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Filed Pursuant to Rule 424(b)(1)
Registration No. 333-31163
PROSPECTUS
ENAMELON, INC.
628,400 SHARES OF COMMON STOCK
This Prospectus pertains to up to 628,400 shares (the "Shares") of common
stock, $.001 par value per share (the "Common Stock"), of Enamelon, Inc., a
Delaware corporation (the "Company"), that may be sold by the Selling
Stockholders named herein (the "Selling Stockholders"). See "Selling
Stockholders."
The Shares are a portion of the 1,200,000 shares sold to accredited investors
in June 1997 pursuant to a private offering (the "June 1997 Offering") exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"). Of the 1,200,000 shares sold in the June 1997 Offering,
1,080,000 were sold by the Company and 120,000 shares were sold by Dr. Steven R.
Fox, Chief Executive Officer of the Company. The Shares are those shares that
were purchased in the June 1997 Offering but not previously sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale
of the Shares by the Selling Stockholders. The registration of the Shares
offered hereby is being effected pursuant to registration rights granted by the
Company to the Selling Stockholders and, in accordance with the terms of such
rights, the Company will bear the expense of such registration, except that the
Selling Stockholders will bear the cost of all brokerage commissions and
discounts incurred in connection with the sale of their Securities and their
respective legal expenses.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Commencing on the effective date of this Prospectus, the Shares may be sold,
from time to time, by the Selling Stockholders directly to purchasers or,
alternatively, may be offered through agents, brokers, dealers or underwriters,
who may receive compensation in the form of concessions or commissions from the
Selling Stockholders or purchasers of the Shares. Sales of the Shares may be
made on the Nasdaq Stock Market National Market System ("NASDAQ"), in privately
negotiated transactions or otherwise, and such sales may be made at the market
price prevailing at the time of sale, a price related to such prevailing market
price or a negotiated price.
Any brokers, dealers or agents that participate in the distribution of the
Shares may be deemed to be underwriters, and any commissions received by them
and any profit on the resale of such shares positioned by them may be deemed to
be underwriting discounts and commissions under the Securities Act. The sale of
the Shares by the Selling Stockholders is subject to the prospectus delivery and
other requirements of the Securities Act. See "Plan of Distribution."
_____________
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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THE DATE OF THIS PROSPECTUS IS APRIL 22, 1998
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices located at Seven World Trade
Center, New York, New York 10048, and at Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material may be
obtained, at prescribed rates, by writing to the Commission, Public Reference
Section, 450 Fifth Street, N.W. Washington, D.C. 20549. The Commission
maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically.
The Company has filed with the Commission a Post-Effective Amendment No. 1 on
Form S-3 to Registration Statement on Form S-1 under the Securities Act with
respect to the securities offered hereby via the Electronic Data Gathering
Analysis and Retrieval System ("EDGAR") and may be found on the Commission's web
site at http://www.sec.gov. This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits thereto, as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to such
Registration Statement and the exhibits thereto or incorporated therein by
reference. The Registration Statement, including such exhibits, may be inspected
without charge at the public reference facilities maintained by the Commission
and at the Commission's regional offices at the addresses stated above. Copies
of these documents may be obtained, at prescribed rates, by writing to the
Commission's Public Reference Section at its office set forth above.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission are incorporated into this
Prospectus by reference:
(1) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997 ("Form 10-KSB").
(2) The Company's Proxy Statement dated April 17, 1997.
(3) The Company's Current Report on Form 8-K dated as of April 6, 1998.
(4) The description of the Company's Common Shares contained in the
Company's registration statement on Form 8-A (File No. 0-21595),
dated October 21, 1996, filed pursuant to Section 12(g) of the
Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of the filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes
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such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company furnishes its stockholders with annual reports which contain
financial statements audited by its independent certified public accounts and
such other interim reports containing unaudited financial information as it
deems appropriate.
The Company will provide without charge to each person who receives this
Prospectus, upon written request a copy of any information that is incorporated
by reference, in the Prospectus (not including exhibits to the information that
is incorporated by reference unless the exhibits are themselves specifically
incorporated by reference). Such requests should be directed to the following
address:
ENAMELON, INC.
758 Route 18 North
Suite 102
New Brunswick, N.J. 08816
Attention: Chief Financial Officer
Enamelon(TM) is a trademark of the Company. Certain other trademarks of the
Company and other companies, including ENAMELINE(TM), Crest(R), Colgate(R),
Aquafresh(R), Mentadent(R), Arm & Hammer Dental Care(R) and Sensodyne(R), are
used in this Prospectus.
BUSINESS SUMMARY
The Company is focused on developing and marketing over-the-counter oral care
products that help stop cavities before they begin. The Company's products are
based on proprietary formulations and technologies that have been shown in
laboratory and small-scale human studies to enhance remineralization of tooth
enamel and to prevent early stage tooth decay. Enamelon(R) anticavity fluoride
toothpaste contains the active ingredient sodium fluoride in a formulation with
calcium and phosphate ions, to enhance the remineralization of tooth enamel. The
Company launched its initial product, Enamelon(R) all-family toothpaste, in test
markets in March 1997 and began the product's national introduction in the first
quarter of 1998.
The Company holds licenses from the American Dental Association Health
Foundation (the "ADAHF") to use patented technology relating to a method for
oral use of various amorphous calcium phosphate compounds that enhance the
natural activity of fluoride to prevent tooth decay (the "ADAHF Patented
Technology"). The ADAHF has granted the Company (i) exclusive United States and
foreign licenses to develop, manufacture and market toothpaste and chewing gum
and other food and confectionery products using the ADAHF Patented Technology
and (ii) a non-exclusive international license covering products not covered by
the Company's exclusive licenses (including oral spray, mouth rinse and
professional gel products) using the ADAHF Patented Technology. The Company's
international license is co-extensive with a non-exclusive international license
granted to SmithKline Beecham Corp. ("SmithKline"), which also obtained from the
ADAHF an exclusive United States license covering products not covered by the
Company's exclusive licenses. The Company is required to pay the ADAHF royalties
under these license agreements.
The Company itself has also developed both patented and proprietary
technologies relating to the prevention of tooth decay before it begins (the
"Enamelon(R) Proprietary Technology"). It has been granted five United States
patents for methods and materials that supply soluble calcium and phosphate
salts to teeth to enhance remineralization, and one patent for its split-tube
system, which is used to dispense Enamelon(R) toothpaste. In addition, the
Company has 13 patent applications with respect to certain Enamelon(R)
Proprietary Technology pending in the United States and 40 patent applications
pending in foreign jurisdictions.
The Company's objective is to become a leading marketer of a variety of oral
care and chewing gum and other food and confectionery products based on the
ADAHF Patented Technology and the Enamelon(R) Proprietary Technology (together,
the "Enamelon(R) Technologies").
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk and immediate and substantial dilution and should only be made by
persons who can afford a loss of their entire investment. In evaluating an
investment in the Common Stock being offered hereby, investors should consider
carefully, among other matters, the following risk factors, as well as the other
information contained in this Prospectus.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has a limited history of operations and has accumulated net losses
from inception in June 1992 through December 31, 1997, of $15,462,685. Losses
have resulted principally from research and development costs, costs of
manufacturing and test marketing Enamelon(TM) toothpaste and general and
administrative costs. Although the Company commenced test marketing of
Enamelon(TM) toothpaste in March 1997, costs of production and marketing
presently exceed revenues. The Company expects to continue to incur additional
operating losses at least through 1999, principally as a result of expenses of
ongoing clinical testing and anticipated marketing and manufacturing expenses
associated with the national introduction of Enamelon(TM) toothpaste. There can
be no assurance that the Company will ever generate an operating profit or
achieve profitability.
DEPENDENCE ON SUCCESS OF INITIAL PRODUCT
The Company is dependent to a large extent on the success of Enamelon(TM)
toothpaste. The Company began the national introduction of Enamelon(TM)
toothpaste in the first-quarter of 1998. There can be no assurance that
Enamelon(TM) toothpaste will become a commercially viable product, or that if it
does become commercially viable, it can be produced in a timely manner, can be
manufactured economically on a large scale, can be free from governmental and
competitive challenges, or can achieve and sustain market acceptance.
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UNCERTAINTY OF RESULTS OF HUMAN CLINICAL STUDIES
Based upon laboratory studies by the Company and others, the Company believes
that the current formulation of Enamelon(TM) toothpaste will achieve expected
results in humans. Nevertheless, results of laboratory studies are not
necessarily indicative of results that will be obtained in human clinical
trials, which the Company has commenced. The Company intends to continue to
conduct human clinical studies of Enamelon(TM) toothpaste in order to begin to
establish additional advertising claims concerning efficacy in humans. The
Company believes that these advertising claims will distinguish Enamelon(TM)
toothpaste from competitors' products and give the Company a competitive
advantage. However, there can be no assurance that the results of the human
clinical studies will substantiate the anticipated advertising claims. Adverse
or inconclusive human clinical trial results concerning any of the Company's
toothpaste product formulations could limit the product claims the Company can
make for Enamelon(TM) toothpaste. In such event, the Company may have to conduct
further studies, which would delay its ability to make expected advertising
claims regarding the effectiveness of Enamelon(TM) toothpaste in humans.
UNCERTAINTY OF CONSUMER ACCEPTANCE OF ENAMELON TOOTHPASTE
The Company will be dependent upon consumer acceptance of Enamelon(TM)
toothpaste as an alternative to current well-known brand name toothpastes.
Market acceptance will depend on many factors, including (i) the Company's
ability to demonstrate to consumers the effectiveness of Enamelon(TM)
toothpaste, (ii) whether the Company's marketing strategy will achieve desired
results, (iii) the extent to which consumers are willing to pay a premium for
Enamelon(TM) toothpaste and (iv) the response of the Company's competitors to
the national introduction of Enamelon(TM) toothpaste. There can be no assurance
that the Company will be able to market its toothpaste or other products
successfully or that any of its products will be accepted in the marketplace.
LIMITED MARKETING CAPABILITY
The Company has limited marketing capabilities and resources. Achieving
market penetration will require significant efforts by the Company to create
awareness of, and demand for, its toothpaste and other proposed products.
Accordingly, the Company's ability to build its customer base will be dependent
on its marketing efforts, including its ability to establish an effective sales
organization or establish strategic marketing arrangements with other companies.
The Company's failure to successfully develop its marketing capabilities, both
internally and through brokers, would have a material adverse effect on the
Company's business. Further, there can be no assurance that the development of
such marketing capabilities will lead to sales of the Company's toothpaste and
other proposed products.
UNCERTAINTIES RELATED TO DEVELOPMENT OF ADDITIONAL PRODUCTS
The Company has focused its product development efforts to date on
Enamelon(TM) toothpaste. Accordingly, the Company will require significant
additional efforts to develop other products using the Enamelon Technologies.
All such future product development efforts are subject to certain risks and may
not succeed. These risks include, but are not limited to, the possibility that
(i) new products will be found ineffective or unsafe, (ii) even if safe and
effective, they will be difficult to develop into commercially viable products
or to manufacture economically on a large scale, free of governmental or
competitive challenges and (iii) any such products will fail to achieve and
sustain market acceptance.
COMPETITION
Competition in toothpaste products and other oral care products, as well as in
chewing gum and other food and confectionery products, is intense. The
Company's primary competitors include companies with substantially greater
financial, technological, marketing, personnel and research and development
resources than those of the Company. There can be no assurance that the Company
will be able to compete successfully in these markets. The Company's toothpaste
products will compete with other brand name toothpastes, including Crest,
Colgate, Aquafresh, Mentadent, Arm & Hammer Dental Care and Sensodyne. Further,
new products or future developments by others may provide therapeutic or cost
advantages over the Company's toothpaste and other proposed products. There can
be no assurance
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that developments by others of similar or more effective products will not
render the Company's products or technologies noncompetitive or obsolete or that
competitors will not challenge the validity of the Company's patent rights.
Since the Company's products and proposed products will be new to the market and
sold in competition with the products of companies with greater financial and
other resources, there can be no assurance that a market for the Company's
products and proposed products will develop.
The Company's non-exclusive license to market products not covered by its
exclusive licenses (including oral sprays, mouth rinses, and professional gels)
outside of the United States is co-extensive with a license granted to
SmithKline, which has financial and other resources that are substantially
greater than those of the Company. Therefore, it is likely that the Company will
not be able to compete with SmithKline for the sale of those products outside of
the United States unless the Company enters into strategic alliances with other
companies having financial and other resources comparable to those of
SmithKline. However, there can be no assurance that the Company will be able to
successfully market products covered by its non-exclusive license, even if it is
able to form such alliances.
COMPLIANCE WITH THE FDA MONOGRAPH
The Company's toothpaste products are subject to regulation by the Food and
Drug Administration (the "FDA"). The FDA has published a final monograph,
Anticaries Drug Products for Over-the-Counter Human Use (the "Monograph"), for
over-the-counter ("OTC") anticaries drug products. The Monograph establishes
conditions under which OTC drug products that aid in the prevention of tooth
decay are generally recognized as being safe and effective and not misbranded.
The Company's products may be lawfully marketed without being required to file a
New Drug Application (an "NDA") with the FDA, if they use as their sole active
ingredient one of the active ingredients permitted in the Monograph and only
make labeling claims permitted by the Monograph. The Company's toothpaste and
other proposed OTC drug products have been and are being developed with the sole
active ingredient being sodium fluoride, an active ingredient permitted under
the Monograph, and the Company intends to comply with the Monograph in all other
respects. However, there can be no assurance that the FDA will determine that
the Company's toothpaste and other proposed OTC drug products meet all of the
conditions of the Monograph. The Company will be limited in the claims it can
make with respect to its products in order to remain in compliance with the
Monograph. The Company's inability to market its toothpaste and other OTC drug
products under and in compliance with the Monograph would have a material
adverse effect on the Company.
In order to market its products other than in compliance with the Monograph,
the Company would be required to file an NDA. An NDA would require substantial
testing procedures, which are costly and time consuming. Accordingly, if the
Company were required to file an NDA with respect to any of its products, the
Company's ability to sell such products in the United States could be delayed
indefinitely. Further, the Company may not have sufficient financial or other
resources available to complete the NDA process and assuming such financial and
other resources are available, there is no assurance that the FDA would approve
the Company's NDA, if one were necessary.
COMPLIANCE WITH OTHER GOVERNMENT REGULATION
In addition to regulation by the FDA under the Monograph, the Company is
subject to additional FDA regulation as well as regulation under various other
federal and state laws and government agencies. Each domestic drug product
manufacturing facility must be registered with the FDA, and each manufacturer
must inform the FDA of every drug product it has in commercial distribution and
keep such list updated. Domestic manufacturing facilities are also subject to at
least biennial inspection by the FDA for compliance with Good Manufacturing
Practices ("GMP's") regulations promulgated by the FDA. Compliance with GMP's is
required at all times during the manufacture and processing of drug products.
Accordingly, to the extent that the Company uses contract manufacturers, such
manufacturers must be in compliance with FDA requirements. To date, the Company
has used, and plans to continue to use, contract manufacturers to manufacture
its Enamelon(TM) toothpaste. If any such manufacturer is not in compliance with
GMP's, the FDA could bring an action to enforce its regulations, which could
lead to closing such manufacturing facility. In that instance, the Company would
be required to contract with another manufacturer, any such contract could
possibly
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be on terms less favorable to the Company than its former agreement, and the
sales and marketing of the Company's products could be disrupted.
Both the Company's products and its product claims may be challenged by the
Company's competitors or by the Federal Trade Commission (the "FTC") or other
governmental or private agencies. Such challenges may include an assertion that
the data obtained by the Company to substantiate the Company's advertising
claims may be inadequate or that such claims are inaccurate. There can be no
assurance that the Company will successfully defend any challenge in this area
or be able to modify its products or the claims with respect thereto to such an
extent that the products remain commercially viable. If the Company is unable
to defend such claims, it may become subject to an FTC cease and desist order,
which would impair its ability to market its products.
The laws and regulations administered by governmental agencies are subject to
change and varying interpretations. While the Company uses and intends to
continue to use its best efforts to comply with relevant laws and regulations,
no assurance can be given that an agency might not assert a claim of
noncompliance against the Company in the future. Unanticipated changes in laws
or adverse interpretations of regulations could materially jeopardize the
Company's ability to distribute its products or engage in its contemplated
business activities.
The marketing of the Company's proposed products abroad will be subject to
significant regulation by foreign cosmetic and/or drug regulatory agencies. No
assurance can be given that the Company will be granted approval to market its
proposed products in foreign countries, and the failure to obtain such required
approvals would have an adverse effect on the Company's ability to market its
products internationally.
DEPENDENCE ON LICENSING AGREEMENTS
Since the Company believes that the ADAHF Patented Technology is a key element
in its product development, the Company considers its license agreements with
the ADAHF to be material to the Company's business. If the Company fails to pay
the royalties required under the license agreements or otherwise breaches such
agreements, then the ADAHF will be entitled to terminate the agreements if such
breaches remain uncured. In that event, the Company would be unable to use the
ADAHF Patented Technology, which could have a material adverse effect on the
ability of the Company to develop, manufacture and sell its products, or even to
continue in business.
UNCERTAIN ABILITY TO PROTECT PATENTS
The Company's ability to compete effectively depends on its success in
protecting the Enamelon Technologies, both in the United States and abroad. No
assurance can be given that the Company's protection of patents or other
proprietary technology within and/or outside of the United States is sufficient
to deter others, legally or otherwise, from developing or marketing competitive
products using the Enamelon Technologies.
The patents and pending patent applications constituting the ADAHF Patented
Technology (the "ADAHF Patent Rights") and certain of the Enamelon Proprietary
Technology (the "Enamelon Patent Rights" and collectively with the ADAHF Patent
Rights, the "Patent Rights") are material to the Company's business. No
assurance can be given that any further patents will be issued from the United
States or foreign patent offices for the Patent Rights or that the Company will
receive any patents in the future based on its continued development efforts.
The Company believes that the protection afforded by the Patent Rights is
material to its future revenues and earnings. There can be no assurance that
any of the Patent Rights will be found to be valid or that any of the Patent
Rights will be enforceable or prevent others from developing and marketing
competitive products or methods. A successful challenge to the validity of the
Patent Rights could have a material adverse effect on the Company and could
jeopardize its ability to engage in its
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contemplated business. An infringement action on behalf of the Company to
enforce any of the Patent Rights may require the diversion of substantial funds
from the Company's operations and may require management to expend efforts that
might otherwise be devoted to the Company's operations. Furthermore, there can
be no assurance that the Company will be successful in enforcing the Patent
Rights.
There can be no assurance that patent infringement claims in the United States
or in other countries will not be asserted against the Company by a competitor
or others, and if asserted, that the Company will be successful in defending
against such claims. If any of the Company's products is determined to infringe
a patent of others, the Company or its sublicensees may be required to pay
substantial damages, may be enjoined from using and selling such product, or may
be required to obtain a royalty-bearing license. If such a license is not
available, the Company would be required either to redesign those aspects of the
product held to infringe so as to avoid future infringement or to stop selling
the product. In such case, any redesign efforts undertaken by the Company could
require significant expense, be inadequate to avoid infringement, necessitate an
FDA review, delay the introduction or the re-introduction of the product into
certain markets, or be so significant as to be impractical.
PROTECTION OF PROPRIETARY TECHNOLOGY AND INFORMATION
The Company also intends to rely on trade secrets, know-how and continuing
technological advancement to establish and maintain a competitive position in
the market for its products. Although the Company has entered into
confidentiality and invention agreements with its employees and consultants, no
assurance can be given that such agreements will be honored or that the Company
will be able to effectively protect its rights to its unpatented trade secrets
and know-how. Moreover, no assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets and know-how.
EVOLVING PRODUCT FORMULATIONS
The Company expects that the formulation of its toothpaste and other products
will be modified from time to time as a result of the Company's ongoing research
and product testing programs. As a result of such modifications, products that
the Company produces in the future may differ from those that were the subject
of earlier research and testing. Therefore, the research studies conducted to
date and relied upon by the Company for efficacy and claims substantiation, as
well as the Patent Rights obtained at this time, might not necessarily be
applicable to the Company's future product formulations. In that event, the
Company may be required to make significant additional expenditures on
development and testing of these new formulations and in securing relevant
patent rights. Furthermore, there can be no assurance that future product
formulations will comply with the Monograph, that the Company will not be
required to file an NDA in connection with new product formulations, or that any
products using such formulations will be commercially viable.
DEPENDENCE ON OTHERS TO MANUFACTURE
The Company is using a contract manufacturer to manufacture its toothpaste
products for the United States market. There can be no assurance that if the
Company's present contract manufacturer becomes unavailable, the Company will be
able to retain another qualified manufacturer on terms favorable to the Company.
The Company may seek to sublicense or enter into joint ventures or strategic
partnerships with major consumer product companies or other entities on either
an exclusive or non-exclusive basis, for manufacturing its products in foreign
markets as well as for manufacturing its other proposed products. Manufacturing
arrangements in these markets are likely to be encompassed in any agreements
establishing such relationships and may place primary manufacturing
responsibility on others. The Company has no plan, agreement, understanding or
arrangement with respect to such relationships, and no assurance can be given
that the Company will enter into any such arrangements.
The Company's dependence upon others to manufacture its products may adversely
affect its future profit margins, if any, and may affect the Company's ability
to sell toothpaste and other proposed products on a timely and competitive
basis.
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FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The Company's cash requirements may vary materially from those now planned
depending on numerous factors, including the status of the Company's marketing
efforts, the Company's business development activities, the results of human
clinical trials, the regulatory process and competition. Although the Company
currently estimates that its cash and cash equivalents on hand will be
sufficient to finance its working capital and other requirements for a period of
approximately two years, there can be no assurance that the Company's financial
resources will not be exhausted sooner. Thereafter, if the Company is not
profitable, it will need to raise additional funds through public or private
financings, including equity financings, which may be dilutive to stockholders.
There can be no assurance that the Company will be able to raise additional
funds if its capital resources are exhausted, or that funds will be available on
terms attractive to the Company or at all. If adequate funds are not available,
the Company may be required to reduce materially its proposed operations.
PRODUCT LIABILITY
The sale of any over-the-counter consumer product may result in claims of
adverse reactions by users. Although the Company has no intention of marketing
any product without reasonable belief in its safety and efficacy when used in
accordance with its instructions, misuse of the Company's products may result in
consumer injury. In addition, future developments, including possible adverse
medical studies and associated negative publicity, could have a material adverse
impact on the market for the Company's products and on its results of
operations. Further, the Company may be subject to certain consumer claims and
informal complaints relating to its products that are incidental and routine to
its business and for which the Company intends to maintain insurance coverage.
The Company currently has product liability insurance with an aggregate limit
of $1,000,000. In addition, the Company has an umbrella policy of $10,000,000 in
excess of the product liability insurance. Product liability insurance coverage
is expensive and subject to many exclusions, and there can be no assurance that
the Company will be able to maintain its current insurance coverage or to obtain
additional insurance coverage in sufficient amounts or on favorable terms.
Exclusions or damage limitations may render any insurance coverage obtained
insufficient to protect the Company adequately from the successful assertion of
a product liability claim. There can be no assurance that the Company's present
or future insurance coverage will be sufficient to satisfy product liability
claims, if any, made against the Company with respect to injuries arising from
the use of such products. In the event of a successful product liability claim
against the Company, the insufficiency of insurance coverage and the negative
publicity from such a suit could have a material adverse effect on the Company
and jeopardize its ability to engage in its contemplated business activities.
There also can be no assurance that the Company will be able to increase such
insurance coverage or to maintain such coverage on acceptable terms. If the
Company's insurance coverage were to lapse or be terminated, then the Company
would have no insurance coverage for claims arising subsequent to the lapse or
termination of the policy. Product liability claims successfully asserted after
the lapse or termination of the policy could have a materially adverse effect on
the Company.
DEPENDENCE ON KEY PERSONNEL
The success of the Company will be largely dependent upon the personal efforts
of Dr. Steven R. Fox, D. Brooks Cole, Norman Usen and Anthony E. Winston. The
loss of the services of any of such persons could have a material adverse effect
on the Company's business and prospects. The Company has entered into an
employment agreement with Dr. Fox as Chairman of the Board and Chief Executive
Officer, which expires in 1999. The Company has also entered into an employment
agreement with Mr. Cole as President and Chief Operating Officer pursuant to
which Mr. Cole serves at the pleasure of the Board of Directors. Although the
Company has entered into employment agreements with each of the aforementioned
individuals, there can be no assurance that the Company will be able to retain
their services. The success of the Company will also be dependent upon its
ability to hire and retain additional qualified management, marketing and
financial personnel. The Company will compete with other companies with greater
financial and other resources for such personnel.
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<PAGE>
CONTROL BY PRINCIPAL STOCKHOLDERS
The Company's directors, executive officers and principal stockholders
beneficially own approximately 33.3% of the Common Stock. Consequently, they
have the ability to significantly influence the election of the Company's
directors and the outcome of all other issues submitted to the Company's
stockholders.
NO ASSURANCE OF ACTIVE OR CONTINUED PUBLIC MARKET; VOLATILITY OF STOCK PRICE
Although a public trading market for the Common Stock currently exists, there
can be no assurance that such trading market will provide significant liquidity
with regard to the Common Stock or that such market will be sustained.
Trading volume and prices for the Common Stock have been and could continue to
be subject to wide fluctuations in response to quarterly variations in
operations, financial results, announcements with respect to sales and earnings,
technological innovations, new product developments, the sale or attempted sale
of a large amount of securities in the public market, and other events or
factors that cannot be foreseen or predicted by the Company. In addition,
various factors affecting consumer products companies, as well as price and
volume volatility affecting small and emerging growth companies generally, but
not necessarily related to their particular operating performance, may have a
significant impact on the market price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of Common Stock by existing stockholders pursuant to Rule 144
("Rule 144") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to registration rights granted to certain holders of
warrants to purchase the Common Stock, or pursuant to other registrations or
exemptions from registration under the Securities Act, could have an adverse
effect on the price of the shares of Common Stock. As of April 7, 1998, the
Company had approximately 10,137,393 shares of Common Stock outstanding. In
addition, the Company has reserved for issuance (i) 1,255,989 shares of Common
Stock upon exercise of options granted under the Company's 1993 Stock Option
Plan (the "1993 Plan"), (ii) 140,071 shares upon exercise of options granted
under the Company's 1997 Stock Option Plan (the "1997 Plan"), (iii) 609,929
shares upon the exercise of options available for grant under the 1997 Plan,
and (iv) 746,250 shares upon exercise of outstanding warrants (the "Warrants").
Of the 10,137,393 shares of Common Stock issued and outstanding, 1,700,000
were sold publicly in the Company's October, 1996 initial public offering,
2,300,000 shares were sold publicly in the Company's October, 1997 second public
offering, approximately 534,047 shares have been sold publicly pursuant to Rule
144, and 635,400 shares may be sold publicly pursuant to the Registration
Statement of which this Prospectus is a part. The remaining 4,952,194
outstanding shares of Common Stock are "restricted securities," as that term is
defined in Rule 144, and may only be sold pursuant to a registration statement
under the Securities Act or an applicable exemption from registration
thereunder, including exemptions provided by Rule 144. All of such shares are
presently eligible for resale under Rule 144. In addition, holders of 558,399
shares of common stock and warrants to purchase 631,250 shares of common stock
at prices ranging from $3.60 to $5.75 per share have three demand registration
rights exercisable until October 24, 2001, and unlimited piggyback registration
rights exercisable until January 23, 2003 (subject to certain limitations), and
holders of warrants to purchase 140,000 shares of common stock at $8.40 per
share have one demand registration right and unlimited piggyback registration
rights exercisable until October 29, 2001. Employees, consultants, and other
eligible holders of options to purchase approximately 1,107,722 shares of Common
Stock granted under the 1993 Plan and the 1997 Plan also have the right to
exercise their options and immediately sell the shares of Common Stock received
pursuant to a registration statement on Form S-8 filed with the Securities and
Exchange Commission on February 13, 1998. No prediction can be made as to the
effect that future sales of Common Stock, or the availability of shares of
Common Stock for future sales, will have on the market prices for the Common
Stock prevailing from time to time. Sales of substantial amounts of Common
Stock, or
-9-
<PAGE>
the perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock and could impair the Company's ability to
raise capital through the future sale of its equity securities.
ISSUANCE OF PREFERRED STOCK; ANTITAKEOVER PROVISIONS OF DELAWARE LAW
The Company's Amended Certificate of Incorporation authorizes the issuance of
5,000,000 shares of Preferred Stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without obtaining stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. In the event of issuance, the
Preferred Stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in the control of the Company.
The Board of Directors has also approved an amendment to the Company's Amended
Certificate of Incorporation to authorize the classification of the Board of
Directors into two classes as nearly equal in size as possible, each class being
elected for staggered two-year terms, and an amendment to the Company's Amended
and Restated By-Laws (the 'By-Laws") to establish procedures with respect to the
nomination of persons for election as Directors, including a notification
requirement. Both the amendment to the Amended Certificate of Incorporation and
the amendment to the By-Laws, if approved by the vote required under Delaware
law at the Company's Annual Meeting of Stockholders to be held on May 19, 1998,
may have the effect of discouraging third party attempts to acquire control of
the Company. Certain provisions of Delaware law may also discourage third party
attempts to acquire control of the Company.
USE OF PROCEEDS
The Shares are being offered for sale solely by the Selling Stockholders
pursuant to certain registration rights granted to them by the Company in the
Private Offering. Accordingly, the Company will not receive any proceeds from
the sale of the Shares.
-10-
<PAGE>
SELLING STOCKHOLDERS
The table below sets forth, with respect to each Selling Stockholder, based
upon information available to the Company as of the date hereof, the number of
shares of Common Stock beneficially owned or underlying other securities
beneficially owned, the number of shares to be sold; and the number and
percentage of outstanding Common Shares beneficially owned before and after the
sale of the Shares offered hereby. An aggregate 628,400 Shares are being offered
for the accounts of the Selling Stockholders. Although there can be no assurance
that the Selling Stockholders will sell any or all of the Shares, the following
table assumes that each of the Selling Stockholders will sell all Shares offered
by this Prospectus.
<TABLE>
<CAPTION>
Amount and Shares Percent of Class(2)
Nature Beneficial Shares Beneficially -------------------
Ownership to Be Owned After Before After
Name (1) Sold Offering Offering Offering
- ---- --- ---- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Allen & Company 154,288(3) 28,000 126,288 1.5% 1.2%
Incorporated
Gamma North Peel 56,250(4) 25,000 31,250 * *
Laboratory Limited
Arthur B. Modell 42,628(5) 10,000 32,628 * *
Ambit & Co. 50,000(6) 50,000 0 * 0
SBSF Biotechnology 66,000(6) 66,000 0 * 0
Fund, L.P.
Ranger Investments, L.P. 23,000(6) 23,000 0 * 0
Zweig-DiMenna Special 15,900(6) 15,900 0 * 0
Opportunities, L.P.
Zweig-DiMenna 61,800(6) 61,800 0 * 0
International Ltd.
Barbara Fromm 1,000(6) 1,000 0 * 0
Fromm Revocable Trust 30,000(6) 30,000 0 * 0
Larry Flinn 38,400(6) 38,400 0 * 0
John W. Gildea 5,000(6) 5,000 0 * 0
Goldman Grandchildren 3,000(6) 3,000 0 * 0
Irrevocable Trust
Hare & Co. 200,000(6) 200,000 0 2.0% 0
Haussmann Holdings N.V. 13,900(6) 13,900 0 * 0
Maurice D. Kent 5,500(6) 5,500 0 * 0
Lawrence J. Kent 5,500(6) 5,500 0 * 0
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Amount and Shares Percent of Class(2)
Nature Beneficial Shares Beneficially -------------------
Ownership to Be Owned After Before After
Name (1) Sold Offering Offering Offering
- ---- --- ---- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Friends Fromm Institute 10,000(6) 10,000 0 * 0
for Life Long Learning
SBSF Biotechnology 9,000(6) 9,000 0 * 0
Partners, L.P.
Weyerhauser Company 7,400(6) 7,400 0 * 0
Master Retirement Trust
Vange, LP 20,000(6) 20,000 0 * 0
</TABLE>
_________________________
* Represents less than 1%
(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from the date hereof upon the exercise of warrants or options. Each
beneficial owner's percentage ownership is determined by assuming that
options or warrants that are held by such person (but not those held by any
other person) and which are exercisable within 60 days from the date hereof
have been exercised.
(2) Based on 10,121,641 shares of Common Stock issued and outstanding as of
April 1, 1998.
(3) Includes 28,000 shares issued in the June 1997 Offering, and 13,788 shares
of Common Stock and 112,500 Warrants issued in connection with a private
placement in January 1996.
(4) Includes 25,000 shares issued in the June 1997 Offering and 31,250 shares
issued in connection with a private placement in October 1995.
(5) Includes 10,000 shares issued in the June 1997 Offering and 32,628 shares
issued in connection with a private placement in June 1993.
(6) Represents shares acquired in the June 1997 Offering.
-12-
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders are offering the Shares for their own account and
not for the account of the Company. The Shares may be sold from time to time by
the Selling Stockholders or by pledgees, donees, transferees or other
successors in interest to the Selling Stockholders directly to purchasers or,
alternatively, may be offered from time to time through agents, brokers, dealers
or underwriters, who may receive compensation in the form of concessions or
commissions from the Selling Stockholders or purchasers of the Shares. Sales of
the Shares may be made in one or more transactions on the NASDAQ National Market
or in privately negotiated transactions or otherwise, and such sales may be made
at the market price prevailing at the time of sale, a price related to such
prevailing market price or a negotiated price. The sale of the Shares is
subject to the Prospectus delivery and other requirements of the Securities Act.
Under the Exchange Act and the regulations thereunder, any person engaged in a
distribution of the shares of Common Stock of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the Common Stock of the Company during the applicable "cooling off"
periods prior to the commencement of such distribution. In addition, and
without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder including, without limitation, Regulation M, which provisions may
limit the timing of purchases and sales of Common Stock by the Selling
Stockholders.
To the extent required, the Company will use its best efforts to file, during
any period in which offers or sales are being made, one or more supplements to
this Prospectus to describe any material information with respect to the plan of
distribution not previously disclosed in this Prospectus.
COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
LEGAL MATTERS
Snow Becker Krauss P.C., 605 Third Avenue, New York, New York 10158 is acting
as counsel to the Company and has passed upon the legality of the shares of
Common Stock offered hereby.
EXPERTS
The financial statements of the Company at December 31, 1997 and for each of
the two years in the period ended December 31, 1997 incorporated herein by
reference to the Company's Form 10-KSB for the fiscal year ended December 31,
1997 have been included in reliance upon the report of BDO Seidman LLP,
independent certified pubic accountants, given upon the authority of said firm
as experts in accounting and auditing.
INTERESTS OF NAMED EXPERTS AND COUNSEL
SBK Investment Partners, a partnership consisting of members of Snow Becker
Krauss P.C., counsel to the Company, owns 96,600 shares of Common Stock and
holds an option to purchase 32,628 shares of Common Stock.
-13-
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
OR INCORPORATED BY REFERENCE INTO THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. SUBJECT TO ANY DUTIES AND
OBLIGATIONS UNDER APPLICABLE SECURITIES LAWS TO UPDATE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN, NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
__________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 2
Information Incorporated by Reference... 2
Business Summary........................ 3
Risk Factors............................ 3
Use of Proceeds......................... 10
Selling Stockholders.................... 11
Plan of Distribution.................... 12
Commission Position on Indemnification
for Securities Act Liabilities....... 13
Experts................................. 13
Interests of Named Experts and Counsel.. 13
</TABLE>
================================================================================
ENAMELON, INC.
628,400 SHARES
COMMON STOCK
--------------------------
PROSPECTUS
---------------------------
APRIL 22, 1998
================
================================================================================
