As filed with the Securities and Exchange Commission on April 24, 2000
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
SYMBOLLON CORPORATION
(Exact name of registrant as specified in its charter)
-----------
Delaware 36-3463683
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
------------
37 Loring Drive
Framingham, MA 01702
(508) 620-7676
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
Paul C. Desjourdy
President and Chief Operating Officer, Chief Financial Officer
Symbollon Corporation
37 Loring Drive
Framingham, MA 01702
(508) 620-7676
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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With a copy to:
Norman Alpert, Esq.
RubinBaum LLP
30 Rockefeller Plaza
New York, NY 10112
(212) 698-7700
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Approximate date of commencement 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. [ ]
<PAGE>
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 the delivery of the
prospectus is expected to be made pursuant to Rule 434, please check the
following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- ---------------------------------------------------- ------------- ----------------- ------------------ --------------
Title of each class of securities to be registered Amount to Proposed Proposed maximum Amount of
be maximum aggregate registration
registered offering price offering price fee
per share (1)
- ---------------------------------------------------- ------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C>
Class A Common Stock 836,685 $5.90625 $4,941,670.78 $1,304.60
- ---------------------------------------------------- ------------- ----------------- ------------------ --------------
Class A Common Stock underlying warrants 897,675 $6.00 $5,386,050.00 $1,421.92
- ---------------------------------------------------- ------------- ----------------- ------------------ --------------
Total 1,734,360 $10,327,721 $2,726.52
- ---------------------------------------------------- ------------- ----------------- ------------------ --------------
</TABLE>
(1) The price of $5.90625 per share, which was the average of the high and low
sales price of the Class A Common Stock on the Nasdaq SmallCap Market on April
17, 2000, is set forth solely for the purpose of calculating the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended (the
"Securities Act"). The price of $6.00 per share, which is the highest exercise
price of the warrants, is set forth solely for the purpose of calculating the
registration fee pursuant to Rule 457(g)(1) under the Securities Act.
Pursuant to Rule 416(a) under the Securities Act of 1933, this registration
statement also covers such indeterminable additional shares as may become
issuable as a result of any future stock splits, stock dividends of similar
transactions. The registrant hereby amends this registration 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 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.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED APRIL 24, 2000
SYMBOLLON CORPORATION
1,734,360 SHARES OF CLASS A COMMON STOCK
This prospectus relates to the proposed sale of up to 1,734,360 shares of our
common stock by certain selling stockholders, of which 897,675 shares are
underlying warrants. These selling stockholders acquired their shares and
warrants in a 1999 private placement of our securities. We will not
receive any of the proceeds from the sale of these shares.
Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"SYMBA". On April 17, 2000, the last reported sale price of our common stock on
the Nasdaq SmallCap Market was $6.00 per share.
You should read this entire prospectus, the documents we incorporate by
reference and any amendments or supplements to this prospectus carefully before
you make your investment decision. See "Risk factors" beginning on page 5 for
certain risks you should consider before you purchase any shares.
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.
The information contained 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 it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this prospectus is ________, 2000
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information........................................-2-
Note Concerning Forward Looking Statements.................................-3-
Symbollon Corporation......................................................-3-
Risk Factors...............................................................-5-
Use of Proceeds...........................................................-16-
Selling Stockholders......................................................-16-
Plan of Distribution......................................................-18-
Legal Matters.............................................................-20-
Experts...................................................................-20-
You should rely only on the information contained or incorporated by reference
in this prospectus and in any accompanying prospectus supplement. No one has
been authorized to provide you with different information.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, commonly called
the SEC. You may read and copy any document that we file at the SEC's Public
Reference Room at 450 Fifth Street, N.W. Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. Our SEC filings are also available to you free of charge at the
SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information 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
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supercede 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 until this offering has been completed:
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o Our Annual Report on Form 10-KSB for the year ended
December 31, 1999.
o Our Proxy Statement for the 2000 Annual Meeting of
Stockholders to be held on May 24, 2000.
o The description of our Class A Common Stock contained
under the heading "Description of Securities" in our
Registration Statement on From SB-2 (Registration
Statement No. 33-68828) which is incorporated by
reference in our Registration Statement on Form 8-A
under the Securities Exchange Act of 1934, dated
November 12, 1993, including any amendments or reports
filed for the purpose of updating such description.
You may request free copies of these filings by writing or
telephoning us at our principal office, which is located at the following
address:
Symbollon Corporation
37 Loring Drive
Framingham, MA 01702
Attention: Chief Financial Officer
(508) 620-7676
NOTE CONCERNING FORWARD LOOKING STATEMENTS
All statements contained in this Prospectus and the documents we
incorporate by reference that are not statements of historical fact are
"forward-looking statements." Sometimes these statements contain words like
"believes," "belief," "plans," "anticipates," "expects," "estimates, "may,"
"will" or similar terms. Forward-looking statements involve known or unknown
risks, uncertainties and other factors that could cause our actual results to be
materially different from historical results or from any future results
expressed or implied by the forward-looking statements. The "Risk Factors"
section of this Prospectus, beginning on page 5, summarizes certain of the
material risks and uncertainties that could cause our actual results,
performance or achievements to differ materially from what we say in this
Prospectus and in the documents we incorporate by reference. The Risk Factors
apply to all of our forward-looking statements. Given these uncertainties, you
should not place undue reliance on these forward-looking statements, which speak
only as of the date of this prospectus. We will not revise these forward-looking
statements to reflect events or circumstances after the date of this Prospectus
or to reflect the occurrence of unanticipated events.
SYMBOLLON CORPORATION
We are engaged in development and commercialization of proprietary
iodine-based pharmaceutical agents and antimicrobials. We are a Delaware
corporation formed in August 1993 and are the successor to a corporation
initially formed in July 1986. Our principal executive office is located at 37
Loring Drive, Framingham, Massachusetts 01702 and our telephone number is
(508) 620-7676.
We have developed proprietary iodine technology that we believe
maximizes the "therapeutic index" of iodine. The "therapeutic index" of a drug
is the ratio of the largest safe dose to the smallest effective dose. Iodine has
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been shown to be a rapid acting, broad-spectrum antimicrobial and an effective
therapeutic for certain pharmaceutical applications. Our technology accomplishes
this by controlling the ratio of molecular iodine (I2), to the other inactive
species of iodine typically present in solution. We believe that our
iodine-based technology has potential use in several product application areas,
notably women's healthcare and infection control. Our current product
development work is focused on proposed product applications for a treatment for
fibrocystic breast disease and the treatment of various dermatological and
ophthalmic diseases.
Bovine Teat Sanitizer Product
Since 1995, we have marketed a bovine teat sanitizer, "IodoZyme(R)",
through West Agro, Inc. of Kansas City, MO, a subsidiary of the Tetra Laval
Group and a leading manufacturer and distributor of iodophor-based products for
dairy use. 1999 sales for IodoZyme were $425,209.
Women's Healthcare
We have developed an oral dosage form of our technology which generates
molecular iodine in situ in the stomach of the patient. We refer to this tablet
as IoGen(TM). Based on the available scientific literature, we believe that
IoGen may be effective in the prevention and treatment of certain female health
problems, including some types of pre-menopausal breast cancer, fibrocystic
breast disease and endometriosis.
Fibrocystic breast disease is a benign breast condition affecting
approximately thirty percent of the women of childbearing age, which represents
in the United States about 24 million women. However, estimates indicate that
only 3.3 million of those women have been formally diagnosed with the disease.
During 1998, we began a multi-center Phase II clinical trial evaluating
IoGen in patients with moderate to severe fibrocystic breast disease to evaluate
the clinical effects and safety of IoGen at three dose levels compared with
placebo in a group of approximately 100 patients. We anticipate that the data
from this trial will be available in the third quarter of 2000.
During 1999, we also conducted a Phase I clinical trial of IoGen to
determine dose proportionality and bioavailability of the drug. The results from
this Phase I study should be available in the second quarter of 2000. If the
results from these clinical trials warrant, we plan to continue the clinical
development of IoGen. We may need additional resources to do this. If the
clinical development of IoGen does continue, we anticipate seeking a corporate
relationship with a pharmaceutical company to commercialize IoGen.
Ophthalmology and Dermatology Applications
We currently plan to pursue development of ophthalmic and
dermatological products based on our technology. Resources allowing, our goal is
to initiate human clinical trials in dermatology. Since 1997, our efforts at
developing ophthalmic products have been made pursuant to a collaboration and
sale/licence agreement with Bausch & Lomb Pharmaceuticals, Inc. However, this
program has experienced delays and is subject to Bausch & Lomb's right to
terminate. A collaboration with another company to develop dermatological
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products was terminated by that company in 1999.
Other Potential Applications
We believe that our technology has potential applications in the
development of a variety of human healthcare and other products such as topical
anti-infectives, oral care and hygiene products, wound care applications, and as
a preventive for urinary tract infection. Given our limited resources, although
certain preliminary research, development and regulatory activities may be
undertaken by us in some of these potential product areas, our ability to fund
the development and commercialization of such applications will depend in large
part on entering into product development and commercialization agreements with
corporate partners.
RISK FACTORS
Investing in our common stock is highly speculative and risky. You
should be able to bear a complete loss of your investment. Before making an
investment decision, you should carefully consider the following risk factors.
If any event or circumstance described in the following risk factors actually
occurs, it could materially adversely affect our business, financial condition
or results of operations. The risks and uncertainties described below are not
the only ones which we face. There may be additional risks and uncertainties not
presently known to us or that we currently believe are immaterial which could
also have a negative impact on our business, financial condition, or results of
operations.
Our future revenues are dependent on corporate licensing relationships
We generate our revenues from corporate licensing arrangements. In
1999, a development partner terminated its relationship covering the use of our
technology in dermatology. All of our 1998 and 1999 revenues came from our
remaining relationships with West Agro, Inc. and Bausch & Lomb. They can
terminate their collaboration with us at any time. Since the development program
with Bausch & Lomb has not progressed as quickly as expected, they might choose
to terminate their relationship with us. If that happens, and we are not able to
enter into new licensing relationships, our revenues for 2000 and beyond will
significantly decrease.
We have no data that IoGen will effectively treat fibrocystic breast disease
The Phase II clinical trial that we initiated in 1998 is the first
trial run on IoGen. We did not conduct any animal or human studies to evaluate
the potential effectiveness of IoGen before launching the Phase II trial. Our
decision to invest in the clinical development of IoGen was based on information
we obtained from the scientific literature. That literature indicated that prior
studies utilizing iodine to treat fibrocystic breast disease reported clinical
improvement in over 60% of the patients. We expect to complete the IoGen Phase
II trial in the summer of 2000. We do not know if the IoGen trials will be
successful.
We lack the resources to conduct the necessary clinical trials required prior to
commercial sales of our potential drugs
Any drug candidates we develop will require significant additional
research and development efforts, including extensive preclinical (animal and in
vitro data) and clinical testing and regulatory approval, prior to commercial
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sale. In addition to IoGen, our other active drug development efforts are in
dermatology and ophthalmology. We have not initiated our clinical trials in
dermatology or ophthalmology. Under our arrangement with Bausch & Lomb, they are
financially responsible for any clinical trials conducted in ophthalmology. We
must pay for any future clinical trials in women's healthcare and dermatology.
Our ability to conduct the necessary clinical trials depends on our generating
the resources required to pay for this from future revenues, financings or
licensing relationships. We may not be able to generate the necessary financial
resources.
We may lose control over development and commercialization of drugs after we
license them
A key element of our strategy has been to fund most of our product
development programs through collaborative agreements with major pharmaceutical
companies. As part of these licensing relationships we may have to grant to the
other party control over the development and commercialization process. If we
enter into these relationships, we incur risks beyond those related to whether
our technology can be formulated into an acceptable drug compound under
regulatory requirements. These new risks include:
o the business priorities of our partner;
o the committed resources to the program;
o changes in management or ownership of our partner; and
o internal competition with other drug candidates of our partner.
For example, our only existing collaborative agreement is with Bausch &
Lomb. Under that collaboration, Bausch & Lomb is responsible for:
o conducting preclinical and clinical trials;
o obtaining required regulatory approvals of drug candidates;
o manufacturing any resulting products; and
o commercializing any resulting products.
Bausch & Lomb is not obligated to develop or commercialize any drug
candidates under the collaboration. Bausch & Lomb alone controls the amount and
timing of resources dedicated by it to the program. Accordingly, Bausch & Lomb
controls development progress. Moreover, Bausch & Lomb may view certain drug
candidates developed utilizing Symbollon's technology as competitive with its
own drugs or drug candidates. Accordingly, Bausch & Lomb may develop its
existing or alternative technologies in preference to the drug candidates based
on our technology. In addition, Bausch & Lomb may terminate the relationship at
any time. If they did, our ability to further develop an ophthalmic product
would be severely hampered without greater resources than we presently have.
West Agro markets and distributes IodoZyme under an exclusive marketing
and supply agreement which covers IodoZyme as well as other products which may
be developed for use in dairy facilities. IodoZyme's future growth and
profitability will depend, in large part, on the success of West Agro's
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personnel and others conducting marketing efforts on their behalf in fostering
acceptance of IodoZyme as an alternative to other available products. West Agro
also markets and distributes products which are directly competitive with
IodoZyme.
We have had difficulty raising additional funds
We will require substantial additional funds to run our company.
We need funds for
o developing our potential products;
o operating the company;
o pursuing regulatory clearances; and
o protecting our intellectual property rights.
We intend to seek additional funds through public or private financing
or collaborative or other arrangements with corporate partners. We have not been
able to enter into a new corporate relationship since 1997. We believe that
before we can enter into any significant new relationships, we will have to
generate clinical results on our potential drugs. Our limited financial
resources may require us to finance the cost of generating these results. During
1999, we had difficulty raising funds by selling equity. We obtained stockholder
approval to sell up to 1,250,000 shares, with a like number of warrants. We were
only able to sell 836,685 shares and warrants.
Our common stock remains thinly traded. There is very little market
support for our common stock. So long as these conditions exist, future
financings will continue to be difficult. Ultimately, this could impact the
terms and conditions upon which we are able to sell securities and raise funds.
If adequate funds were not available when needed, we would be forced to limit
the scope of our development or perhaps cease operations.
We have a history of operating losses that may continue in the future
We have incurred a cumulative operating loss of $6,444,769 through
December 31, 1999. Our losses have resulted principally from costs incurred in
research and development activities related to our efforts to develop IodoZyme,
IoGen and other potential product formulations, and from the associated
administrative and patent costs. We expect to incur additional significant
operating losses over the next several years and expect cumulative losses to
increase substantially due to expanded development efforts, preclinical and
clinical trials. In the next few years, our revenues may be limited to sales of
IodoZyme, contract research payments and licensing milestone payments under the
Bausch & Lomb agreement (unless terminated) and any amounts received under other
research or development collaborations that we may establish. Ultimately, our
long term profitability is dependent on our ability to
o complete the clinical development of our product candidates,
o develop and obtain patent protection,
o obtain regulatory approvals for our product candidates,
o manufacture the resulting products and
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o commercialize the resulting products.
Based on the current status of our development efforts, we will not
receive revenues or royalties from commercial sales for a significant number of
years, if at all. Our failure to receive significant revenues or achieve
profitable operations would impair our ability to sustain operations.
Patent and proprietary rights are difficult to obtain and enforce
Obtaining and enforcing patent and proprietary rights that cover our
product candidates and processes is essential to our future success. Because of
the length of time and considerable expense associated with bringing new drug
candidates through the development and regulatory approval process to the
marketplace, the pharmaceutical industry has traditionally placed considerable
importance on obtaining patent and trade secret protection for significant new
technologies, products and processes. However, legal standards relating to the
validity of patents covering pharmaceutical and biotechnological inventions and
the scope of claims made under such patents are still developing. There is no
consistent policy regarding the breadth of claims allowed in biotechnology
patents. The patent position of a biotechnology firm is uncertain and involves
complex legal and factual questions.
We might not receive any additional patents from the patent
applications we have filed. Further, any rights we may have under issued patents
might not provide us with significant protection against competitive products or
otherwise be commercially viable. Any existing or future patents issued to, or
licensed by, us may subsequently be challenged, infringed upon, invalidated or
circumvented by others. In addition, patents may have been granted, or may be
granted, to others covering products or processes that are necessary or useful
to the development of our product candidates. Our development, manufacture and
sale of product candidates could be severely restricted or prohibited if they
are found to infringe upon the patents, or otherwise impermissibly utilize the
intellectual property, of others. In such event, we may be required to obtain
licenses from third parties. We may not be able to obtain such licenses on
acceptable terms, or at all. There has been significant litigation in the
industry regarding patents and other proprietary rights. If we become involved
in litigation regarding our intellectual property rights or the intellectual
property rights of others, we might incur substantial litigation costs and have
to pay substantial damages.
In addition to patent protection, we rely on trade secrets, proprietary
know-how and technological advances which we seek to protect, in part, by
confidentiality agreements with our collaborative partners, employees and
consultants. But these confidentiality agreements might be breached, and we
might not have adequate remedies for any such breach. Moreover, our trade
secrets, proprietary know-how and technological advances might otherwise become
known or be independently discovered by others.
The outcome of clinical drug development cannot be predicted
Our drug candidates will be subject to extensive preclinical and
clinical trials to demonstrate their safety and efficacy in humans before we can
obtain regulatory approvals for the commercial sale of any of our potential
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products. We are dependent on our collaborative partners to conduct clinical
trials for the drug candidates covered by our collaborative agreements and may
become dependent on other third parties to conduct future clinical trials of our
internally developed drug candidates. Our only experience in conducting
preclinical or clinical trials is with IoGen.
We can not predict the successful outcome of our preclinical or
clinical trials for our drug candidates. Companies in the biotechnology industry
have suffered significant setbacks in advanced clinical trials, even after
demonstrating promising results in earlier trials. The failure to adequately
demonstrate the safety and efficacy of a drug candidate under development could
delay or prevent regulatory approval of the drug candidate and would have a
material adverse effect on our business, operating results and financial
condition. Our drug candidates will be subject to the risks of failure inherent
in the development of pharmaceutical products based on new technologies. These
risks include the failure
o to satisfy applicable regulatory standards for safety and
effectiveness;
o to receive necessary regulatory clearances,
o to manufacture the product on a large scale,
o to develop into commercially viable products,
o to obtain and enforce adequate proprietary protection for such
product or
o to avoid infringement of third party proprietary rights when
marketing such products.
The drug industry is extremely competitive
The biotechnology and pharmaceutical industries are intensely
competitive and subject to rapid and significant technological change. Our
competitors in the United States and elsewhere are numerous and include, among
others, major multinational pharmaceutical and chemical companies, specialized
biotechnology firms and universities and other research institutions. Most of
these competitors employ greater financial and other resources, including larger
research and development staffs and more effective marketing and manufacturing
organizations, than we or our collaborative partners. Acquisitions of competing
companies and potential competitors by large pharmaceutical companies or others
could enhance financial, marketing and other resources available to such
competitors. As a result of academic and government institutions becoming
increasingly aware of the commercial value of their research findings, such
institutions are more likely to enter into exclusive licensing agreements with
commercial enterprises, including our competitors, to market commercial
products. Our competitors may succeed in developing technologies and products
that are more effective or less costly than any which we develop or which make
our technology and future products obsolete and noncompetitive.
In addition, most of our competitors have greater experience in
conducting clinical trials and obtaining United States Food and Drug
Administration (commonly called FDA) and other regulatory approvals.
Accordingly, our competitors may succeed in obtaining FDA or other regulatory
approvals for drug candidates more rapidly. Companies that complete clinical
trials, obtain required regulatory agency approvals and commence commercial sale
of their products before their competitors may achieve a significant competitive
advantage, including certain patent and FDA marketing exclusivity rights that
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would delay our ability to market certain products. We are aware of one company,
Mimetix Inc., that has conducted human clinical trials in the United States and
Canada utilizing an iodine-based compound for the treatment of fibrocystic
breast disease. If Mimetix receives marketing approval for its drug compound
before we do, it could adversely affect our ability to receive marketing
approval, or if approved, our ability to sell our product. Products resulting
from our technology may not be able to compete successfully with competitors'
existing products or products under development.
Drug development and commercialization is subject to extensive government
regulation
The FDA and comparable agencies in foreign countries impose substantial
requirements upon the introduction of pharmaceutical products through lengthy
and detailed preclinical, laboratory and clinical testing procedures, sampling
activities and other costly and time-consuming procedures to establish their
safety and efficacy. All of our product candidates will require governmental
approvals for commercialization, none of which we have obtained. Satisfaction of
these requirements typically take a significant number of years and can vary
substantially based upon the type, complexity and novelty of the product.
Government regulation also affects the manufacturing and marketing of
pharmaceutical products. The effects of government regulation on our potential
products are far-reaching, and include
o possible delays in or denials to market them,
o costly procedural requirements may be imposed upon our activities,
o competitive advantages may be obtained by companies with greater
resources or experience,
o possible limitations imposed on the indicated use for which they
may be marketed and
o continual review and periodic inspection of the manufacturing
facilities for them.
The regulatory standards are applied stringently by the FDA and other regulatory
authorities and failure to comply can, among other things, result in fines,
denial or withdrawal of regulatory approvals, product recalls or seizures,
operating restrictions and criminal prosecution.
Teat sanitizers, although considered animal drugs by the FDA, do not
currently require clearance by the FDA prior to marketing. The FDA, however,
issued draft guidelines in 1993 governing teat dips and no assurance can be
given that clearance by the FDA will not be required in the future. Required
compliance with these guidelines or other FDA requirements which may be adopted,
would have a significant adverse effect on the marketing of IodoZyme and,
consequently, on our results of operations.
As with many biotechnology and pharmaceutical companies, we are subject
to numerous environmental and safety laws and regulations. Any violation of, and
the cost of compliance with, these regulations could materially adversely affect
our business, operating results and financial condition.
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We are dependent on the continued employment of our executive officers
We are highly dependent upon the efforts of our senior management and
scientific team, including the services of Dr. Jack H. Kessler, the Chief
Executive Officer, Chief Scientific Officer, Secretary and Chairman of the Board
of Directors, and Paul C. Desjourdy, the President, Chief Operating Officer,
Chief Financial Officer, General Counsel, Treasurer and a director of Symbollon.
Losing the services of one or both of these individuals might impede the
achievement of our development objectives and could have a material adverse
effect on our business. Because of the specialized scientific nature of our
business, we are highly dependent upon our ability to attract and retain
qualified scientific and technical personnel. Major pharmaceutical and chemical
companies, specialized biotechnology firms and universities and other research
institutions compete intensely for qualified personnel in our field of activity.
We may not be able to continue to attract and retain the qualified personnel
necessary for the development of our business. Loss of the services of, or
failure to recruit, key scientific and technical personnel could adversely
affect our business, operating results and financial condition.
We have no marketing experience within our company
We have granted marketing rights to our collaborative partners with
respect to products developed based on our technology, and we intend to rely on
similar arrangements with others for the marketing and distribution of our
products currently under development, including IoGen, if and when successfully
developed and approved by applicable regulatory agencies. This results, and will
result, in our not having control over some or all of the marketing and
distribution of these products. Although we have no present plans to do so, we
may, in the future, determine to directly market certain of our proposed
products. We have no marketing experience and significant additional capital
expenditures and management resources would be required to develop a direct
sales force. In the event we elect to engage in direct marketing activities,
there can be no assurance that we can obtain the requisite funds or attract and
retain the human resources necessary to successfully market any products.
We have limited manufacturing experience within our company
IodoZyme is currently produced through a combination of internal
manufacturing activities and external contract manufacturers. We have granted
manufacturing rights to Bausch & Lomb with respect to products developed under
our collaboration, and we intend to rely on similar arrangements with others for
the manufacturing of our products currently under development, if and when
successfully developed and approved by applicable regulatory agencies. Our
dependence on third parties for manufacturing may adversely affect our ability
to develop and deliver products on a timely and competitive basis. If we are
unable to develop or contract for manufacturing on acceptable terms, our ability
to conduct preclinical and clinical trials with our drug candidates will be
adversely affected. This could result in delays in the submission of drug
candidates for regulatory approvals or in the initiation of new development
programs, which in turn could materially impair our competitive position and the
possibility of achieving profitability.
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Except for limited experience regarding IodoZyme, we have no experience
with the manufacture of any of our products or proposed products. In the event
we continue to perform our current IodoZyme manufacturing activities in-house,
additional manufacturing space and equipment may be necessary beyond 1999 if our
product volume increases. In addition, if we undertake to directly manufacture
any of our proposed products, we will be required to attract and retain
experienced personnel to develop a manufacturing capability and to comply with
extensive government regulations with respect to our facilities, including among
others, the FDA manufacturing requirements. We may not be able to successfully
establish appropriate manufacturing operations.
Our proposed drug candidates will be impacted by cost reimbursement and drug
pricing uncertainty
The successful commercialization of, and the interest of potential
collaborative partners to invest in, the development of our drug candidates will
depend substantially on reimbursement of the costs of the resulting products and
related treatments at acceptable levels from government authorities, private
health insurers and other organizations, such as health maintenance
organizations. Reimbursement in the United States or elsewhere may not be
available for any products we may develop or, if available, may be decreased in
the future. Limited reimbursement amounts may reduce the demand for, or the
price of, our products, thereby adversely affecting our business. If
reimbursement is not available or is available only to limited levels, we may
not be able to obtain collaborative partners who will manufacture and
commercialize our products, or we may not be able to obtain a sufficient
financial return on our own manufacture and commercialization of any future
products.
Third-party payers are increasingly challenging the prices charged for
medical products and services. Also, the trend toward managed health care in the
United States and the concurrent growth of organizations such as HMOs, which can
control or significantly influence the purchase of health care services and
products, as well as legislative proposals to reform health care or reduce
government insurance programs, may result in lower prices for pharmaceutical
products. The cost containment measures that health care providers are
instituting, and the effect of any health care reform, could materially
adversely affect our ability to sell any of our products if successfully
developed and approved. Moreover, we are unable to predict what additional
legislation or regulation, if any, relating to the health care industry or
third-party coverage and reimbursement may be enacted in the future or what
effect such legislation or regulation would have on our business.
Drug development and commercialization is subject to potential product liability
Our business exposes us to potential liability risks that are inherent
in the testing, manufacturing and marketing of pharmaceutical products. The use
of our drug candidates in clinical trials may expose us to product liability
claims and possible adverse publicity. These risks will expand with respect to
our drug candidates, if any, that receive regulatory approval for commercial
sale. Product liability insurance for the biotechnology industry is generally
expensive, if available at all. Such coverage is becoming increasingly expensive
and we may not be able to retain insurance coverage at acceptable costs or in a
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<PAGE>
sufficient amount. A product liability claim could adversely affect our
business, operating results or financial condition.
Our technology has material incompatibility issues
An important aspect of our present and future product candidates is
that they must be compatible with the surfaces with which they come into
contact. We have ceased efforts to develop a microbicide for dental handpieces
and renal control units as a result of staining and corrosion caused by required
microbicide formulations, and we have encountered problems of staining in
connection with our efforts to develop a high level disinfectant for flexible
endoscopes. We continue to investigate the balance between the level of efficacy
and the need to avoid staining and corrosion. For any proposed product
applications, staining or corrosion from a product candidate could be sufficient
to limit or forestall regulatory approval or, if approved, could adversely
affect market acceptance of such product. We might not be successful in
overcoming any problems of materials incompatibility.
We use hazardous materials in our development and commercial efforts
Our manufacturing and development activities involve the controlled use
and shipment of hazardous chemicals and other materials. Although we believe
that our safety procedures for handling, shipping and disposing of such
materials comply with the standards prescribed by federal, state and local
regulations, we cannot completely eliminate the risk of accidental contamination
or injury from these materials. In the event of such an accident, we could be
held liable for any damages that result and any such liability could exceed the
our resources. There can be no assurance that current or future environmental or
transportation laws, rules, regulations or policies will not have a material
adverse effect on us.
We can issue preferred stock without stockholder approval and we have a
classified Board of Directors
Our Certificate of Incorporation, as amended, authorizes the issuance
of 5,000,000 shares of preferred stock on terms which may be fixed by our Board
of Directors without further stockholder action. The terms of any series of
preferred stock, which may include priority claims to assets and dividends, and
special voting rights, could adversely affect the rights of holders of the
common stock. The issuance of such preferred stock could make a takeover of our
company or the removal of our management more difficult, discourage hostile bids
for control of our company in which stockholders may receive premiums for their
shares of common stock, or otherwise dilute the rights of holders of common
stock and the market price of the common stock. There are no shares of preferred
stock outstanding. Although we have no current plans to issue any shares of
preferred stock, there can be no assurance that we will not do so in the future.
Our Board of Directors is divided into three classes, with only one
class being elected each year and each elected director to serve three years.
This could discourage efforts to obtain control of our company. It makes it more
difficult for stockholders to change the composition of the Board in a
relatively short period of time since at least two Annual Meetings of
Stockholders will be required to effect a change in the majority of the members.
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<PAGE>
We are a development stage company with a volatile stock price
The market prices for securities of emerging and development stage
companies in general, and biopharmaceutical companies in particular, have
historically been highly volatile. Future announcements concerning us or our
competitors, including the results of testing, technological innovations or new
commercial products, government regulations, developments concerning proprietary
rights, litigation or public concern as to safety of products developed by us or
others, may have a significant adverse impact on the market price of our
securities. Over the last 12 months our stock price has ranged from $14.00 to
$1.75.
The volatile price of our stock makes it difficult for investors to
predict the value of their investment, to sell shares at a profit at any given
time, or to plan purchases and sales in advance.
Trading in our stock has been limited, so investors may not be able to sell as
much stock as they want at prevailing prices.
The average daily trading volume in our common stock was approximately
16,600 shares and the average daily number of transactions was approximately 30
over the last three months. If limited trading in our stock continues, it may be
difficult for investors to sell their shares in the public market at any given
time at prevailing prices.
The issuance of additional shares could adversely effect the market price of our
stock
Warrants to purchase 897,675 shares of common stock and options to
purchase 1,084,895 shares of common stock are currently outstanding. All of the
warrants and many of the options are currently exercisable. These options and
warrants are likely to be exercised at a time when we might be able to obtain
additional equity capital on more favorable terms. We have the right to redeem
the warrants if the average closing bid price of our common stock as quoted by
Nasdaq over twenty successive trading day is equal to or greater than:
Between Closing Bid Price
------- -----------------
August 10, 1999 to August 9, 2000 $5.00
August 10, 2000 to August 9, 2001 $6.00
August 10, 2001 to August 9, 2002 $7.00
August 10, 2002 to August 9, 2003 $8.00
Each of the above prices is $1 higher if our common stock is reported
in the over-the-counter market rather than quoted on Nasdaq. On the date of this
prospectus, the exercise price of the warrants is below the market price for the
shares and we would be permitted to give notice of the redemption of the
warrants. A redemption notice would probably cause the warrants to be exercised
and the underlying shares of our common stock to be issued at prices below the
then market price of our common stock. While these options and warrants are
outstanding, they may adversely affect the terms on which we could obtain
additional capital. If the holders of these outstanding options and warrants
sell the common stock received upon exercise, it is likely to have a negative
effect on the market price of our common stock, particularly in light of the
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<PAGE>
limited trading volume for our common stock.
In addition, we may have to sell more equity securities in the future
to obtain operating funds. We may sell these securities at a discount to the
market price. Any future sales of equity securities will dilute the holdings of
existing stockholders, possibly reducing the value of your investment.
We could be delisted from the Nasdaq SmallCap Market.
In order to qualify for continued listing on the Nasdaq SmallCap
Market, we must, among other things, have net tangible assets of at least
$2,000,000. At December 31, 1999, our balance sheet showed total assets of
$3,360,579 and stockholders' equity of $2,673,656. Since we are expecting
continuing losses during 2000, we may not be able to meet the continued listing
criteria of the Nasdaq SmallCap Market unless we receive sufficient funds to
maintain our net tangible assets. If our shares of common stock are delisted
from the Nasdaq SmallCap Market, trading, if any, in the common stock would
thereafter be conducted in the over-the-counter market in the so-called "pink
sheets" or, if then available, the "OTC Bulletin Board Service." As a result, an
investor might find it more difficult to dispose of, or to obtain accurate
quotations as to the value of, our securities.
Our common stock will be adversely effected if it becomes subject to penny stock
rules
If our common stock is removed from the Nasdaq SmallCap Market, it may
become subject to the SEC's "penny stock" rules which impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and "accredited investors" (generally,
individuals with net worths in excess of $1,000,000 or annual incomes exceeding
$200,000 or $300,000 together with their spouses). For transactions covered by
these rules, a broker-dealer must make a special suitability determination for
the purchase and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, the rules require delivery of a
risk disclosure document relating to the penny stock market prior to any such
transaction. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks. Consequently, the "penny stock" rules may
affect the ability of broker-dealers to sell our common stock and may affect the
ability of purchasers in this offering to sell any of their shares in the
secondary market.
We do not anticipate paying dividends
We have never paid any cash dividends on our common stock and do not
anticipate the payment of cash dividends in the foreseeable future.
Substantial influence of market makers
There are a limited number of market makers which currently make a
market in our common stock and our common stock is thinly traded. Consequently,
these market makers may exert a dominating influence on the market for our
common stock. Such market-making activity may be discontinued at any time. The
price and liquidity of our common stock may be significantly affected by the
degree of any current market maker's participation in the market.
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<PAGE>
USE OF PROCEEDS
All of the common stock covered by this prospectus is being sold by
the selling stockholders. We will not receive any of the proceeds from those
sales.
If all of the 897,675 warrants whose underlying shares are being
registered for resale are exercised at their current $3.00 exercise price, we
will receive net proceeds from such exercise of approximately $2,693,000. The
exercise price increases by $1.00 annually, up to $6.00. The proceeds from the
exercise of the warrants would used for working capital and other general
corporate purposes.
SELLING STOCKHOLDERS
This prospectus covers offers and sales by the selling stockholders
of the shares of our common stock, including shares issuable upon exercise of
warrants, issued in our 1999 private placement.
In the private placement, we offered to accredited investors units,
at a price of $1.75 per unit, consisting of one share of common stock and one
warrant. Each warrant is exercisable for a four year period expiring August 10,
2003 to purchase one share of common stock at an exercise price (subject to
adjustment) of $3.00 during the first year, $4.00 during the second year, $5.00
during the third year and $6.00 during the fourth year. We sold a total of
836,685 units. In addition, pursuant to our obligation to the placement agent
for the offering, Indianapolis Securities, Inc., we issued an aggregate of
60,990 warrants (some of which warrants were transferred by the placement agent
to certain of its employees). These warrants were issued as a portion of the
placement agent's compensation, in addition to paying $106,733 (in the
aggregate) as a 10% cash commission to the placement agent for units sold by it.
The table below lists the selling stockholders, shows the shares of
common stock beneficially owned by each of the selling stockholders as of March
31, 2000 and the shares offered for resale by each of the selling stockholders.
Beneficial ownership includes shares which the selling stockholders can acquire
upon exercise of the warrants (all of which are currently exercisable) or of
options exercisable currently or within 60 days after March 31, 2000. Our
registration of these shares does not necessarily mean that any selling
stockholder will sell all or any of its shares of common stock. The "Beneficial
Ownership After Offering" columns in the table assume that all shares covered by
this prospectus will be sold by the selling stockholders and that no additional
shares of common stock are bought or sold by any selling stockholder. Except for
Indianapolis Securities, Inc., or as noted in the footnotes, no selling
stockholder has had, within the past three years, any position, office or other
material relationships with us.
The information provided in the table below is from the selling
stockholders, reports furnished to us under rules of the SEC, and our stock
ownership records.
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<PAGE>
<TABLE>
<CAPTION>
Beneficial
Beneficial Ownership Prior to Offering Ownership After
Offering
--------------------------------------------------- ------------------
Total
Shares Total Shares % of Number of
Underlying Ownership Total Shares
Name of Selling Stockholder Shares (1) Warrants Shares Offered Shares %
- -------------------------------------- ------------ ------------- -------------- --------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard M. & Tina D. Lilly (2) 286,110 75,110 361,220 9.6% 97,210 264,010 7.1%
Mary Beth Cooney 6,700 6,700 13,400 * 13,400 -0- *
Ferdie A. & Ursula M. Falk 6,000 6,000 12,000 * 12,000 -0- *
KG Associates 26,000 26,000 52,000 1.4% 52,000 -0- *
Charles R. Behrmann 13,600 10,000 23,600 * 20,000 3,600 *
Richard P. Morgenstern (3) 127,500 127,500 255,000 6.7% 255,000 -0- *
Alan S. Morgenstern 1994 Trust 45,000 45,000 90,000 2.4% 90,000 -0- *
Carol E. Morgenstern (4) 90,000 90,000 180,000 4.9% 180,000 -0- *
Pure Holdings, LP 30,000 30,000 60,000 1.6% 60,000 -0- *
Star Investments, LP 30,000 30,000 60,000 1.6% 60,000 -0- *
Paul and Carol McHugh Cole 26,000 26,000 52,000 1.4% 52,000 -0- *
Eugene Lieberstein (5) 35,016 15,000 50,016 1.3% 30,000 20,016 *
Norman Alpert (6) 7,500 7,500 15,000 * 15,000 -0- *
Edward Klimerman and Janet C. Walden
(7) 2,500 2,500 5,000 * 5,000 -0- *
Thomas L. Hansberger 20,000 20,000 40,000 1.1% 40,000 -0- *
Judith W. Schrafft 4,000 4,000 8,000 * 8,000 -0- *
Robert Kiken 10,000 10,000 20,000 * 20,000 -0- *
Kenneth M. Kiken 22,000 10,000 32,000 * 20,000 12,000 *
Norman P. Kiken 10,000 10,000 20,000 * 20,000 -0- *
Assaf Family Trust 14,000 14,000 28,000 * 28,000 -0- *
Warren M. Knight 25,000 4,000 29,000 * 8,000 21,000 *
Russell R. Desjourdy (8) 20,000 20,000 40,000 1.1% 40,000 -0- *
Gopen Family Trust 50,000 50,000 100,000 2.7% 100,000 -0- *
Brett P. & Mary Sheila Smith 17,500 17,500 35,000 * 35,000 -0- *
Matthew A. Frinzi 10,000 10,000 20,000 * 20,000 -0- *
Jan McArt 20,200 20,200 40,400 1.1% 40,400 -0- *
Paul C. Desjourdy (9) 288,054 10,000 298,054 7.6% 20,000 278,054 7.1%
Peter K. and Jill Boli 19,885 14,285 34,170 * 28,570 5,600 *
Eileen Botfeld 5,000 5,000 10,000 * 10,000 -0- *
Jane A. & Barron G. Postmus 10,000 10,000 20,000 * 20,000 -0- *
Western Investment Corporation 50,000 15,000 65,000 1.8% 30,000 35,000 *
Merrick Management Corporation 15,000 15,000 30,000 * 30,000 -0- *
Tony and Carmen Chamoun 5,000 5,000 10,000 * 10,000 -0- *
George Kottler 9,000 9,000 18,000 * 18,000 -0- *
Stanley and Lesley Berkovitz 10,000 10,000 20,000 * 20,000 -0- *
Edwin W. and Ellen A. Harley 3,000 3,000 6,000 * 6,000 -0- *
Carl J. Domino 20,000 20,000 40,000 1.1% 40,000 -0- *
Ronald C. & Pamela A. Retterath 3,000 3,000 6,000 * 6,000 -0- *
Ronald L. and Sheila L. Miller 20,000 20,000 40,000 1.1% 40,000 -0- *
Robert B. Forsyth 3,400 3,400 6,800 * 6,800 -0- *
Herbert J. Stangl Trust 10,000 10,000 20,000 * 20,000 -0- *
Roger D. Bensen 68,800 50,000 118,800 3.2% 100,000 18,800 *
Indianapolis Securities, Inc. (10) -0- 14,748 14,748 * 14,748 -0- *
Ian G. Walker (11) -0- 6,480 6,480 * 6,480 -0- *
Ann Greene (11) -0- 1,500 1,500 * 1,500 -0- *
- ---------------------------------------------------------------
</TABLE>
* Less than 1% of the common stock outstanding.
(1) Exclusive of shares underlying warrants.
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<PAGE>
(2) Includes shares owned by Mr. Lilly's revocable trust dated December 1,
1989 and includes 10,000 shares owned by his children. Also, includes
38,262 placement agent warrants transferred to Mr. and Mrs. Lilly by
Indianapolis Securities, Inc. and another 14,748 placement agent
warrants owned by Indianapolis Securities, Inc., which Mr. Lilly may be
considered to beneficially own. As described in the "Selling
Stockholders" section, Indianapolis Securities, Inc. was placement
agent for our 1999 private placement and received warrants as part of
its compensation.
(3) Includes shares owned by Mr. Morgenstern's living trust and includes
67,500 shares of common stock and 67,500 warrants owned by Mr.
Morgenstern's children.
(4) Includes 45,000 shares of common stock and 45,000 warrants owned by Ms.
Morgenstern's children.
(5) Mr. Lieberstein is a Symbollon director and provides legal services to
us. Includes currently exercisable options to
purchase 7,916 shares of common stock.
(6) Mr. Alpert is a member of RubinBaum LLP, which provides legal services
to us.
(7) Mr. Klimerman is a member of RubinBaum LLP, which provides legal
services to us.
(8) Russell Desjourdy is the brother of our President, Paul C. Desjourdy.
(9) Mr. Desjourdy is our President, Chief Operating Officer, Chief
Financial Officer, General Counsel and Treasurer, and he is also a
Symbollon director. Includes currently exercisable options to purchase
232,854 shares of common stock.
(10) See note 1.
(11) Employee of Indianapolis Securities, Inc. and transferee of a portion
of its placement agent warrants.
PLAN OF DISTRIBUTION
We are registering the common stock covered by this prospectus for the
selling stockholders pursuant to a registration right granted to the selling
stockholders. The selling stockholders have indicated that they are acting
independently from us in determining the manner and extent of sales of the
shares of our common stock. These shares may be sold or distributed from time to
time by the selling stockholders, by their donees, pledgees and transferees or
by their other successors in interest. Such sales may be made in one or more
types of transactions (which may include block transactions) in the
over-the-counter market, in negotiated transactions, through put or call options
transactions relating to the shares, through short sales of shares, hedging
transaction, or a combination of such methods of sale, at market prices
prevailing at the time of sale, or at negotiated prices. Such transactions may
or may not involve brokers or dealers. Sales of shares in the over-the-counter
market involving brokers or dealers may be by means of one or more of the
following transactions:
o in a block trade in which a broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o in transactions in which brokers, dealers or underwriters
purchase the shares as principal and resell the shares for
their own accounts pursuant to this prospectus; and
o in ordinary brokers' transactions and transactions in which
the broker solicits purchasers.
The selling stockholders have advised us that they have made no
arrangements or agreements with any underwriters, brokers or dealers regarding
the resale of the common stock prior to the effective date of this prospectus.
The selling stockholders may pay commissions or allow discounts to any brokers
or dealers participating in the resale of the common stock, which commissions or
discounts may be less than or in excess of the customary rates of such brokers
18
<PAGE>
or dealers for similar transactions.
We have agreed to pay the fees and expenses of registering the common
stock, including the reasonable fees and disbursements of persons retained by
us; however, we will not pay the commissions and discounts of underwriters,
dealers or agents.
The selling stockholders also may sell these shares in accordance with
Rule 144 under the Securities Act of 1933.
The participating selling stockholders and any underwriters, brokers
or dealers engaged by them may be deemed underwriters, and any profits on sales
of the common stock by them and any discounts, commissions or concessions
received by any selling stockholder or underwriter, broker or dealer may be
deemed to be underwriting discounts or commissions under the Securities Act of
1933.
If the selling stockholder notifies us that a material arrangement has
been entered into with an underwriter, broker or dealer for the sale of the
common stock through a secondary distribution or a purchase by an underwriter,
broker or dealer, a supplemented prospectus will be filed, if required,
disclosing such of the following information as we believe is appropriate:
o the name of each such selling stockholder and of the participating
underwriter, broker or dealer;
o the number of shares of common stock involved;
o the price at which such common stock was sold;
o the commissions paid or discounts or concessions allowed to such
underwriter, broker or dealer;
o where applicable, that such broker or dealer did not conduct any
investigation to verify the information set out or incorporated by
reference in the prospectus; and
o other facts material to the transaction.
We have agreed to indemnify the selling stockholders against certain
liabilities relating to resale of the common stock under the Securities Act of
1933. Each of the selling stockholders has agreed to indemnify us (and our
officers and directors and any person that controls us) against such liabilities
to the extent resulting from untrue statements or omissions in the prospectus or
registration statement based on written information furnished by the selling
stockholder specifically for use in preparing this prospectus or the
registration statement. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act of 1933. Insofar as indemnification for liabilities under the
Securities Act of 1933 may be permitted to our directors or officers, or persons
that control us, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
Although all of the shares are being registered for public sale, the
sale of any or all of such shares by the selling stockholders may depend on the
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<PAGE>
sale price of such shares and market conditions generally prevailing at the
time. We are unable to predict the effect which sales of the common stock
offered hereby might have upon our ability to raise further capital.
Because selling stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, the selling stockholders will be
subject to the prospectus delivery requirement of the Securities Act of 1933 and
the rules promulgated thereunder. We have informed the selling stockholders that
the anti-manipulative provisions of Regulation M under the Securities Exchange
Act of 1934 may apply to their sales in the market.
In order to comply with certain states' securities laws, if
applicable, the common stock will be sold in these states only through
registered or licensed brokers or dealers. In addition, in certain states, the
shares of common stock may not be sold unless they have been registered or
qualified for sale in such states or an exemption from registration or
qualification is available and complied with.
LEGAL MATTERS
For purpose of this offering, RubinBaum LLP, New York, New York, is
giving an opinion on the validity of the common stock offered by this
prospectus. Messrs. Alpert and Klimerman are members of RubinBaum LLP and also
are selling stockholders hereunder.
See "Selling Stockholders."
EXPERTS
The financial statements incorporated by reference in this
prospectus have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in their report
incorporated herein by reference, and are incorporated herein in reliance upon
such report given upon the authority of said firm as experts in auditing and
accounting.
20
<PAGE>
SYMBOLLON CORPORATION
1,734,630 SHARES OF CLASS A COMMON STOCK
PROSPECTUS
_________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than
any underwriting discounts and commissions, payable in connection with the sale
of the common stock being registered. All amounts are estimates except the SEC
registration fee.
SEC Registration and filing fee $ 2,727
Printing fees 1,000
Accounting fees and expenses 1,500
Legal fees and expenses 4,000
Miscellaneous 773
----------
Total $10,000
=======
Item 15. Indemnification of Directors and Officers.
Reference is made to Section 145 of the Delaware General Corporation
Law (the "DGCL"), Article TENTH of the Registrant's Certificate of
Incorporation, as amended (Exhibit 3.1), Article VIII of the Registrant's
By-Laws, as amended (Exhibit 3.2) and the Indemnification Agreements entered
into with certain of the Registrant's directors and officers (Exhibit 10.5).
Section 145 of the DGCL generally provides that a corporation is
empowered to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation or is or was serving, at the request of the corporation, in
any of such capacities with another corporation or other enterprise, if such
director, officer, employee or agent acted in good faith and in a manner he
reasonably believed in or not opposed to the best interests of the corporation,
and with, respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. In the case of an action or suit by or in
the right of the corporation, no indemnification shall be made with respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the court having
jurisdiction shall determine that such person is fairly and reasonably entitled
to indemnity. This statute describes in detail the right of the Registrant to
indemnify any such person.
Pursuant to Article NINTH of the Registrant's Certificate of
Incorporation and Article VIII of the Registrant's By-Laws, the Registrant shall
indemnify, to the fullest extent permitted by the DGCL, any person, including
officers and directors, with regard to any action or proceeding.
The Registrant has entered into an indemnification agreement with its
directors and officers. Such agreement provides that the Registrant will
indemnify the indemnitee to the fullest extent permitted by applicable law
against expenses, including reasonable attorneys' fees, judgments, penalties,
II-1
<PAGE>
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any civil or criminal action or administrative proceeding
arising out of his performance of his duties as a director or officer of the
Registrant other than an action initiated by a director or officer. Such
indemnification is available if the indemnitee acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Registrant, and with respect to any criminal action, had no reasonable cause
to believe his conduct was unlawful.
Under such indemnification agreement, the entitlement of a director or
officer to indemnification is determined by a majority vote of a quorum of
disinterested directors, or if such quorum either is not obtainable or so
directs, by independent counsel or by the stockholders or the Registrant, as
determined by such quorum of disinterested directors. Under certain
circumstances, a party to the indemnification agreement is conclusively presumed
to have met the applicable statutory standard of conduct unless the Registrant's
Board of Directors, stockholders or independent legal counsel determine that the
relevant standard has not been met. If a change of control of the Registrant has
occurred, the entitlement of such director or officer to indemnification is
determined by independent counsel selected by such director or officer, unless
such director or officer requests that either the Board of Directors or the
stockholders make such determination.
The Registrant currently has Director and Officer
liability insurance which covers, among other things, certain liabilities
arising under the Securities Act.
The agreement with the selling stockholders pursuant to which this
Registration Statement is being filed provided that each selling stockholder
will indemnify and hold harmless the Registrant, its directors and officers and
any controlling person of the Registrant from and against, and will reimburse
the Registrant, its directors and officers, and any such controlling person with
respect to, any and all loss, damage, liability, cost or expense to which the
Registrant or any controlling person may become subject under the Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
selling stockholders specifically for use in the preparation thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. See Item 17. "Undertakings."
II-2
<PAGE>
Item 16. Exhibits
(a) Exhibit
Number Description
3.1 Amended Certificate of Incorporation of the Company; including
Certificate of Designations, Preferences and Rights of Series
A Preferred Stock of the Company. (previously filed as exhibit 3.1
to Form 10-QSB for the quarter ended June 30, 1999 and
incorporated by reference.)
3.2 Amended By-Laws of the Company. (previously filed as exhibit 3.2 to
Form 10-QSB for the quarter ended June 30, 1999 and incorporated by
reference.)
3.3 Agreement of Merger, dated as of August 4, 1993, between the Company
and Symbollon Corporation, a Massachusetts corporation (including
Certificate of Merger and other state filings). (previously filed as
exhibit number 3.3 of the Registration Statement (the "Registration
Statement") on Form SB-2 (Registration No. 33-68828) filed on November
24, 1993 and declared effective on December 7, 1993, and incorporated
by reference.)
4.1 Form of Specimen Class A Common Stock Certificate. (previously filed as
exhibit number 4.2 of the Registration Statement and
incorporated by reference.)
4.2 Form of Stock Restriction Agreement among the Company, the Class B
Stockholders and the Underwriter. (previously filed as exhibit number
4.4 of the Registration Statement and incorporated by reference.)
5.1 Opinion by RubinBaum LLP *
10.1 1993 Stock Option Plan of the Company, as amended. (previously filed as
exhibit 10.1 to Form 10-QSB for the quarter ended
June 30, 1999 and incorporated by reference.)
10.2 Employment Agreement, dated December 14, 1999, between the Company and
Paul C. Desjourdy. (previously filed as exhibit number 10.2 to Form
10-KSB for the year ended December 31, 1999 and incorporated by
reference.)
10.3 Employment Agreement, dated December 14, 1999, between the Company and
Dr. Jack H. Kessler (previously filed as exhibit number 10.3 to Form
10-KSB for the year ended December 31, 1999 and incorporated by
reference.)
10.4 Commercial Lease dated June 5, 1997, between Pine Street Realty Trust
and the Company. (previously filed as exhibit number 10.18 to Form
10-QSB for the quarter ended June 30, 1997 and incorporated by
reference.)
10.5 Form of Indemnification Agreement between the Company and each officer
and director of the Company. (previously filed as exhibit number 10.6
of the Registration Statement and incorporated by reference.)
10.6 Marketing and Supply Agreement, dated January 11, 1995 between the
Company and West Agro. (previously filed as exhibit number 10.1 to Form
8-K of the Registrant dated January 11, 1995 and incorporated by
reference). **
10.7 Agreement, dated August 31, 1992 among the Company, Dr. Jack H. Kessler
and Dr. Robert Rosenbaum. (previously filed as exhibit number
10.8 of the Registration Statement and incorporated by reference.)
10.8 Form of Stock Option Agreement to be entered into between the Company
and each option holder. (previously filed as exhibit number 10.10 to
Form 10-KSB for the year ended December 31, 1993 and incorporated by
reference.)
10.9 1994 Employee Stock Purchase Plan of the Company. (incorporated by
reference to Exhibit B to the Company's 1994 Annual Stockholders
Meeting Proxy Statement filed under cover of Schedule 14A dated
May 4, 1994.)
10.10 1995 Non-Employee Directors' Stock Option Plan of the Company.
(previously filed as exhibit number 10.1 to Form 10-QSB for
the quarter ended June 30, 1995 and incorporated by reference.)
10.11 Collaboration and Sale/License Agreement, dated August 4, 1997, between
the Company and Bausch & Lomb Pharmaceuticals, Inc. (previously filed
as exhibit number 10.19 to Form 10-QSB for the quarter ended June 30,
1997 and incorporated by reference.) **
10.12 Stock Purchase Agreement, dated August 4, 1997, between the Company and
Bausch & Lomb Pharmaceuticals, Inc. (previously filed as exhibit number
10.20 to Form 10-QSB for the quarter ended June 30, 1997 and
incorporated by reference.)
II-3
<PAGE>
10.13 Form of Subscription Agreement, dated as of August 10, 1999, between
the Company and the purchasers of Units (previously filed as exhibit
number 10.14 to Form 10-QSB for the quarter ended September 30, 1999
and incorporated by reference.)
10.14 Form of Redeemable Warrant for the purchase of shares of Class A Common
Stock, dated as of August 10, 1999, issued to purchasers of Units
(previously filed as exhibit number 10.15 to Form 10-QSB for the
quarter ended September 30, 1999 and incorporated by reference.)
23.1 Consent by BDO Seidman, LLP *
23.3 Consent by RubinBaum LLP (included in Exhibit 5.1) *
24.1 Power of Attorney (included on the signature page of this registration
statement) *
- --------------------------------------------------------------------------------
* Filed herewith.
** Indicates that material has been omitted and confidential treatment has been
granted or requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
Item 17. Undertakings.
The registrant will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) Include any additional or changed material information
on the plan of distribution;
provided, however, that paragraphs (1)(i) and (1)(ii) will not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of such securities at that time to be the initial bona
fide offering thereof.
II-4
<PAGE>
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant 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 Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant small business issuer
of expenses incurred or paid by a director, officer or controlling person of the
registrant small business issuer in the successful defense of any action, suit
of proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant small business
issuer 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 Act and will be governed by the final adjudication of such
issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Framingham, Commonwealth of Massachusetts, on April
24, 2000.
SYMBOLLON CORPORATION
By /s/ Paul C. Desjourdy
-----------------------------
Paul C. Desjourdy, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby severally constitutes and appoints Paul C. Desjourdy and
Jack H. Kessler and each of them, his true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement on Form S-3 and all documents relating thereto, 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, each acting alone full power and authority to do and perform each and
every act and thing necessary or advisable to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack H. Kessler Chief Executive Officer, April 24, 2000
- -------------------------- Chief Scientific Officer,
Jack H. Kessler Secretary and Chairman
of the Board of Directors
(Principal Executive Officer)
/s/ Paul C. Desjourdy President, Chief Operating Officer, April 24, 2000
- -------------------------- Treasurer, General Counsel, Chief
Paul C. Desjourdy Financial Officer, and Director (Principal
Financial and Accounting Officer)
/s/ James C. Richards Director April 24, 2000
- --------------------------
James C. Richards
/s/ Richard F. Maradie Director April 24, 2000
- --------------------------
Richard F. Maradie
/s/ Eugene Lieberstein Director April 24, 2000
- --------------------------
Eugene Lieberstein
II-6
<PAGE>
INDEX TO EXHIBITS
3.1 Amended Certificate of Incorporation of the Company; including
Certificate of Designations, Preferences and Rights of Series
A Preferred Stock of the Company. (previously filed as exhibit 3.1
to Form 10-QSB for the quarter ended June 30, 1999 and
incorporated by reference.)
3.2 Amended By-Laws of the Company. (previously filed as exhibit 3.2 to
Form 10-QSB for the quarter ended June 30, 1999 and
incorporated by reference.)
3.3 Agreement of Merger, dated as of August 4, 1993, between the Company
and Symbollon Corporation, a Massachusetts corporation (including
Certificate of Merger and other state filings). (previously filed as
exhibit number 3.3 of the Registration Statement (the "Registration
Statement") on Form SB-2 (Registration No. 33-68828) filed on November
24, 1993 and declared effective on December 7, 1993, and incorporated
by reference.)
4.1 Form of Specimen Class A Common Stock Certificate. (previously filed
as exhibit number 4.2 of the Registration Statement and
incorporated by reference.)
4.2 Form of Stock Restriction Agreement among the Company, the Class B
Stockholders and the Underwriter. (previously filed as exhibit number
4.4 of the Registration Statement and incorporated by reference.)
5.1 Opinion by RubinBaum LLP. *
10.1 1993 Stock Option Plan of the Company, as amended. (previously filed
as exhibit 10.1 to Form 10-QSB for the quarter ended
June 30, 1999 and incorporated by reference.)
10.2 Employment Agreement, dated December 14, 1999, between the Company and
Paul C. Desjourdy. (previously filed as exhibit number 10.2 to Form
10-KSB for the year ended December 31, 1999 and incorporated by
reference.)
10.3 Employment Agreement, dated December 14, 1999, between the Company
and Dr. Jack H. Kessler. (previously filed as exhibit
number 10.3 to Form 10-KSB for the year ended December 31, 1999 and
incorporated by reference.)
10.4 Commercial Lease dated June 5, 1997, between Pine Street Realty Trust
and the Company. (previously filed as exhibit number 10.18 to Form
10-QSB for the quarter ended June 30, 1997 and
incorporated by reference.)
10.5 Form of Indemnification Agreement between the Company and each
officer and director of the Company. (previously filed as exhibit
number 10.6 of the Registration Statement and incorporated by
reference.)
10.6 Marketing and Supply Agreement, dated January 11, 1995 between the
Company and West Agro. (previously filed as exhibit number 10.1 to Form
8-K of the Registrant dated January 11, 1995 and incorporated by
reference). **
10.7 Agreement, dated August 31, 1992 among the Company, Dr. Jack H. Kessler
and Dr. Robert Rosenbaum. (previously filed as exhibit number 10.8 of
the Registration Statement and incorporated by reference.)
10.8 Form of Stock Option Agreement to be entered into between the Company
and each option holder. (previously filed as exhibit number 10.10 to
Form 10-KSB for the year ended December 31, 1993 and incorporated by
reference.)
10.9 1994 Employee Stock Purchase Plan of the Company. (incorporated by
reference to Exhibit B to the Company's 1994 Annual Stockholders
Meeting Proxy Statement filed under cover of Schedule 14A
dated May 4, 1994.)
10.10 1995 Non-Employee Directors' Stock Option Plan of the Company.
(previously filed as exhibit number 10.1 to Form 10-QSB for
the quarter ended June 30, 1995 and incorporated by reference.)
10.11 Collaboration and Sale/License Agreement, dated August 4, 1997, between
the Company and Bausch & Lomb Pharmaceuticals, Inc. (previously filed
as exhibit number 10.19 to Form 10-QSB for the quarter ended June 30,
1997 and incorporated by reference.) **
10.12 Stock Purchase Agreement, dated August 4, 1997, between the Company and
Bausch & Lomb Pharmaceuticals, Inc. (previously filed as exhibit number
10.20 to Form 10-QSB for the quarter ended June 30, 1997 and
incorporated by reference.)
10.13 Form of Subscription Agreement, dated as of August 10, 1999, between
the Company and the purchasers of Units (previously filed as exhibit
number 10.14 to Form 10-QSB for the quarter ended September 30, 1999
and incorporated by reference.)
10.14 Form of Redeemable Warrant for the purchase of shares of Class A Common
Stock, dated as of August 10, 1999, issued to purchasers of Units
(previously filed as exhibit number 10.15 to Form 10-QSB for the
quarter ended September 30, 1999 and incorporated by reference.)
23.1 Consent of BDO Seidman, LLP *
23.2 Consent by RubinBaum LLP (included in Exhibit 5.1) *
24.1 Power of Attorney (included on the signature page of this registration
statement) *
- --------------------------------------------------------------------------------
* Filed herewith.
** Indicates that material has been omitted and confidential treatment has been
granted or requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
II-7
Exhibit 5.1
[Letterhead of RubinBaum ]
April 24, 2000
Symbollon Corporation
37 Loring Drive
Framingham, Massachusetts 01702
Dear Sirs:
We have acted as counsel to Symbollon Corporation, a Delaware
corporation (the "Company"), in connection with the registration by the Company
of the following shares (total of 1,734,360 shares) of its Class A Common Stock,
$.001 par value per share (the "Common Stock") for resale by selling
stockholders (the "Selling Stockholders") named in the Registration Statement on
Form S-3 (the "Registration Statement") to be filed by the Company with the
Securities and Exchange Commission (the "Commission") on April 24, 2000, under
the Securities Act of 1933, as amended (the "Act"):
1. 836,685 shares of Common Stock issued to the Selling Stockholders in
the Company's 1999 private placement (the "Private Placement") of units each
consisting of one share of Common Stock and one redeemable warrant (the
"Redeemable Warrants") exercisable for one share of Common Stock.
2. Up to 836,685 shares of Common Stock issuable upon exercise of the
Redeemable Warrants included in the units purchased by Selling Stockholders in
the Private Placement.
3. Up to 60,990 shares of Common Stock issuable upon exercise of
warrants (which are identical with the Redeemable Warrants, and together with
the Redeemable Warrants are collectively called the "Warrants") issued pursuant
to the Company's obligation to the placement agent for the Private Placement, as
described in the Registration Statement, 46,242 of which Warrants were
transferred by the placement agent to certain of its employees.
<PAGE>
RUBINBAUM LLP
- -------------
Symbollon Corporation
April 24, 2000
Page 2
In furnishing this opinion, we have examined the Certificate of
Incorporation and By-laws of the Company, as amended, as well as the originals
or photostatic or certified copies of such documents, records, certificates,
agreements and other papers as we have deemed necessary for the purposes of this
opinion. In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to executed documents of all unexecuted copies submitted to us, and the
authenticity of, and the conformity to, original documents of all documents
submitted to us as certified or photostatic copies. As to various questions of
fact material to our opinion, we have relied upon oral statements, written
information and certificates of officials and representatives of the Company and
others.
Based upon the foregoing, we are of the opinion that:
1. The 836,685 shares of Common Stock issued to the Selling
Stockholders are legally issued, fully paid and non-assessable.
2. Up to 896,775 shares of Common Stock issuable upon exercise of the
Warrants, if and when paid for and issued upon exercise of the Warrants in
accordance with the terms thereof, will be legally issued, fully paid and
non-assessable.
We are members of the Bar of the State of New York, and the opinions
expressed herein are limited to questions arising under the laws of the State of
New York, the General Corporation Law of the State of Delaware and the Federal
laws of the United States of America, and we disclaim any opinion whatsoever
with respect to matters governed by the laws of any other jurisdiction.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the caption
"Legal Matters" in the Prospectus which is a part of the Registration Statement.
In giving this consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission promulgated thereunder. Reference is
made to the sections of the Registration Statement entitled "Selling
Stockholders" and "Legal Matters" for a description of ownership of the
Company's Common Stock and Warrants by certain attorneys of this firm.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
/s/ RUBINBAUM LLP
RUBINBAUM LLP
Exhibit 23.1
[Letterhead of BDO Seidman, LLP]
Consent of Independent Certified Public Accountants
Symbollon Corporation
Framingham, Massachusetts
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated January
21, 2000, relating to the financial statements of Symbollon Corporation
appearing in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO Seidman, LLP
Boston, Massachusetts
April 24, 2000
