(9) Form of Purchase Agreement between the Registrant and the
individual Purchasers, dated January 28, 1997.
4.6(10) Stock Purchase Agreement between the Registrant and Capital
Research and Management Company, dated December 8, 1998.
4.7(12) Purchase Agreement among the Registrant and Lehman Brothers Inc.,
Deutsche Bank Securities Inc. and U.S. Bancorp Piper Jaffray Inc.
dated October 6, 1999.
4.8(12) Registration Rights Agreement among the Registrant and Lehman
Brothers Inc., Deutsche Bank Securities Inc. and U.S. Bancorp Piper
Jaffray Inc., dated October 13, 1999.
4.9(12) Indenture between the Registrant as Issuer and Chase Manhattan Bank
and Trust Company, National Association, as Trustee, dated
October 13, 1999.
4.10(12) Form of Inhale Registration Rights Agreement, between Inhale and
Selling Shareholder, dated January 25, 2000
4.11 (13) Purchase Agreement among the Registrant and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank
Securities Inc., Lehman Brothers Inc., and U.S. Bancorp Piper
Jaffray Inc., dated February 2, 2000.
4.12 (13) Resale Registration Rights Agreement among Registrant and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Deutsche Bank Securities Inc., Lehman Brothers Inc., and U.S.
Bancorp Piper Jaffray Inc., dated February 8, 2000.
4.13 (13) Indenture between Registrant as Issuer and Chase Manhattan Bank
and Trust Company, National Association, as Trustee, dated
February 8, 2000.
5.1(14) Opinion of Cooley Godward llp.
10.1(4) Registrant's 1994 Equity Incentive Plan, as amended.
10.2(7) Registrant's 1994 Non-Employee Directors' Stock Option Plan, as
amended.
10.3(2) Registrant's 1994 Employee Stock Purchase Plan, as amended.
10.4(2) Standard Industrial Lease between the Registrant and W.F. Batton &
Co., Inc., dated September 17, 1992, as amended September 18, 1992.
10.5(2) Addendum IV dated April 1, 1994 to Lease dated September 17, 1992,
between the Registrant and W.F. Batton and Marie A. Batton, dated
September 17, 1992.
10.6(6) Amendment Agreement Number One, dated October 20, 1995, to Lease
dated September 17, 1992, between the Registrant and W.F. Batton
& Co., Inc.
10.7(6) Amendment Agreement Number Two, dated November 15, 1995, to Lease,
dated September 17, 1992, between Registrant and W.F. Batton and
Marie A. Batton, Trustees of the W.F. Batton and Marie A. Batton
Trust UTA dated January 12, 1998 ("Batton Trust").
II-2
<PAGE>
10.8(11) Amendment Agreement Number Three, dated February 14, 1996, to
Lease, dated September 17, 1992, between Registrant and Batton
Trust.
10.9(11) Amendment Agreement Number Four, dated September 15, 1996, to
Lease, dated September 17, 1992, between Registrant and Batton
Trust.
10.10(2) Senior Loan and Security Agreement between the Registrant and
Phoenix Leasing Incorporated, dated September 15, 1993.
10.11(2) Sublicense Agreement between the Registrant and John S. Patton,
dated September 13, 1991.
10.12(5) Stock Purchase Agreement between the Registrant and Baxter World
Trade Corporation, dated March 1, 1996.
10.13(8) Sublease and Lease Agreement, dated October 2, 1996, between the
Registrant and T.M.T. Associates L.L.C. ("Landlord").
10.14(11) First Amendment, dated October 30, 1996, to Sublease and Lease
Agreement, dated October 2, 1996, between Registrant and Landlord.
10.15(11) Letter Agreement, dated April 9, 1997, amending Sublease and
Agreement, dated October 2, 1996, between the Registrant and
Landlord.
10.16(11) Third Amendment, dated April 16, 1997, to Sublease and Lease
Agreement, dated October 2, 1996, between Registrant and Landlord.
10.17(11) Fourth Amendment, dated November 5, 1997, to Sublease and Lease
Agreement, dated October 2, 1996, between Registrant and Landlord.
10.18(13) Sublease by and between Webvan Group, Inc., as sublessor and
Registrant, as sublessee, dated November 3, 1999.
23.1(14) Consent of Ernst & Young LLP, independent auditors.
23.2(14) Consent of Cooley Godward LLP. (included in Exhibit 5.1)
24.1(14) Power of Attorney (included in signature page).
- -----------
(1) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
(2) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-1 (No. 33-75942), as amended.
(3) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-1 (No. 33-89502), as amended.
(4) Incorporated by reference to Inhale's Registration Statement on Form S-8
(No. 333-59735).
(5) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996.
(6) Incorporated by reference to the indicated exhibit in Inhale's Annual
Report on Form 10-K for the year ended December 31, 1995.
(7) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996.
II-3
<PAGE>
(8) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996.
(9) Incorporated by reference to Inhale's Registration Statement on Form S-3
(No. 333-20787).
(10) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-68897), as amended.
(11) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
(12) Incorporated by reference to the indicated exhibit in Inhale's Registration
Statement on Form S-3 (No. 333-94161), as amended.
(13) Incorporated by reference to the indicated exhibit in Inhale's Annual
Report on Form 10-K for the year ended December 31, 1999.
(14) Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of The
Securities Act 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 20 percent
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 or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(I) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration
II-4
<PAGE>
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.
(4) 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) or 15(d) of the Securities Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to provisions
described in Item 15, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Carlos, County of San Mateo, State of California
on March 13, 2000.
By: /s/ Robert B. Chess
Robert B. Chess
CO-CHIEF EXECUTIVE OFFICER
By: /s/ Ajit S. Gill
Ajit S. Gill
CO-CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert B. Chess and Ajit S. Gill and each
of them, as his true and lawful attorneys-in-fact and agents, 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, exhibits thereto and other documents in connection therewith) to
this registration statement and any subsequent registration statement filed by
the registrant pursuant to Securities and Exchange Commission Rule 462, which
relates to this registration statement and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any 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, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Co-Chief Executive Officer and Chairman of the Board
/S/Robert B. Chess (Principal Executive Officer) March 13 , 2000
Co-Chief Executive Officer, President and Director (Principal
/S/Ajit S. Gill Executive Officer) March 13 , 2000
Chief Financial Officer (Principal Financial and Accounting
/S/Brigid A. Makes Officer) March 13 , 2000
/S/Mark J. Gabrielson Director March 13, 2000
/S/James B. Glavin Director March 13, 2000
/S/John S. Patton Vice President and Director March 13, 2000
/S/Melvin Perelman Director March 13, 2000
/S/Irwin Lerner Director March 13, 2000
</TABLE>
II-6
<PAGE>
EXHIBIT 5.1
March 9, 2000
Inhale Therapeutic Systems, Inc.
150 Industrial Road
San Carlos, CA 94070-6256
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Inhale Therapeutic Systems, Inc. (the "Company") of a
Registration Statement on Form S-3 on or about March 14, 2000 (the
"Registration Statement") with the Securities and Exchange Commission
covering the offering of up to one hundred eighty thousand ninety-nine
(180,099) shares of the Company's Common Stock, $.0001 par value (the
"Shares").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation and Bylaws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement and related Prospectus, will be validly issued, fully paid, and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
/S/ Mark P. Tanoury
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Ernst & Young
LLP, Independent Auditors" in the Registration Statement on Form S-3 and
related Prospectus of Inhale Therapeutic Systems, Inc. For the registration
of 180,099 shares of its common stock and to the incorporation by reference
therein of our report dated January 24, 2000, with respect to the financial
statements of Inhale Therapeutic Systems, Inc. Included in its Annual Report
on Form 10-K for the year ended December 31, 1999, filed with the Securities
and exchange Commission.
/S/Ernst & Young LLP
Palo Alto, California
March 9, 2000
