<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2001
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INHALE THERAPEUTIC SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-3134940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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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)
------------------------------
AJIT S. GILL
CHIEF EXECUTIVE OFFICER
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)
------------------------------
COPIES TO:
MARK P. TANOURY, ESQ.
JOHN M. GESCHKE, ESQ.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
(650) 843-5000
------------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO AGGREGATE OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1)(2) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.0001 par value per share.... 3,752,456 $29.75 $111,635,566.00 $27,908.89
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933.
(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 transactions.
------------------------------
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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--------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD 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.
<PAGE>
SUBJECT TO COMPLETION
PROSPECTUS DATED JANUARY 19, 2001
[LOGO]
INHALE THERAPEUTIC SYSTEMS, INC.
3,752,456 SHARES OF COMMON STOCK
The selling security holders may sell up to 3,752,456 shares of common stock
of Inhale Therapeutic Systems, Inc., a Delaware corporation. The selling
security holders 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 the selling security holders.
Our common stock currently trades on the Nasdaq National Market under the
symbol "INHL". The last reported sale price on January 18, 2001 was $37.63 per
share.
We will not be paying any underwriting commissions or discounts in the
offering of these shares.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE
CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
------------------------
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.
------------------------
In connection with this offering, no person is authorized to give any
information or to make any representations not contained in this prospectus. If
information is given or representations are made, you may not rely on that
information or representations as having been authorized by us. This prospectus
is neither an offer to sell nor a solicitation of an offer to buy any securities
other than those registered by this prospectus, nor is it an offer to sell or a
solicitation of an offer to buy securities where an offer or solicitation would
be unlawful. You may not imply from the delivery of this prospectus, nor from
any sale made under this prospectus, that our affairs are unchanged since the
date of this prospectus or that the information contained in this prospectus is
correct as of any time after the date of this prospectus.
------------------------
The date of this prospectus is , 2001.
<PAGE>
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 AMENDED ANNUAL REPORT ON
FORM 10-K/A 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
AMENDED ANNUAL REPORT.
We are creating a drug delivery system to easily and painlessly deliver a
wide range of drugs, including peptides, proteins, 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
macromolecule 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 our insulin program with Pfizer, we have development collaborations
with Biogen, Inc., Aventis Behring LLC a division of Aventis S.A.), and Eli
Lilly and Co. We also have early stage feasibility and research collaborations
with several other companies and have tested eight drugs in human clinical
trials.
Currently there are approximately 35 macromolecule drugs marketed in the
United States and about 120 other such drugs in human clinical trials. Sales of
the top 15 genetically engineered protein drugs (a subset of macromolecule
drugs) were estimated at $15.6 billion worldwide in 1999. 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 shown generally to be 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 macromolecule drugs.
We are creating a proprietary technology platform integrating customized
formulation, dry powder processing and packaging with a proprietary inhalation
devices to enable efficient, reproducible delivery of macromolecule drugs for
systemic and local lung indications. For specific drug products, we formulate
and process bulk drugs supplied by collaborative partners into dry powders which
are packaged into individual dosing units referred to as blisters. The blisters
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 macromolecule drugs, and have scaled-up our powder
processing and packaging for late stage clinical trials and small scale
production for certain drugs.
Our most advanced product is inhaleable insulin for Type 1 and Type 2
diabetes, which is being developed through a collaborative program with Pfizer.
Worldwide insulin and insulin delivery systems sales were estimated to be
$3.2 billion in 1998. Data published by Pfizer and clinical investigators from a
190 person Phase IIb human clinical trial using our drug delivery system showed
that inhaleable insulin provided statistically equivalent control of diabetes
when compared with injectable mealtime insulin for diabetics on insulin, and
improved control of diabetes when compared with injectable mealtime insulin for
diabetics on insulin, and improved control of diabetes for patients poorly
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<PAGE>
controlled on oral therapies. The Phase III trials involve approximately 120
clinical sites. In November 1998, Pfizer announced that it entered into a
co-development and co-promotion arrangement with Aventis for inhaleable insulin.
Pfizer and Aventis have reported plans to invest over 300 million DM
(approximately $134 million) for the construction of a jointly-owned
manufacturing facility in Germany for the supply of insulin for pulmonary
delivery. This state-of-the-art insulin plant is projected to be the largest of
its kind in the world. We will receive royalties on inhaleable insulin products
marketed by Pfizer and Aventis as well as revenues for supplying devices and
powders.
In a typical collaboration, our partner will provide the drug, fund clinical
development and market the resulting commercial product. We will supply the
delivery system and receive revenues from powder manufacturing, device supply
and royalties from sales of any commercial products. Prior to commercialization,
we receive revenues from our partners for research and development funding and
progress payments upon achievement of certain developmental milestones.
In addition to Pfizer's sponsorship of our inhaleable insulin program, we
have active pulmonary delivery development programs with Biogen for
AVONEX-Registered Trademark-, an interferon beta drug used in the treatment of
Multiple Sclerosis; Aventis Behring for an alpha-1 antitrypsin proteinase
inhibitor being used for the treatment of genetic emphysema; and Lilly for
Forteo-TM-, a parathyroid hormone, or PTH 1-34, being developed for the
treatment of osteoporosis. These and other ongoing projects in various stages of
research, formulation and clinical development have been selected as focus
programs by us because we believe our approach may have significant advantages
over current therapies. 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.
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.
2
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN EVALUATING AN INVESTMENT
IN OUR STOCK. THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE
ACT. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT ARE
"FORWARD-LOOKING STATEMENTS" FOR PURPOSES OF THESE PROVISIONS, INCLUDING ANY
PROJECTIONS OF EARNINGS, REVENUES OR OTHER FINANCIAL ITEMS, ANY STATEMENTS OF
THE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, ANY STATEMENTS
CONCERNING PROPOSED NEW PRODUCTS OR SERVICES, ANY STATEMENTS REGARDING FUTURE
ECONOMIC CONDITIONS OR PERFORMANCE AND ANY STATEMENT OF ASSUMPTIONS UNDERLYING
ANY OF THE FOREGOING. IN SOME CASES, FORWARD-LOOKING STATEMENTS CAN BE
IDENTIFIED BY THE USE OF TERMINOLOGY SUCH AS "MAY", "WILL", "EXPECTS", "PLANS",
"ANTICIPATES", "ESTIMATES", "POTENTIAL", OR "CONTINUE" OR THE NEGATIVE THEREOF
OR OTHER COMPARABLE TERMINOLOGY. ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS
REFLECTED IN THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE,
THERE CAN BE NO ASSURANCE THAT SUCH EXPECTATIONS OR ANY OF THE FORWARD-LOOKING
STATEMENTS WILL PROVE TO BE CORRECT AND ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE PROJECTED OR ASSUMED IN THE FORWARD-LOOKING STATEMENTS. OUR FUTURE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, AS WELL AS ANY FORWARD-LOOKING
STATEMENTS, ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES, INCLUDING BUT NOT
LIMITED TO THE RISK FACTORS SET FORTH BELOW AND FOR THE REASONS DESCRIBED
ELSEWHERE IN THIS PROSPECTUS. ALL FORWARD-LOOKING STATEMENTS AND REASONS WHY
RESULTS MAY DIFFER INCLUDED IN THIS PROSPECTUS ARE MADE AS OF THE DATE HEREOF
AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENT OR
REASON WHY ACTUAL RESULTS MIGHT DIFFER.
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 eight
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 preclinical (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 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.
3
<PAGE>
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 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 or commercial 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 laboratory
animal and human testing and an extensive review process mandated by the United
States Food and Drug Administration ("FDA") and equivalent foreign
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<PAGE>
authorities. This process 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, or
"cGMP",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
- a deep lung delivery device.
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 our products or business
development activities 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 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 primarily 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.
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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 DEVICES. We face many technical challenges in further developing
our inhalation devices to work with a broad range of drugs, to produce such
devices in sufficient quantities and to adapt the devices to different powder
formulations. There is a risk that we will not successfully achieve any of these
things. Our failure to overcome any of these things 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 devices.
There is a risk that we will not be able to enter into or maintain arrangements
with potential contract manufacturers or effectively scale-up production of our
drug delivery devices through contract manufacturers that we identify. Our
failure to do so would negatively impact our revenues and results of operations.
WE DEPEND ON SOLE OR EXCLUSIVE SUPPLIERS FOR OUR INHALATION DEVICES AND BULK
DRUGS.
We plan to subcontract the manufacture of our pulmonary delivery devices
before commercial production of our first products. 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 systems 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 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 results 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
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- 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
WILL 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 September 30, 2000, have incurred
a cumulative deficit of approximately $152.3 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 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 34 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.
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IF WE FAIL TO MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS MAY SUFFER.
Our ability to commercialize our products, achieve our expansion objectives,
manage our growth effectively and satisfy our commitments under our
collaboration agreements depends on a variety of factors. Key factors include
our ability to develop products internally, enter into strategic partnerships
with collaborators, attract and retain skilled employees and effectively expand
our internal organization to accommodate anticipated growth including
integration of any potential businesses that we may acquire. If we are unable to
manage growth effectively, there could be a material adverse effect on our
business, financial condition and results of operations.
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 100 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 any 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.
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, including enhanced injectable and other 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;
8
<PAGE>
- 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 twelve-month period ending January 18,
2001, based on closing prices on the Nasdaq National Market, our stock price
ranged from $23.156 to $63.313. 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.
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 SUBSTANTIAL INDEBTEDNESS HAS INCREASED SUBSTANTIALLY AND MAY RESULT IN
FUTURE LIQUIDITY PROBLEMS.
As of September 30, 2000, we had approximately $242.6 million in long-term
debt. In October 2000, we entered into a build-to-suit lease transaction, where
the estimated present value of minimum lease payments approximates
$46.2 million. Additionally, subsequent to Inhale's quarter ending
September 30, 2000, the Company entered into privately negotiated agreements
with certain holders of its outstanding 5.0% convertible subordinated notes due
February 2007 providing for the conversion of their notes into shares of common
stock in exchange for a cash payment. Approximately $168.6 million aggregate
principal amount of such outstanding notes was converted into approximately
4.4 million shares of common stock for cash payments of approximately
$25.5 million. The October 2000 issuance of the 3.5% convertible subordinated
notes due 2007 increased our long-term debt by approximately $230.0 million.
This additional indebtedness has and will continue to impact us by:
- 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 from operations to
satisfy the annual debt service payments that will be required as a result of
the sale of the notes. This may require us to use a portion of the proceeds from
the sale of the notes to pay interest or borrow additional funds or sell
additional equity to meet out 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.
9
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
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.
INCORPORATION BY REFERENCE
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 of 1934:
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 Amendment to Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1999, filed on March 14, 2000, including all material
incorporated by reference therein;
3. Our Amendment to Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1999, filed on April 28, 2000, including all material
incorporated by reference therein;
4. Our Definitive Proxy on Schedule 14A, filed on May 3, 2000;
5. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000,
filed on May 11, 2000, including all material incorporated by reference
therein;
6. Our Amendment to Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 2000, filed on May 15, 2000, including all material
incorporated by reference therein;
7. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000,
filed August 14, 2000, including all material incorporated by reference
therein;
8. Our Quarterly Report on Form 10-Q for the quarter ended September 30,
2000, filed November 14, 2000, including all material incorporated
therein;
9. Our Current Report on Form 8-K, filed on February 1, 2000;
10. Our Current Report on Form 8-K, filed on February 9, 2000;
11. Our Current Report on Form 8-K, filed on February 24, 2000;
10
<PAGE>
12. Our Current Report on Form 8-K, filed on September 6, 2000;
13. Our Current Report on Form 8-K, filed on October 10, 2000;
14. Our Current Report on Form 8-K, filed on October 10, 2000;
15. Our Current Report on Form 8-K, filed on October 13, 2000;
16. Our Current Report on Form 8-K, filed on October 30, 2000;
17. Our Current Report on Form 8-K, filed on December 21, 2000;
18. Our Current Report on Form 8-K, filed on January 11, 2001;
19. All other reports filed by us pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1999, including all materials
incorporated by reference therein; and
20. The description of the common stock contained in our Registration
Statement on Form 8-A.
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 January 18, 2001 was $37.63 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. This prospectus is an offer to sell or to buy only the
securities referred to herein, and only under circumstances and in jurisdictions
where it is lawful to do so. 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. See "Selling Security Holders".
11
<PAGE>
SELLING SECURITY HOLDERS
In connection with our acquisition of Bradford Particle Design plc completed
in January 2001, we issued to all of the selling shareholders shares of our
common stock, and we agreed to register these shares of common stock for resale.
This Registration Statement may be suspended if Inhale determines, in good
faith, that it is in the best interest of Inhale and its shareholders to defer
disclosure of non-public information until such information has reached a more
advanced state. During a period of suspension sales under this Registration
Statement will be suspended. After two years the potential constraints on
tradeability imposed by the Registration Statement referred to above cease to
apply. Our registration of the shares of common stock does not necessarily mean
the selling shareholders will sell all or any of the shares.
The following table sets forth information known to us with respect to the
number of shares of our common stock beneficially owned as of January 17, 2001
by each selling shareholder.
The information provided in the table below with respect to each selling
shareholder has been obtained from that selling shareholder. Except as otherwise
disclosed below, none of the selling shareholders has, or within the past three
years has had, any position, office or other material relationship with us.
Because the selling shareholders may sell all or some portion of the shares of
common stock beneficially owned by them, we cannot estimate either the number or
percentage of shares of common stock that will be beneficially owned by the
selling shareholders after this offering. In addition, the selling shareholders
may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the date on which
they provided the information regarding the shares of common stock beneficially
owned by them, all or a portion of the shares of common stock beneficially owned
by them in transactions exempt from the registration requirements of the
Securities Act of 1933.
The number of shares beneficially owned by each selling shareholder is
determined under Rule 13d-3 promulgated by the SEC under the Securities Exchange
Act of 1934, as amended, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Except as indicated, and subject to
community property laws where applicable and the limitations discussed in this
"Selling Shareholders" section, the persons named have sole voting and
investment power with respect to all shares shown as beneficially owned by them.
Percentage of beneficial ownership is based on 51,369,030 shares of common stock
outstanding as of January 17, 2001.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER OFFERING
------------------- SHARES BEING -------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Ceredig Owen Humphreys......................... 10,094 * 10,094 -- --
Robert David Bigland........................... 6,143 * 6,143 -- --
Charles Jefferis Woodburn Benson............... 14,316 * 14,316 -- --
Donald Charles Macpherson...................... 36,702 * 36,702 -- --
John Anthony Clamp............................. 4,496 * 4,496 -- --
Henry Alun Humphreys........................... 6,790 * 6,790 -- --
Bridgett Bernadette Humphreys.................. 6,790 * 6,790 -- --
Claire Louise Humphreys........................ 1,468 * 1,468 -- --
Elen Siobhain Humphreys........................ 1,468 * 1,468 -- --
Sir Christopher John Benson.................... 36,708 * 36,708 -- --
Mark Antony Loveday............................ 7,341 * 7,341 -- --
Ulric David Barnett............................ 7,341 * 7,341 -- --
David Lionel Mayhew............................ 7,341 * 7,341 -- --
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER OFFERING
------------------- SHARES BEING -------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Duncan Robert Hunter........................... 7,341 * 7,341 -- --
David Michael Wentworth-Stanley................ 7,341 * 7,341 -- --
Charles Julian Cazalet......................... 8,718 * 8,718 -- --
Anthony David Brampton......................... 2,083 * 2,083 -- --
Tessa Kilgour.................................. 5,506 * 5,506 -- --
Robert Darnton Wade............................ 6,143 * 6,143 -- --
Jonathan D. Wade............................... 1,035 * 1,035 -- --
Desmond de Silva, QC........................... 1,376 * 1,376 -- --
Patrick Cantrill............................... 917 * 917 -- --
Jennifer Clare Cazalet......................... 1,376 * 1,376 -- --
Pinnacle Trustees Ltd a/c Sitova (Chown)....... 1,835 * 1,835 -- --
Robert Morton Craven........................... 1,284 * 1,284 -- --
Alexandra Norma Craven......................... 1,284 * 1,284 -- --
Ian M. Gilbert................................. 3,206 * 3,206 -- --
Simon T. Concannon............................. 1,376 * 1,376 -- --
Kenneth Simmonds............................... 11,012 * 11,012 -- --
Carole Julia Nicholson......................... 10,214 * 10,214 -- --
Michael J. Walker.............................. 917 * 917 -- --
Julian Christopher Woodburn Benson............. 15,397 * 15,397 -- --
H. Roger Edmunds............................... 1,835 * 1,835 -- --
John Richard Precious.......................... 6,423 * 6,423 -- --
Andreas Saesseli............................... 13,323 * 13,323 -- --
Joseph F. Bohan................................ 9,177 * 9,177 -- --
John Davies.................................... 27,531 * 27,531 -- --
Gwyn Humphreys................................. 811,246 1.58% 811,246 -- --
Peter York..................................... 811,246 1.58 811,246 -- --
Mazen Hanna.................................... 811,246 1.58 811,246 -- --
University of Bradford......................... 686,439 1.34 686,439 -- --
Walker Morris Trustees Ltd..................... 18 * 18 -- --
3i Group plc................................... 311,085 * 311,085 -- --
Raymond Botterell.............................. 4,588 * 4,588 -- --
Dr. Stephen E. Walker.......................... 4,588 * 4,588 -- --
Avril Walker................................... 4,588 * 4,588 -- --
Vincent Brophy................................. 4,588 * 4,588 -- --
David John Mathiesan Ray....................... 4,588 * 4,588 -- --
Derek Pearce................................... 4,588 * 4,588 -- --
</TABLE>
------------------------
* Represents beneficial ownership of less than one percent (1%).
None of the selling holders nor any of their 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, although the selling
holders may hold additional securities of Inhale. The selling holders acquired
the common stock from us in a private transaction on January 8, 2001. All of the
shares of common stock purchased by the selling security holders were
"restricted securities" under the Securities Act prior to this registration.
13
<PAGE>
PLAN OF DISTRIBUTION
The selling security holders and their successors, including their
transferees, pledgees or donees or their successors, may sell the shares of
common stock directly to purchasers or through underwriters, broker-dealers or
agents, who may receive compensation in the form of discounts, concessions or
commissions from the selling holders or the purchasers. These discounts,
concessions or commissions as to any particular underwriter, broker-dealer or
agent may be in excess of those customary in the types of transactions involved.
The shares offered hereunder may be sold from time to time by the selling
security holders in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at prices related to the prevailing market
prices, at varying prices determined at the time of sale, or at negotiated
prices. These sales may be effected in transactions:
- on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the common stock may
be listed or quoted at the time of sale;
- 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, the selling security holders
will be subject to the applicable provisions of the Securities Exchange Act,
which provisions may limit the timing of purchases and sales of shares of common
stock by the selling security holders or any other such persons.
In order to comply with the securities laws of some jurisdictions, if
applicable, the shares of common stock must be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions, the shares of common stock may not be sold unless they have been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
The selling security holders and any underwriters, broker-dealers or agents
that participate in the sale or distribution of the shares of common stock may
be deemed "underwriters" within the meaning of Section 2(11) of the Securities
Act. Any discounts, commissions, concessions or profit they earn on any resale
of the shares may be underwriting discounts and commissions under the Securities
Act. Selling holders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
In addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling holder
may not sell any shares of common stock described in this prospectus and may not
transfer, devise or gift these securities by other means not described in this
prospectus.
To the extent required, the shares of common stock to be sold, the names of
the selling holders, the respective purchase prices and public offering prices,
the names of any agent, dealer or underwriter, and any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
14
<PAGE>
In connection with the acquisition of all outstanding share capital of
Bradford Particle Design plc, we agreed for the benefit of the selling security
holders to register the common stock of Inhale they received under applicable
federal and state securities laws under specific circumstances and at specific
times. We will pay substantially all of the expenses incurred by the selling
holders incident to the offering and sale of the common stock.
LEGAL MATTERS
The validity of the shares of common stock offered hereby is being passed
upon for us by Cooley Godward LLP, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K, as amended, as set forth
in their report, which is incorporated by reference in this prospectus and
elsewhere in the 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.
Ernst & Young LLP, independent auditors, have also audited the financial
statements of Bradford Particle Design plc, included in our Current Report on
Form 8-K filed on January 11, 2001, as set forth in their report, which is
incorporated by reference in the registration statement. These 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
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
About our Business.......................................... 1
Risk Factors................................................ 3
Where You Can Find More Information......................... 10
Incorporation by Reference.................................. 10
Use of Proceeds............................................. 11
Selling Security Holders.................................... 12
Plan of Distribution........................................ 14
Legal Matters............................................... 15
Experts..................................................... 15
</TABLE>
------------------------
3,752,456
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 Inhale 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.
<TABLE>
<S> <C>
Registration fee............................................ $27,908.89
Legal fees and expenses..................................... $10,000.00
Accounting fees and expenses................................ $ 8,000.00
Printing and engraving...................................... $20,000.00
Nasdaq National Market filing fee........................... $17,500.00
Miscellaneous............................................... 10,000.00
TOTAL................................................... $93,408.89
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, Inhale 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").
Inhale'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 Inhale 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 Inhale,
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, for any transaction from which the director
derived an improper personal benefit and for violating Section 174 of the
Delaware General Corporation 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.
Inhale has entered into agreements with its directors and executive officers
that require Inhale 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 Inhale 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 Inhale 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
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
--------------------- -------------
<C> <C> <S>
2.1 (1) Agreement and Plan of Merger between Inhale Therapeutic
Systems, a California corporation, and Inhale Therapeutic
Systems (Delaware), Inc., a Delaware corporation.
2.2 (16) Recommended Offer, dated December 21, 2000 by
Cazenove & Co. on behalf of Inhale Therapeutic
Systems, Inc. for Bradford Design plc.
3.1 (1) Certificate of Incorporation of Inhale.
3.2 (1) Bylaws of Inhale.
3.3 (14) Certificate of Amendment of the Amended Certificate
of Incorporation.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2 (2) Restated Investor Rights Agreement among Inhale 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 Inhale and Pfizer Inc.,
dated January 18, 1995.
4.5 (9) Form of Purchase Agreement between Inhale and the individual
Purchasers, dated January 28, 1997.
4.6 (10) Stock Purchase Agreement between Inhale and Capital Research
and Management Company, dated December 8, 1998.
4.7 (12) Purchase Agreement among Inhale 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 Inhale and Lehman
Brothers Inc., Deutsche Bank Securities Inc. and U.S.
Bancorp Piper Jaffray Inc., dated October 13, 1999.
4.9 (12) Indenture between Inhale 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 Inhale and 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, 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.
4.14 (14) Specimen common stock certificate.
4.15 (15) Specimen warrants to purchase shares of common stock.
4.16 (17) Purchase Agreement among Inhale and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Deutsche Bank Securities Inc.,
Lehman Brothers Inc., and U.S. Bancorp Piper Jaffray Inc.,
dated October 11, 2000.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
--------------------- -------------
<C> <C> <S>
4.17 (17) Resale Registration Rights Agreement among Registrant and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche
Bank Securities, Inc., Lehman Brothers Inc., and U.S.
Bancorp Piper Jaffray Inc., dated October 17, 2000.
4.18 (17) Indenture between Registrant, as Issuer, and Chase Manhattan
Bank and Trust Company, National Association, as Trustee,
dated October 17, 2000.
5.1 (18) 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 Inhale 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 Inhale 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 Inhale 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").
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 Inhale and
Phoenix Leasing Incorporated, dated September 15, 1993.
10.11 (2) Sublicense Agreement between Inhale and John S. Patton,
dated September 13, 1991.
10.12 (5) Stock Purchase Agreement between Inhale and Baxter World
Trade Corporation, dated March 1, 1996.
10.13 (8) Sublease and Lease Agreement, dated October 2, 1996, between
Inhale 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
Lease Agreement, dated October 2, 1996, between Inhale 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.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
--------------------- -------------
<C> <C> <S>
10.18 (13) Sublease by and between Webvan Group, Inc., as sublessor and
Registrant, as sublessee, dated November 3, 1999.
10.19 (15) Registrant's 2000 Equity Incentive Plan
10.20 (15) Registrant's Stock Option Agreement issued in accordance
with Inhale's 2000 Equity Incentive Plan.
10.21 (15) Agreement for the Contribution of 201 Industrial Road
Project made and entered into as of September 14, 2000 by
and among Inhale, Inhale 201 Industrial Road, L.P., a
California limited partnership and Bernardo Property
Advisors, Inc., a California corporation.
10.22 (15) Agreement of Limited Partnership of Inhale 201 Industrial
Road., L.P., a California limited partnership made and
entered into September 14, 2000, by and among SCIMED PROP
III, Inc., a California corporation, as general partner, 201
Industrial Partnership, a California general partnership, as
limited partner, and Inhale, as limited partner.
10.23 (15) Build-To-Suit Lease made and entered into as of
September 14, 2000 by and between Inhale 201 Industrial
Road, L.P., a California limited partnership, as Landlord,
and Inhale, as Tenant.
10.24 (15) Amendment to Lease dated October 3, 2000 by and between
Inhale 201 Industrial Road, L.P., a California limited
partnership, as Landlord, and Inhale, as Tenant.
10.25 (15) Parking Lease Agreement entered into as of September 14,
2000 by and between Inhale 201 Industrial Road, L.P., a
California limited partnership, as Landlord, and Inhale, as
Tenant.
23.1 (18) Consent of Ernst & Young LLP, independent auditors.
23.2 (18) Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 (18) Power of Attorney (included in signature page).
</TABLE>
------------------------
(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.
(8) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996.
II-4
<PAGE>
(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) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000.
(15) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000.
(16) Incorporated by reference to the indicated exhibit in Inhale's Current
Report on Form 8-K, filed on January 11, 2001.
(17) Incorporated by reference to Inhale's Registration Statement on Form S-3
(No. 333-53678), filed on January 12, 2001.
(18) 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 Inhale pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-5
<PAGE>
(2) That, for the purpose 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.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of Inhale's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
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 Inhale pursuant to provisions described in Item 15, or
otherwise, Inhale 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 Inhale of expenses incurred or paid by a director,
officer or controlling person of Inhale 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,
Inhale 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-6
<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 January 19, 2001.
<TABLE>
<S> <C> <C>
By: /s/ AJIT S. GILL
----------------------------------------
Ajit S. Gill
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSON BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert B. Chess, Ajit S. Gill and Brigid A. Makes
and each of them, as his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him or her and in his or
her 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 ratify and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, registration
statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ AJIT S. GILL Chief Executive Officer, President January 19, 2001
------------------------------------ and Director (Principal Executive
Ajit S. Gill Officer)
/s/ ROBERT B. CHESS Chairman of the Board January 19, 2001
------------------------------------
Robert B. Chess
/s/ BRIGID A. MAKES Chief Financial Officer and Vice January 19, 2001
------------------------------------ President (Principal Financial and
Brigid A. Makes Accounting Officer)
/s/ JOHN S. PATTON Vice President and Director January 19, 2001
------------------------------------
John S. Patton
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES B. GLAVIN Director January 19, 2001
------------------------------------
James B. Glavin
/s/ MELVIN PERELMAN Director January 19, 2001
------------------------------------
Melvin Perelman
/s/ IRWIN LERNER Director January 19, 2001
------------------------------------
Irwin Lerner
/s/ ROY A. WHITFIELD Director January 19, 2001
------------------------------------
Roy A. Whitfield
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
--------------------- -------------
<C> <C> <S>
2.1 (1) Agreement and Plan of Merger between Inhale Therapeutic
Systems, a California corporation, and Inhale Therapeutic
Systems (Delaware), Inc., a Delaware corporation.
2.2 (16) Recommended Offer, dated December 21, 2000 by
Cazenove & Co. on behalf of Inhale Therapeutic
Systems, Inc. for Bradford Design plc.
3.1 (1) Certificate of Incorporation of Inhale.
3.2 (1) Bylaws of Inhale.
3.3 (14) Certificate of Amendment of the Amended Certificate of
Incorporation.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2 (2) Restated Investor Rights Agreement among Inhale 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 Inhale and Pfizer Inc.,
dated January 18, 1995.
4.5 (9) Form of Purchase Agreement between Inhale and the individual
Purchasers, dated January 28, 1997.
4.6 (10) Stock Purchase Agreement between Inhale and Capital Research
and Management Company, dated December 8, 1998.
4.7 (12) Purchase Agreement among Inhale 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 Inhale and Lehman
Brothers Inc., Deutsche Bank Securities Inc. and U.S.
Bancorp Piper Jaffray Inc., dated October 13, 1999.
4.9 (12) Indenture between Inhale 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 Inhale and 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, 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.
4.14 (14) Specimen common stock certificate.
4.15 (15) Specimen warrants to purchase shares of common stock.
4.16 (17) Purchase Agreement among Inhale and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Deutsche Bank Securities Inc.,
Lehman Brothers Inc., and U.S. Bancorp Piper Jaffray Inc.,
dated October 11, 2000.
4.17 (17) Resale Registration Rights Agreement among Registrant and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche
Bank Securities, Inc., Lehman Brothers Inc., and U.S.
Bancorp Piper Jaffray Inc., dated October 17, 2000.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
--------------------- -------------
<C> <C> <S>
4.18 (17) Indenture between Registrant, as Issuer, and Chase Manhattan
Bank and Trust Company, National Association, as Trustee,
dated October 17, 2000.
5.1 (18) 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 Inhale 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 Inhale 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 Inhale 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").
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 Inhale and
Phoenix Leasing Incorporated, dated September 15, 1993.
10.11 (2) Sublicense Agreement between Inhale and John S. Patton,
dated September 13, 1991.
10.12 (5) Stock Purchase Agreement between Inhale and Baxter World
Trade Corporation, dated March 1, 1996.
10.13 (8) Sublease and Lease Agreement, dated October 2, 1996, between
Inhale 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
Lease Agreement, dated October 2, 1996, between Inhale 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.
10.19 (15) Registrant's 2000 Equity Incentive Plan
10.20 (15) Registrant's Stock Option Agreement issued in accordance
with Inhale's 2000 Equity Incentive Plan.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
--------------------- -------------
<C> <C> <S>
10.21 (15) Agreement for the Contribution of 201 Industrial Road
Project made and entered into as of September 14, 2000 by
and among Inhale, Inhale 201 Industrial Road, L.P., a
California limited partnership and Bernardo Property
Advisors, Inc., a California corporation.
10.22 (15) Agreement of Limited Partnership of Inhale 201 Industrial
Road., L.P., a California limited partnership made and
entered into September 14, 2000, by and among SCIMED PROP
III, Inc., a California corporation, as general partner, 201
Industrial Partnership, a California general partnership, as
limited partner, and Inhale, as limited partner.
10.23 (15) Build-To-Suit Lease made and entered into as of
September 14, 2000 by and between Inhale 201 Industrial
Road, L.P., a California limited partnership, as Landlord,
and Inhale, as Tenant.
10.24 (15) Amendment to Lease dated October 3, 2000 by and between
Inhale 201 Industrial Road, L.P., a California limited
partnership, as Landlord, and Inhale, as Tenant.
10.25 (15) Parking Lease Agreement entered into as of September 14,
2000 by and between Inhale 201 Industrial Road, L.P., a
California limited partnership, as Landlord, and Inhale, as
Tenant.
23.1 (18) Consent of Ernst & Young LLP, independent auditors.
23.2 (18) Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 (18) Power of Attorney (included in signature page).
</TABLE>
------------------------
(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.
(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.
<PAGE>
(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) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000.
(15) Incorporated by reference to the indicated exhibit in Inhale's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000.
(16) Incorporated by reference to the indicated exhibit in Inhale's Current
Report on Form 8-K, filed on January 11, 2001.
(17) Incorporated by reference to Inhale's Registration Statement on Form S-3
(No. 333-53678), filed on January 12, 2001.
(18) Filed herewith.
