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As filed with the Securities and Exchange Commission on July 7, 1999
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GUILFORD PHARMACEUTICALS INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1841960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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6611 TRIBUTARY STREET
BALTIMORE, MARYLAND 21224
(410) 631-6300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
CRAIG R. SMITH, M.D.
CHIEF EXECUTIVE OFFICER
GUILFORD PHARMACEUTICALS INC.
6611 TRIBUTARY STREET
BALTIMORE, MARYLAND 21224
(410) 631-6300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
MICHAEL J. SILVER, ESQ.
HOGAN & HARTSON L.L.P.
111 SOUTH CALVERT STREET, 16TH FLOOR
BALTIMORE, MARYLAND 21202
(410) 659-2700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per unit (1) aggregate offering price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value (2) ..... 312,933 shares $11.5625 $3,618,288 $1006.00
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</TABLE>
(1) We estimated this amount only to calculate the registration fee. We based
this amount on the average of the high and low sale prices of our common stock
on June 29, 1999 as reported on the Nasdaq Stock Market of $11.5625 per share.
(2) Includes Series A Junior Participating Preferred Share Purchase Rights
attached thereto, for which no separate fee is payable pursuant to Rule 457(i).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS 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.
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PROSPECTUS SUBJECT TO COMPLETION
JULY 7, 1999
GUILFORD PHARMACEUTICALS INC.
312,933 SHARES OF COMMON STOCK
We have prepared this prospectus to allow the selling stockholder we
identify herein to sell up to 312,933 shares of our common stock. We will not
receive any of the proceeds from the sale of common stock by the selling
stockholder.
Our common stock is traded on the Nasdaq Stock Market under the symbol
"GLFD." On July 6, 1999, the last reported sale price of our common stock on
Nasdaq was $13.75 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 1.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE COMMON
STOCK, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is July , 1999.
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THE COMPANY
Guilford Pharmaceuticals Inc. is a biopharmaceutical company engaged in
the development and commercialization of novel products in two principal areas:
(i) targeted and controlled drug delivery systems using proprietary
biodegradable polymers for the treatment of cancer and other diseases; and (ii)
therapeutic and diagnostic products for neurological diseases and conditions.
Our principal executive offices are located at 6611 Tributary Street, Baltimore,
Maryland 21224, and our telephone number is (410) 631-6300.
RISK FACTORS
An investment in our stock is very speculative and involves a high degree
of risk. In addition to the other information contained in this prospectus
(including the reports we incorporate by reference), you should consider the
following important factors carefully in evaluating our company and its business
before purchasing shares of our stock.
In addition to historical information, this prospectus contains
forward-looking statements that reflect our current expectations regarding the
future results of our operations, economic performance and financial condition
as well as other matters that may affect our business. In general, we try to
identify these forward-looking statements by using words such as:
- "anticipate,"
- "believe,"
- "estimate,"
- "expect" and similar expressions.
While these statements reflect our current plans and expectations and we
base the statements on information currently available to us, we cannot be sure
that we will be able to implement these plans successfully. We may never realize
any or all of our expectations.
The forward-looking statements contained in this prospectus may cover
many topics, including the following:
- our efforts in conjunction with Rhone-Poulenc Rorer
Pharmaceuticals, Inc. ("RPR") to obtain international
regulatory clearances to market and sell GLIADEL and to
increase end-user sales of the product,
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- our efforts in conjunction with RPR to expand the labeled
uses for GLIADEL,
- our efforts to develop polymer product line extensions and
new polymer products,
- the conduct and completion of the research programs
relating to our FKBP neuroimmunophilin ligand technology
and other technologies,
- clinical development activities, including commencement and
conduct of clinical trials related to our polymer based
drug delivery candidates, including GLIADEL, and our
pharmaceutical product candidates including:
- drug candidates falling under the FKBP
neuroimmunophilin ligand technology, such as NIL-A,
- NAALADase inhibitors,
- PARP inhibitors, and
- DOPASCAN,
- our strategic plans,
- our anticipated expenditures and the potential need for
additional funds, and
- our plans to implement solutions to the Year 2000 issue.
All of these areas of our business involve significant risks and
uncertainties.
Any of the statements we make in this prospectus that are forward-looking
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. We wish to caution you that our actual results
may differ significantly from the results we discuss in the forward-looking
statements, and you should not unduly rely on them. Many factors that could
cause or contribute to such differences and include those discussed below, as
well as those discussed elsewhere in our filings with the Securities and
Exchange Commission. In addition, any forward-looking statement we make in this
document speaks only as of the date of this prospectus, and we do not intend to
update any such forward-looking statement to reflect events or circumstances
that occur after that date.
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WE HAVE A HISTORY OF LOSSES AND OUR FUTURE PROFITABILITY IS UNCERTAIN.
Guilford was founded in July 1993 and, with the sole exception of 1996,
we have not earned an operating profit in any year since inception. Our
operating losses stem mainly from the significant amount of money that we have
spent on research and development. As of March 31, 1999, we had an accumulated
deficit of $64.5 million. We expect to have significant additional operating
losses over the next several years.
Most of our product candidates are in research or early stages of
pre-clinical and clinical development. Except for GLIADEL, none of our product
candidates has been marketed and sold to the public. At this time, nearly all of
our revenues come from:
- payments from RPR from the sale and distribution of
GLIADEL,
- one-time signing fees from our corporate partners under our
collaboration agreements supporting the research,
development and commercialization of our product
candidates,
- one-time payments from our corporate partners upon the
achievement of specified regulatory or development
milestones, for example RPR's payment to us upon FDA
approval in September 1996 to market and sell GLIADEL in
the United States, and
- periodic research funding under our collaboration with
Amgen.
We do not expect current and anticipated revenues from GLIADEL to be
sufficient to support all our anticipated future activities. Whether GLIADEL
sales will ever generate any significant revenues continues to remain uncertain.
In addition, we do not anticipate generating revenues from the sale of our
product candidates for the next several years, if ever. We will require payments
from our current corporate partners, principally RPR and Amgen, and any future
corporate partners, to fund our ongoing activities.
Whether we will ever recognize significant revenues from Amgen in the
form of milestone payments or royalties paid on product sales is also subject to
significant risk and uncertainty. These risks are part of each of the following
activities, among others:
- new product development,
- the conduct of pre-clinical animal studies and human
clinical trials,
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- applying for and obtaining regulatory approval to market
and sell product candidates,
- scale-up of the processes for making product candidates in
quantities and qualities needed for research and
development purposes to commercial scale manufacture needed
to support marketing and sales of new products, and
- commercialization of new products.
We discuss these and other risks in greater detail below in this "Risk
Factors" section.
Our revenues and expenses have fluctuated significantly in the past
because of the nature of their sources. This fluctuation has in turn caused our
results of operations to vary significantly from quarter to quarter and year to
year. We expect the fluctuations in our revenues and expenses to continue and
thus our results of operations should also continue to vary significantly. These
fluctuations are due to a variety of factors, including:
- the timing and amount of sales of GLIADEL to RPR and RPR's
sales to others,
- the timing and realization of milestone and other payments
from our corporate partners, including RPR and Amgen,
- the timing and amount of expenses relating to our research
and development, product development, and manufacturing
activities, and
- the extent and timing of costs related to our activities to
obtain patents on our inventions and to extend, enforce
and/or defend our patent and other rights to our
intellectual property.
Whether we will ever be able to achieve sustained profitability in the
future will depend on many factors, including:
- the successful marketing of GLIADEL by RPR,
- receipt of regulatory clearance to market and sell GLIADEL
in Europe,
- receipt of regulatory clearance to market and sell GLIADEL
for patients undergoing initial surgery for malignant
glioma in the United States as well as Europe and other
countries,
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- the successful development and commercialization of product
candidates that result from our collaboration with Amgen,
and
- our ability to enter into additional collaborative
arrangements and license agreements with other corporate
partners for our product candidates and earlier stage
technologies as we develop them.
We will need to conduct substantial additional research, development and
clinical trials. We will also need to receive necessary regulatory clearances.
We expect that these research, development and clinical trial activities, and
regulatory clearances, together with future general and administrative
activities, will result in significant expenses for the foreseeable future. We
cannot be sure that we will be able to achieve significant and sustained
revenues or realize sustained profitable operating results in the future.
WE ARE DEPENDENT ON GLIADEL AND RPR FOR REVENUES.
Our near term prospects depend to a large extent on sales by RPR of
GLIADEL, our first commercial product. GLIADEL was commercially launched in the
United States in February 1997. We currently do not know whether the product
will ever gain broad market acceptance or the extent of the marketing efforts
necessary to achieve broad market acceptance. If GLIADEL fails to gain market
acceptance, that failure would have a material adverse effect on our business,
financial condition and results of operations.
To date, we have received clearance from the FDA to market GLIADEL in the
United States for a limited subset of patients suffering from brain cancer. This
clearance extends to those patients for whom surgical tumor removal, commonly
referred to as "resection", is indicated and who have recurrent forms of the
brain cancer glioblastoma multiforme. A recurrent form of glioblastoma
multiforme is one in which the cancer has returned after initial surgery to
remove a brain tumor. The number of patients undergoing recurrent surgery for
glioblastoma multiforme is very limited, and we believe the total annual
incidence of glioblastoma multiforme in the United States is less than 10,000.
In order to expand the medical uses, commonly referred to as
"indications", for which RPR may market GLIADEL, we and RPR must successfully
complete additional lengthy clinical trials. Thereafter, we and RPR will have to
apply to the FDA for clearance to market GLIADEL for patients undergoing initial
surgery for glioblastoma multiforme and potentially other brain cancers. We
cannot be sure that we and RPR will be able to successfully complete these
clinical trials or receive the desired regulatory clearance. If GLIADEL fails to
receive regulatory clearance, that failure would limit RPR's ability to market
GLIADEL for use in patients
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beyond the current narrow indication. The failure would also have a material
adverse effect on our business prospects, financial condition and results of
operations.
In addition, RPR has filed for marketing clearance for the current
indication for GLIADEL in a number of foreign countries, and as of May 31, 1999,
RPR has received international regulatory approvals to market and sell GLIADEL
in only a limited number of foreign countries. RPR may not be able to obtain any
other international regulatory approvals for GLIADEL, including all approvals
needed in France and Canada to market and sell GLIADEL in those countries. If
RPR fails to obtain those approvals, the failure would have a material adverse
effect on our business prospects, financial condition and results of operations.
We have granted RPR exclusive worldwide (excluding Scandinavia and Japan)
marketing, sales and distribution rights for GLIADEL. However, our agreements
with RPR do not impose any minimum requirements on RPR for the purchase of
GLIADEL from us or for the sale of GLIADEL to end-users. Therefore, we have no
control over the revenues we receive from the sale and distribution of GLIADEL,
which depend completely on RPR's marketing efforts. In addition, prior to the
February 1997 commercial launch of GLIADEL in the United States, RPR's oncology
sales force had no previous experience in marketing a product to neurosurgeons.
We cannot be sure that RPR will elect to continue or increase its marketing and
promotional activities for GLIADEL or that its efforts in that regard will be
successful. The inability or unwillingness of RPR to aggressively market and
promote GLIADEL would have a material adverse effect on our business, financial
condition and results of operations.
GLIADEL is also a very fragile product and can easily break into many
pieces if not handled with great care. Product recalls due to excessive breakage
of the GLIADEL wafers or for other reasons could also have a material adverse
effect on our business, financial condition and results of operations.
RPR must make designated one-time milestone payments to us upon achieving
specified domestic and international regulatory approvals. By and large, RPR is
responsible for the timing and content of the applications necessary for
international regulatory clearances to market and sell GLIADEL. Thus, whether
GLIADEL will receive these clearances depends heavily on the efforts of RPR. We
cannot be sure any or all of these milestones will be satisfied in a manner so
as to entitle us to receive the corresponding milestone payments from RPR. The
potential milestone payments are significant, and failure to achieve the
designated regulatory objectives could have a material adverse effect on our
business, financial condition and result of operations.
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THE SUCCESS OF OUR AMGEN COLLABORATION IS DEPENDENT ON A NUMBER OF FACTORS, MOST
OF WHICH ARE OUTSIDE OF OUR CONTROL.
Regulatory and development milestone payments as well as royalty amounts
on product sales payable to us under our collaboration with Amgen depend on a
number of factors. Many of these factors are not within our control, including:
- the selection of one or more appropriate lead compounds,
- successful completion of pre-clinical and clinical
development activities,
- application for and obtaining regulatory clearances to
market potential products,
- commercialization of products, and
- the successful preservation and extension of the patent and
other intellectual property rights licensed to Amgen.
All of these activities are subject to significant risks and
uncertainties. For a description of these and other material risks related to
the research, development and commercialization of the FKBP neuroimmunophilin
ligand technology, you should read the following sections contained in this Risk
Factors discussion:
- "Technological Uncertainties,"
- "Uncertainty Regarding Patent and Proprietary Technology,"
- "Dependence on Licenses of Intellectual Property,"
- "Uncertainty of Pre-clinical and Clinical Trial Results,"
- "Government Regulation and Product Approvals,"
- "Novel Alternative Technologies and Therapeutic
Approaches," and
- "Competition and Technological Change"
Moreover, under the terms of our collaboration with Amgen, we have no
control over the development activities regarding the FKBP neuroimmunophilin
ligand technology, which have been left to the sole discretion of Amgen. Our
agreement with Amgen also does not specify a timetable for achieving development
and commercialization goals with respect to the FKBP neuroimmunophilin ligand
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technology. If Amgen determines to conduct clinical trials on a product
candidate resulting from our collaboration, Amgen still may not be able
successfully to complete those clinical trials and then receive clearance from
the FDA or foreign regulatory authorities to market and sell any such products.
The FKBP neuroimmunophilin ligand technology we have licensed to Amgen
represents a new approach to the treatment of certain types of neurological and
other diseases and conditions. We and Amgen have very limited experience in
taking the kinds of compounds likely to result from our work and formulating
them into final drug products appropriate for sale to the public. In addition,
both of us have limited experience with the scale-up of such compounds from the
quantity and quality needed to support research and development efforts to
quantities needed to support commercial scale distribution. Also, both we and
Amgen have limited experience with the manufacture of compounds of this type for
commercial sale. There is a risk that Amgen will not be successful in scaling-up
and manufacturing any such compounds needed for commercial sale. For a more
complete description of the kinds of risks associated with product manufacture,
you should read the section entitled "Limited Manufacturing Capabilities" below.
If Amgen is able to obtain all regulatory approvals necessary to market a
product resulting from our collaboration, our agreement does not specify any
minimum sales requirements for Amgen. Thus, any royalty amounts payable to us in
the future will depend entirely on the sales and marketing efforts of Amgen, an
activity over which we will have no control. In addition, our agreement with
Amgen does not prevent Amgen from pursuing technologies for product candidates
competitive with the FKBP neuroimmunophilin ligand technology in the future.
WE HAVE LIMITED MANUFACTURING CAPABILITIES.
To commercialize GLIADEL, we must be able to manufacture this product in
sufficient quantities, in compliance with regulatory requirements, and at
acceptable costs. We manufacture GLIADEL at our manufacturing facility in
Baltimore, Maryland, which consists of production laboratories and a cleanroom
occupying approximately 12,500 square feet. We estimate that the facility
currently has the capacity to manufacture approximately 8,000 GLIADEL treatments
per year.
Although we believe this GLIADEL manufacturing facility meets the FDA's
current requirements for good manufacturing practices, which are commonly
referred to as "cGMP", and the FDA has inspected the facility in the past, we
have manufactured only limited quantities of GLIADEL in the facility. We cannot
be sure that we will be able to continue to satisfy applicable regulatory
standards, including cGMP requirements, and other requirements relating to the
manufacture of GLIADEL in the facility.
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We also face risks inherent in the operation of a single facility for
manufacture of GLIADEL. These risks include:
- unforeseen plant shutdowns due to personnel, equipment or
other factors, and
- the possible inability of the facility to produce GLIADEL
in quantities sufficient to meet demand.
Any delay in the manufacture of GLIADEL could result in delays in product
shipment. Delays in product shipment would have a material adverse effect on our
business, financial condition and results of operations.
Currently, we have no manufacturing capabilities for our product
candidates, including DOPASCAN. Consequently, in order to complete the
commercialization process of any of our product candidates, we must either
acquire, build or expand our internal manufacturing capabilities or rely on
third parties to manufacture these product candidates. We cannot be sure that we
or our corporate partners, including Amgen, will be able to (1) acquire, build
or expand facilities that will meet quality, quantity and timing requirements or
(2) enter into manufacturing contracts with others on acceptable terms, or at
all. Our inability, or that of our corporate partners, to accomplish these tasks
could have a material adverse effect on our business, financial condition and
results of operations.
Third-party manufacturers must also comply with FDA, Drug Enforcement
Administration, and other regulatory requirements for their facilities,
including the FDA's cGMP regulations. In addition, manufacture of product
candidates on a limited basis for investigational use in animal studies or human
clinical trials does not guarantee that large-scale, commercial production is
viable. Small changes in methods of manufacture can affect the safety, efficacy,
controlled release or other characteristics of a product. Changes in methods of
manufacture, including commercial scale-up, can, among other things, require the
performance of new clinical studies. Moreover, if we decide to manufacture one
or more of our product candidates ourselves, we would incur substantial start-up
expenses and need to expand our facilities and hire additional personnel.
WE FACE TECHNOLOGICAL UNCERTAINTIES RELATED TO RESEARCH, DEVELOPMENT AND
COMMERCIALIZATION.
The research, development and commercialization of pharmaceutical drugs
inherently involve significant risk. Except for GLIADEL, we do not expect to
generate revenues from product sales, including any products that may result
from our collaboration with Amgen, for at least the next several years, if ever.
To date we have dedicated substantially all of our resources to the discovery,
development
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and commercialization of proprietary products for (1) the diagnosis, treatment
and prevention of neurological diseases and conditions and (2) targeted,
controlled drug delivery using biodegradable polymers for the treatment of
cancer and other diseases. We expect to continue to dedicate substantially all
of our resources to these two areas for the foreseeable future. Before we or our
corporate partners can be in a position to commercialize a new product (i.e., to
market, distribute and sell the product), each of us will have to:
- expend substantial capital and effort to develop our
product candidates further, which includes conducting
extensive and expensive pre-clinical animal studies and
human clinical trials,
- apply for and obtain regulatory approval to market and sell
such product candidates, and
- conduct other costly activities related to preparation for
product launch, among many other activities.
In some of our research programs, we are using compounds that we consider
to be "prototype" compounds in the research phase of our work. These compounds
include GPI-6150 and GPI-2138. By prototype compounds we mean compounds that we
are using primarily to establish that a relevant scientific mechanism of
biological or chemical action could have commercial application in diagnosing,
treating or preventing disease. These activities are sometimes referred to as
establishing the "proof of principle" of a particular approach to drug research
and development. We generally do not consider our prototype compounds to be lead
compounds acceptable for further development into a product(s) because of
factors that render them unsuitable as drug candidates. Such factors include
sub-optimal metabolic or pharmacokinetic characteristics or unfavorable patent
coverage. In order to develop commercial products, we will need to conduct
research using other compounds that share the key aspects of the prototype
compounds but do not have the unsuitable characteristics. We cannot be sure that
this will always be possible.
In addition, our product candidates are subject to the risks of failure
inherent in the development of products based on new and unproved technologies.
These risks include the possibility that:
- our new approaches will not result in any products that
gain market acceptance;
- a product candidate will prove to be unsafe or ineffective,
or will otherwise fail to receive and maintain regulatory
clearances necessary for marketing,
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- a product, even if found to be safe and effective, could
still be difficult to manufacture on the large scale
necessary for commercialization or otherwise not be
economical to market,
- a product will unfavorably interact with other types of
commonly used medications, thus restricting the
circumstances in which our drugs may be used,
- proprietary rights of third parties will preclude us from
manufacturing or marketing a new product, or
- third parties will market superior or more cost-effective
products.
As a result, our activities, either directly or through corporate
partners, may not result in any commercially viable products.
WE ARE DEPENDENT ON COLLABORATIONS WITH THIRD PARTIES FOR THE DEVELOPMENT AND
COMMERCIALIZATION OF OUR PRODUCTS.
Our resources are limited, particularly because we are developing our
technologies for a variety of different diseases. Our business strategy requires
that we enter into various arrangements with:
- corporate partners, such as RPR and Amgen,
- academic investigators at universities, such as Johns
Hopkins and others,
- licensors of technologies, such as Johns Hopkins,
Massachusetts Institute of Technology and Research Triangle
Institute,
- licensees of our technologies, such as Daiichi Radioisotope
Laboratories, Ltd. and others.
Our success depends in large part upon the efforts of these parties.
Like many small biopharmaceutical companies, our business strategy
includes finding larger pharmaceutical companies to collaborate with us to
support the research, development and commercialization of our product
candidates. In trying to attract corporate partners to collaborate with us in
the research, development and commercialization process, we face serious
competition from other small biopharmaceutical companies and even the in-house
research and development staffs of the larger pharmaceutical companies
themselves. If we are unable to enter into such arrangements with corporate
partners, this failure may severely limit our
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ability to proceed with the research, development, manufacture or sale of
product candidates. For example, we are actively seeking corporate partners to
assist in the development of DOPASCAN as well as our NAALADase and PARP
inhibitor neuroprotective drug programs, but we may not find suitable corporate
partners for these programs.
It is common in many corporate partnerships in our industry for the
larger partner to have responsibility for conducting pre-clinical studies and
human clinical trials and/or preparing and submitting applications for
regulatory approval of potential pharmaceutical or other products. That is the
case with some of our current corporate partnerships, including our
collaboration with Amgen. It is likely that it will also be the case with any
future similar arrangements into which we enter. If one of our collaborative
partners fails to develop or commercialize successfully any of our product
candidates, this failure could materially and adversely affect our business,
financial condition and results of operations.
Furthermore, larger pharmaceutical companies often explore multiple
technologies and products for the same medical conditions. Therefore they are
likely to enter into collaborations with our competitors for products addressing
the same medical conditions targeted by our technologies. Thus our
collaborators, including Amgen, may pursue alternative technologies or product
candidates either on their own or in collaboration with others, including our
competitors, in order to develop treatments for the diseases or disorders
targeted by our collaborative arrangements. Depending on how other product
candidates advance, a corporate partner may slow down or abandon its work on our
product candidates or terminate its collaborative arrangement with us in order
to focus on these other prospects.
We also depend to a large extent on technology license agreements with
third parties, including our agreements with Johns Hopkins relating to the
neuroimmunophilin ligand technology. This license agreement and others we have
require that we meet a specified schedule for achieving designated research,
development and regulatory milestones and that we spend minimum amounts of money
to develop the technology. If we are unable to meet these requirements under a
license, our licensor could terminate the license and thus deprive us of access
to key technology. A deprivation of this type could have a material adverse
effect on our business, financial condition and results of operations.
WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL NEEDED TO OPERATE AND GROW OUR
BUSINESS.
We are not profitable and do not expect to be profitable for the next
several years, if ever. Consequently, we will require substantial funds in order
to continue our research and development programs and pre-clinical and clinical
testing and to
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manufacture and, where applicable, market our products. Under our operating
lease with a trust affiliated with First Union National Bank for our new
research and development facility, we are required to hold in the aggregate
unrestricted cash, cash equivalents and investments of $40 million at all times
during the term of the lease. In addition, we are required to maintain specified
amounts of cash as collateral at First Union under this arrangement and loan
agreements with First Union. These requirements may limit our ability to access
our capital in the future.
Our capital requirements depend on numerous factors, including:
- the progress of our research and development programs,
- the progress of pre-clinical and clinical testing,
- the time and costs involved in obtaining regulatory
approvals,
- the cost of filing, prosecuting, defending and enforcing
any patent claims and other intellectual property rights,
- competing technological and market developments,
- changes in our existing research relationships with
universities and others,
- our ability to establish collaborative arrangements with
large pharmaceutical companies and others,
- the requirements and timing of entering into technology
licensing agreements and other similar arrangements, and
- the progress of efforts to scale-up manufacturing
processes.
We believe that our existing resources will be sufficient to fund our
activities at least for the next twelve months. Nevertheless, we may use these
existing resources before that time because of changes in our research and
development and commercialization plans or other factors affecting our operating
expenses or capital expenditures, including potential acquisitions of other
businesses, assets or technologies.
We anticipate that we will fund future capital requirements through a
combination of:
- revenues generated under our agreements with RPR relating
to GLIADEL,
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- revenues generated under our agreement with Amgen related
to the FKBP neuroimmunophilin ligand technology,
- public or private financings as necessary,
- borrowings from RPR under our loan agreement with it,
- new agreements with corporate partners for the research,
development and commercialization of our technologies,
and/or
- other potential sources.
Our ability to raise future capital on acceptable terms depends on
conditions in the public and private equity markets and our performance, as well
as the overall performance of other companies in the biopharmaceutical and
biotechnology sectors. We cannot be sure that we will be able to obtain any
future funds that we may require on acceptable terms, or at all.
OUR STOCK PRICE IS VOLATILE.
The market price of our stock has been and is likely to continue to be
highly volatile, and an investment in our shares involves substantial risks. The
market prices for shares of smaller biotechnology companies like ours have a
history of being highly volatile. Furthermore, the stock market generally and
the market for stocks of companies with lower market capitalizations, like us,
have from time to time experienced and likely will again experience significant
price and volume fluctuations that are unrelated to the operating performance of
a particular company.
From time to time stock market professionals publish research reports
covering our business and our future prospects. A number of factors may limit
our ability to meet the expectations of securities analysts or investors and
thus may adversely affect our stock price. Such factors include:
- announcements by us or our competitors of clinical results,
technological innovations, product sales, new products or
product candidates,
- developments or disputes concerning patent or proprietary
rights,
- regulatory developments affecting our products,
- period-to-period fluctuations in the results of our
operations, and
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- market conditions for emerging growth companies and
biopharmaceutical companies.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, PERMITTING COMPETITORS TO
DUPLICATE OUR PRODUCTS AND SERVICES.
Our success will depend in large part on our ability to:
- obtain, maintain and enforce patent protection for our
products and processes,
- license rights to patents from third parties,
- maintain trade secret protection, and
- operate without infringing upon the proprietary rights of
others.
Patent protection for our technologies and products will be a crucial
factor in our ability to develop and commercialize our products. Large
pharmaceutical companies consider a strong patent estate critical when they
evaluate whether to enter into a collaborative arrangement to support the
research, development and commercialization of a technology. Without the
prospect of reasonable patent protection, it would be difficult for a corporate
partner, or our company for that matter, to justify the time and money that is
necessary to complete the development of a product.
The rules and criteria for receiving and enforcing a patent for
pharmaceutical and biotechnological inventions are in flux and are unclear in
many respects. The ultimate scope of patent protection afforded these types of
patents remains uncertain, and a number of our product candidates are subject to
this uncertainty.
Many others, including companies, universities and other research
organizations, work in the areas of our business, and we cannot be sure that the
claims contained in our issued patents will be interpreted as broadly as we
would like in light of the inventions of these other parties. In addition, we
cannot be sure that the claims set forth in our pending patent applications will
issue in the form submitted. These claims may be narrowed or stricken, and the
applications may not ever ultimately result in valid and enforceable patents.
We are aware of a company which has asserted publicly that it has
submitted five U.S. patent applications, one of which is under Notice of
Allowance, claiming the use of certain of its immunosuppressive compounds and
certain multidrug
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<PAGE> 19
resistance compounds for nerve growth applications. This company has also
publicly stated that it holds nine issued U.S. patents and three U.S. patent
applications pending, one of which is under a Notice of Allowance, that it
states claim compounds that are useful in nerve growth applications. We do not
believe that our neurotrophic compounds, including those under the FKBP
neuroimmunophilin ligand technology licensed to Amgen, infringe on this
company's patents. Nevertheless, we cannot be sure that our patents and patent
applications will adequately protect our neurotrophic product candidates. Thus
our neurotrophic product candidates may infringe or be dominated by this
company's current patents or patents that may issue in the future, or those of
any other company.
In order to protect our proprietary position with respect to our
neuroimmunophilin ligands, we filed an opposition in 1998 in an effort to
prevent the final issuance of a European patent to the company we reference in
the immediately preceding paragraph. While we do not believe the claims of this
European patent would be valid, any final issuance could result in future
litigation if this company were to allege that we infringed the claims of this
patent in Europe.
Furthermore, we cannot be sure that any or all of the patent applications
assigned or licensed to us from third parties will be granted. We cannot offer
assurances that we will develop additional products or processes that are
patentable, or that any patents issued to us, or licensed by us, will provide us
with any competitive advantages or adequate protection for our products. We also
cannot be sure that others will not successfully challenge, circumvent or
invalidate any or our existing or future patents or intellectual property.
Our policy is to control the disclosure and use of our know-how and trade
secrets by entering into confidentiality agreements with our employees,
consultants and third parties. There is a risk, however, that:
- these parties will not honor our confidentiality
agreements,
- others will independently develop equivalent or competing
technology,
- disputes will arise concerning the ownership of
intellectual property or the applicability of
confidentiality obligations, or
- disclosure of our trade secrets will occur regardless of
these contractual protections.
In our business, we often work with consultants and research
collaborators at universities and other research organizations. To the extent
that any of these consultants or research collaborators use intellectual
property owned by others as part of their work with us, disputes may arise
between us and these other parties as
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<PAGE> 20
to which one of us has the rights to intellectual property related to or
resulting from the work done.
We support and collaborate in research conducted in universities, such as
Johns Hopkins, and in governmental research organizations, such as the National
Institutes of Health. We cannot be sure that we will have or be able to acquire
exclusive rights to the inventions or technical information that result from
work performed by university personnel or at these organizations. Also, disputes
may arise as to which party should have rights in research programs that we
conduct on our own or in collaboration with others that are derived from or
related to the work performed at the university or governmental research
organization. In addition, in the event of a contractual breach by us, some of
our collaborative research contracts provide that we must return the technology
rights (including any patents or patent applications) to the contracting
university or governmental research organization.
Questions of infringement of intellectual property rights, including
patent rights, may involve highly technical and subjective analyses. Some or all
of our existing or future products or technologies may now or in the future
infringe the rights of other parties. These other parties might initiate legal
action against us to enforce their claims, and our defense of the claims might
not be successful.
We may incur substantial costs if we must defend against charges of
infringement of patent or proprietary rights of third parties. We may also incur
substantial costs if we find it necessary to protect our own patent or
proprietary rights by bringing suit against third parties, including suits
involving our neurotrophic product candidates. We could also lose rights to
develop or market products or be required to pay monetary damages or royalties
to license proprietary rights from third parties. In response to actual or
threatened litigation, we may seek licenses from third parties or attempt to
redesign our products or processes to avoid infringement. We cannot be sure that
we will be able to obtain licenses on acceptable terms, or at all, or
successfully redesign our products or processes.
In addition to the risk that we could be a party to patent infringement
litigation, the U.S. Patent and Trademark Office, or its foreign counterparts,
could require us to participate in patent interference proceedings that it
declares. These proceedings are often expensive and time-consuming, even if we
were to prevail in such a proceeding. We may also be forced to initiate legal
proceedings to protect our patent position or other proprietary rights. These
proceedings typically are costly, protracted, and offer no assurance of success.
Under our collaboration, Amgen is responsible for preparing, filing,
prosecuting, maintaining and defending patent applications and patents relating
to the FKBP neuroimmunophilin ligand technology. We cannot be sure that Amgen
will pursue these activities in the same manner or as vigorously as we would if
we had that
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responsibility. Furthermore, Amgen has the option to take the lead in bringing
actions to enforce patent rights relating to the FKBP neuroimmunophilin ligand
technology and to defend against third party infringement suits regarding that
technology. While Amgen and Guilford have agreed to consult with each other on
such matters, in the event of disagreement, Amgen's decisions will control.
WE ARE DEPENDENT ON LICENSED INTELLECTUAL PROPERTY.
We have licensed intellectual property, including patents, patent
applications and know-how, from universities and others, including intellectual
property underlying GLIADEL, DOPASCAN and the neuroimmunophilin ligand
technology. Some of our product development programs depend on our ability to
maintain rights under these licenses. Under the terms of our license agreements,
we are generally obligated to:
- exercise diligence in the research and development of these
technologies,
- achieve specified development and regulatory milestones,
- expend minimum amounts of resources in bringing potential
products to market,
- make specified royalty and milestone payments to the party
from which we have licensed the technology, and
- reimburse patent cost to these parties.
In addition, these license agreements obligate us to abide by
record-keeping and periodic reporting obligations. Each licensor has the power
to terminate its agreement if we fail to meet our obligations under that
license. We may not be able to meet our obligations under these license
agreements. Furthermore, these obligations may conflict with our obligations
under other agreements that we have.
If we default under any of these license agreements, we may lose our
right to market and sell any products based on the licensed technology. Losing
our marketing and sales rights would have a material and adverse effect on our
business, financial condition and results of operations. Our license agreements
require that we pay a royalty on sales of GLIADEL to the university that
licensed us the technology underlying that product. In addition, we will have to
pay milestone and/or royalty payments in connection with the successful
development and commercialization of DOPASCAN and any products that result from
the neuroimmunophilin ligand technology.
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In the future, to support our product development efforts, we may need
research materials or scientific information that researchers at universities or
other organizations generate. We cannot be sure that we will be able to obtain
this scientific information or research materials in a timely manner or at all.
REVENUES FROM OUR PRODUCTS ARE DEPENDENT IN PART ON REIMBURSEMENT FROM HEALTH
CARE PAYORS, WHICH IS UNCERTAIN.
Sales of our product candidates will depend in part on the availability
of reimbursement from third-party health care payors, such as government
insurance plans, including Medicare and Medicaid in the United States, private
insurance and managed care plans. Reimbursement policies for GLIADEL remain
uncertain, both domestically and internationally. We cannot be sure that any
reimbursement will be available for GLIADEL or any of our product candidates
under development. Furthermore, even if reimbursement is available, we cannot be
sure that it will be available at price levels sufficient to realize an
appropriate return on our investment in GLIADEL or other products in
development.
WE ARE DEPENDENT ON ONE SOURCE OF SUPPLY FOR SEVERAL OF OUR KEY PRODUCT
COMPONENTS.
Currently we are able to purchase some of the key components for GLIADEL
and our product candidates only from single source suppliers. These vendors are
subject to many strict regulatory requirements regarding the supply of these
components. We cannot be sure that these suppliers will comply, or have
complied, with applicable regulatory requirements or that they will otherwise
continue to supply us with the key components we require. If suppliers are
unable or refuse to supply us, or will supply us only at a prohibitive cost, we
may not be able to access additional sources at acceptable prices, on a timely
basis, if ever.
The current formulation of GLIADEL utilizes the chemotherapeutic agent,
BCNU, which is also known as "carmustine". Currently we have the option to
procure BCNU from only two sources in the United States, and we are not aware of
any supplier outside of the United States. We currently obtain BCNU from one of
these two U.S. suppliers on a purchase order basis and not through any long-term
supply agreement. If we fail to receive key supplies necessary for the
manufacture of GLIADEL on a timely basis at a reasonable cost, delays in product
shipment could result. Delays of this type would have a material adverse effect
on our business, financial condition and results of operations.
The manufacture of DOPASCAN requires that a precursor compound be labeled
with a radioactive isotope of iodine, known as Iodine-123, to form the final
product. Only a limited number of companies worldwide are capable of performing
the necessary "radioiodination" of the precursor and distribution of the final
product.
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Currently, we do not have any arrangement for the manufacture and supply of
DOPASCAN nor do we have the internal capability to manufacture DOPASCAN
ourselves. Consequently, we will not be in a position to commence Phase III or
other clinical trials for DOPASCAN until we locate a qualified supplier.
We have assessed the companies that we believe are currently capable of
manufacturing a product like DOPASCAN. Based on this assessment, we believe a
significant risk exists that we may not be able to find a manufacturer who can
meet the quality and cost requirements required to conduct the Phase III
clinical trials that will be necessary to support application to the FDA for
regulatory approval. Inability to come to agreement with a suitable manufacturer
for the clinical and commercial supply of DOPASCAN on acceptable terms would
prevent us from developing this product candidate further.
THE U.S. GOVERNMENT HOLDS RIGHTS WHICH MAY PERMIT IT TO LICENSE TO THIRD PARTIES
TECHNOLOGY WE CURRENTLY HOLD THE EXCLUSIVE RIGHT TO USE.
The U.S. government holds rights that govern aspects of the technology
licensed to us. These rights include a non-exclusive, royalty-free, worldwide
license for the government to practice or have practiced resulting inventions
for any governmental purpose. In addition, the U.S. government has the right to
grant to others licenses which may be exclusive under any of these inventions if
the government determines that:
- adequate steps have not been taken to commercialize such
inventions,
- the grant is necessary to meet public health or safety
needs, or
- the grant is necessary to meet requirements for public use
under federal regulations.
The U.S. government also has the right to take title to a subject
invention if we fail to disclose the invention, and may elect to take title
within specified time limits. The U.S. government may acquire title in any
country in which we do not file a patent application within specified time
limits.
Federal law requires any licensor of an invention partially funded by the
federal government to obtain a commitment from any exclusive licensee, such as
us, to manufacture products using the invention substantially in the United
States. Further, these rights include the right of the government to use and
disclose technical data relating to licensed technology that was developed in
whole or in part at government expense. Our principal technology license
agreements contain provisions recognizing these rights.
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We have entered into a contract with the U.S. Army, funded by the Office
of National Drug Control Policy, commonly referred to as the "Drug Czar", to
provide financial support for research being conducted by us on a potential
cocaine inhibitor. That contract permits the U.S. government to obtain unlimited
rights in data developed in the course of our performance if we do not use the
data within five years after termination of the contract to conduct further
laboratory investigation and/or clinical trials aimed at developing a commercial
product to combat drug abuse.
PRE-CLINICAL AND CLINICAL TRIAL RESULTS FOR OUR PRODUCTS MAY NOT BE FAVORABLE.
In order to obtain regulatory approval for the commercial sale of any of
our product candidates, we must conduct both pre-clinical studies and human
clinical trials. These studies and trials must demonstrate that the product is
safe and effective for the clinical use for which we are seeking approval.
Together with RPR, we commenced a Phase III clinical trial for GLIADEL in
December 1997 in patients undergoing initial surgery for the brain cancer
malignant glioma. We cannot be sure that the results of this or other clinical
trials we may conduct in the future will be successful. Adverse results from
this or any future trial would have a material adverse effect on our business,
financial condition and results of operations.
We also face the risk that we will not be permitted to undertake or
continue clinical trials for any of our product candidates in the future. Even
if we are able to conduct such trials, we may not be able to demonstrate
satisfactorily that the products are safe and effective and thus qualify for the
regulatory approvals needed to market and sell the products. Results from
pre-clinical studies and early clinical trials are often not accurate indicators
of results of later-stage clinical trials that involve larger human populations.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION, WHICH MAY CHANGE AND HARM
OUR BUSINESS.
Our research, pre-clinical development and clinical trials and the
manufacturing and marketing of our product candidates are subject to extensive
regulation by numerous governmental authorities in the United States and other
countries, including the FDA and the DEA. Except for GLIADEL, none of our
product candidates has received marketing clearance from the FDA. In addition,
none of our product candidates has received clearance from any foreign
regulatory authority for commercial sale, except with respect to GLIADEL, which
has received marketing clearance in a very limited number of foreign countries.
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As a condition to approval of our product candidates under development,
the FDA could require additional pre-clinical, clinical or other studies. Any
requirement that we perform additional pre-clinical, clinical or other studies,
or purchase clinical or other data from other companies could have a material
adverse effect on our business, financial condition and results of operations.
In order to obtain FDA approval of a new drug product for a specific
clinical use, we must demonstrate to the satisfaction of the FDA that the
product is safe and effective for its intended use. We must also demonstrate
that the product is capable of being manufactured in accordance with applicable
regulatory standards. Significant risks exist that:
- we will not be able to satisfy the FDA's requirements with
respect to any of our drug product candidates or with
respect to the proposed expanded labeling for GLIADEL for
patients undergoing initial surgery for malignant glioma,
or
- even if the FDA does approve our product candidates or
expanded labeling, the FDA will approve less than the full
scope of uses or labeling that we seek.
Failure to obtain regulatory drug approvals on a timely basis could have
a material adverse effect on our business, financial condition and results of
operations.
Even if we are able to obtain necessary FDA approval, the FDA may
nevertheless require post-marketing testing and surveillance to monitor the
approved product and continued compliance with regulatory requirements. The FDA
may withdraw product approvals if we or our corporate partners, such as RPR in
the case of GLIADEL, do not maintain compliance with regulatory requirements.
The FDA may also withdraw product approvals if problems concerning safety or
efficacy of the product occur following approval.
The process of obtaining FDA and other required approvals or licenses and
of meeting other regulatory requirements to test and market drugs, including
controlled substances and radiolabeled drugs, is rigorous and lengthy. It has
required, and will continue to require, that we expend substantial resources. We
will need to conduct clinical trials and other studies on all of our product
candidates before we are in a position to file a new drug application for
marketing and sales approval. Unsatisfactory clinical trial results and other
delays in obtaining regulatory approvals or licenses would prevent the marketing
of the products we are developing. Until we receive the necessary approvals or
licenses and meet other regulatory requirements, we will not receive revenues or
royalties related to product sales.
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In addition to the requirements for product approval, before a
pharmaceutical product may be marketed and sold in some foreign countries, the
proposed pricing for the product must be approved as well. Products may be
subject to price controls or limits on reimbursement. The requirements governing
product pricing and reimbursement vary widely from country to country and can be
implemented disparately at the national level. As to reimbursement, the European
Union generally provides options for its fifteen Member States to restrict the
range of medicinal products covered by their national health insurance systems.
The European Union also generally provides options for its Member States to
control the prices of medicinal products for human use. A Member State may
approve a specific price for the medicinal product or it may, instead, adopt a
system of direct or indirect controls on the profitability of the company
placing the medicinal product on the market. We cannot guarantee that any
country which has price controls or reimbursement limitations for
pharmaceuticals will allow favorable reimbursement and pricing arrangements for
our products or those of our corporate partners, including RPR and its
applications for GLIADEL in France, Canada and elsewhere outside the United
States.
We hope to capitalize on current FDA regulations and the new provisions
of the FDA Modernization Act of 1997. These regulations and provisions permit
"fast track" approval or more limited "treatment use" of, and cost recovery for,
certain experimental drugs under limited circumstances. The FDA's fast track
accelerated or expedited regulations apply only to:
- drug products intended to treat seriously debilitating or
life-threatening diseases and that provide meaningful
therapeutic benefit to patients over existing treatments,
or
- drug products that are for diseases for which no
satisfactory or alternative therapy exists.
The FDA's Modernization Act contains provisions patterned after the
accelerated approval regulations and other provisions pertaining to expanded
access, i.e., treatment uses. Since some of the new statutory provisions and
current FDA regulations are different from one another, it is unclear how they
will apply, if at all, to our drug candidates. We cannot be sure that our drug
candidates will qualify for fast-track approvals or for treatment use and cost
recovery.
Controlled drug products and radiolabeled drugs are subject to special
regulations in addition to those applicable to other drugs. Some of our products
and product candidates, including DOPASCAN, are or may be subject to regulation
by the DEA as controlled substances and other federal agencies as radiolabeled
drugs. If we are unable to continue to obtain exceptions from the DEA for
shipment abroad
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or other activities, as we have in the past, this situation could have a
material adverse effect on us.
We have obtained registrations for our facilities from the DEA. We have
also obtained exceptions from the DEA with respect to various of our activities
involving DOPASCAN, including the shipment of specified quantities of a
precursor of this product candidate to an overseas collaborative partner.
However, we cannot be sure that these exceptions will be sufficient to cover our
future activities or that the DEA will not revoke the exceptions. We also cannot
be sure that we will be able to meet the other requirements to test, manufacture
and market controlled substances or radiolabeled drugs, or that we will be able
to obtain additional necessary approvals or licenses to meet state, federal and
international regulatory requirements to manufacture and distribute these
products. The Modernization Act requires the FDA to issue and finalize within
one and one-half years regulations governing the approval of radiolabeled drugs.
We do not know and cannot predict how these and other provisions may affect the
potential for approval of DOPASCAN.
OUR PRODUCTS USE NOVEL ALTERNATIVE TECHNOLOGIES AND THERAPEUTIC APPROACHES WHICH
HAVE NOT BEEN WIDELY STUDIED.
Many of our product development efforts focus on novel alternative
therapeutic approaches and new technologies that have not been widely studied.
Applications for these approaches and technologies include, among other things,
the treatment of brain cancer, the diagnosis and monitoring of Parkinson's
disease, the promotion of nerve growth and the prevention of neuronal damage.
These approaches and technologies may not be successful. We are applying these
approaches and technologies in our attempt to discover new treatments for
conditions that are also the subject of research and development efforts of many
other companies. Our competitors may succeed in developing technologies or
products that are more effective or economical than those we are developing.
Rapid technological change or developments by others may result in our
technology or product candidates becoming obsolete or noncompetitive.
OUR BUSINESS IS DEPENDENT ON OUR ABILITY TO KEEP PACE WITH THE LATEST
TECHNOLOGICAL CHANGES.
The technological areas in which we work continue to evolve at a rapid
pace. Our future success depends upon maintaining our ability to compete in the
research, development and commercialization of products and technologies in our
areas of focus. Competition from pharmaceutical, chemical and biotechnology
companies, universities and research institutions is intense and expected to
increase. Many of these competitors have substantially greater research and
development capabilities and experience and manufacturing, marketing, financial
and managerial resources than we do, and represent significant competition for
us.
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Acquisitions of competing companies by large pharmaceutical companies or
other companies could enhance financial, marketing and other resources available
to these competitors. These competitors may develop products that are superior
to those we are developing. We are aware of the development by other companies
and research scientists of alternative approaches to:
- the treatment of malignant glioma,
- the diagnosis of Parkinson's disease,
- the promotion of nerve growth and repair,
- the treatment and prevention of neuronal damage, and
- the treatment of cocaine addiction.
Our competitors may develop products that render our products or
technologies noncompetitive or obsolete. In addition, we may not be able to keep
pace with technological developments.
Any product candidate that we develop and for which we gain regulatory
approval, including GLIADEL, must then compete for market acceptance and market
share. An important factor will be the timing of market introduction of
competitive products. Accordingly, we expect that the relative speed with which
we and competing companies can develop products, complete the clinical testing
and approval processes, and supply commercial quantities of the products to the
market will be an important element of market success.
Significant competitive factors include:
- capabilities of our collaborators,
- product efficacy and safety,
- timing and scope of regulatory approval,
- product availability,
- marketing and sale capabilities,
- reimbursement coverage from insurance companies and others,
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- the amount of clinical benefit of our product candidates
relative to their cost,
- the method of administering a product,
- price, and
- patent protection.
Our competitors may very well develop more effective or more affordable
products or achieve earlier product development completion, patent protection,
regulatory approval or product commercialization than we do. Our competitors'
achievement of any of these goals could have a material adverse effect on our
business, financial conditions and results of operations.
WE HAVE LIMITED CLINICAL AND REGULATORY COMPLIANCE CAPABILITIES.
We have limited resources in the areas of product testing and regulatory
compliance. Consequently, in order to carry our products through the necessary
regulatory approvals and prepare our product candidates for commercialization
and marketing, we will have to:
- expend capital to acquire and expand such capabilities,
- reach collaborative arrangements with third parties to
provide these capabilities, or
- contract with third parties to provide these capabilities.
WE ARE SUBJECT TO RISKS OF PRODUCTS LIABILITY.
We may potentially become subject to large liability claims and
significant defense costs as a result of the design, manufacture or marketing of
our products, including GLIADEL, or the conduct of clinical trials involving
these products. A products liability-related claim or recall could have a
material adverse effect on us. We currently maintain only $15 million of product
liability insurance covering clinical trials and product sales. We cannot be
sure that this existing coverage or any future insurance coverage we obtain will
be adequate. Furthermore, we cannot be sure that our insurance will even cover
any claims made against us.
Product liability insurance varies in cost. It can be difficult to
obtain, and we may not be able to purchase it in the future on terms acceptable
to us, or at all. We also may not be able to otherwise protect against potential
product liability claims.
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If this occurs, it could prevent or inhibit the clinical development and/or
commercialization of any products we are developing.
WE ARE DEPENDENT ON QUALIFIED PERSONNEL AND CONSULTANTS.
We depend heavily on the principal members of our management and
scientific staff, including Craig R. Smith, M.D., our Chief Executive Officer,
and Solomon H. Snyder, M.D., who is member of our Board of Directors and a
consultant to our company. The loss of the services of either of these
individuals or other members of our senior management team could have a material
adverse effect on our business, financial condition and results of operations.
We have entered into a consulting agreement with Dr. Snyder and an
employment agreement with Dr. Smith, each of which provides protection for our
proprietary rights. Nevertheless, either Dr. Snyder or Dr. Smith may terminate
his relationship with us at any time. Accordingly, we cannot be sure that either
of these individuals or any of our other employees or consultants will remain
with us. In the future they may take jobs or consulting positions with our
competitors. These employees or consultants may also choose to organize
competing companies or ventures.
Our planned activities will require individuals with expertise in many
areas including:
- medicinal chemistry and other research specialties,
- pre-clinical testing,
- clinical trial management,
- regulatory affairs,
- manufacturing, and
- business development.
These planned activities will require additional personnel, including
management personnel, and will also require existing management personnel to
develop added expertise. Recruiting and retaining qualified personnel,
collaborators, advisors and consultants will be critical to our activities. We
cannot be sure that we will be able to attract and retain the personnel
necessary for the development of our business. Furthermore, many pharmaceutical,
biotechnology and health care companies and academic and other research
institutions compete intensely for experienced scientists. If we are not able to
hire the necessary
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experienced scientists or develop the necessary expertise, this inability could
have a material adverse effect on our operations. In addition, we also depend on
the support of our collaborators at research institutions and our consultants.
WE CURRENTLY LACK SALES AND MARKETING EXPERIENCE.
We currently do not have a sales force, and we have no experience in
marketing or selling a product in a commercial setting. If we decide to
establish an in-house sales force, our efforts may not be successful in this
regard. In addition, if we succeed in bringing additional products to market,
our sales force will have to compete with many other companies that currently
have extensive and well-funded marketing and sales operations. We cannot be sure
that our marketing and sales efforts would compete successfully against these
other companies.
OUR BUSINESS INVOLVES USING HAZARDOUS AND RADIOACTIVE MATERIALS AND ANIMAL
TESTING, ALL OF WHICH MAY RESULT IN ENVIRONMENTAL LIABILITY.
Our research and development processes involve the controlled use of
hazardous and radioactive materials. We and our collaborative partners are
subject to international, federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous and
radioactive materials. We believe that the safety procedures relating to our
in-house research and development and manufacturing efforts comply in all
material respects with the standards prescribed by such laws and regulations.
However, we cannot completely eliminate the risk of accidental contamination or
injury from these materials. Moreover, we cannot be sure that our collaborative
partners are currently complying with the governing standards. We also cannot be
sure that we and our collaborative partners will be in compliance with such
standards in the future. If a regulatory authority determines that we or our
collaborative partners are not complying with the governing laws and
regulations, that determination could have a material adverse effect on our
business, operations or finances. In addition, we and/or our collaborative
partners could be held liable for damages, fines or other liability, which could
exceed our resources.
We believe that we are and will continue to be in compliance in all
material respects with applicable environmental laws and regulations and
currently do not expect to make material capital expenditures for environmental
control facilities in the near term. However we may have to incur significant
costs to comply with environmental laws and regulations in the future. In
addition, future environmental laws or regulations may have a material adverse
effect on our operations, business or assets.
Many of the research and development efforts we sponsor involve the use
of laboratory animals. Changes in laws, regulations or accepted clinical
procedures
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may adversely affect these research and development efforts. Social pressures
that would restrict the use of animals in testing or actions against us or our
collaborators by groups or individuals opposed to testing using animals could
also adversely affect these research and development efforts.
THE COMMON STOCK SOLD IN THIS OFFERING MAY INCREASE THE AMOUNT OF OUR COMMON
STOCK ON THE PUBLIC MARKET, CAUSING OUR STOCK PRICE TO DECLINE.
As of June 30, 1999, we had approximately 19.7 million shares of common
stock outstanding. As of that date, we had issued options to purchase
approximately an aggregate of 3.7 million shares of our common stock and
warrants to purchase approximately 700,000 additional shares of our common
stock.
A significant portion of our outstanding common stock is freely tradable
in the public markets. Additionally, shares issuable upon exercise of
outstanding options and warrants would be freely tradable in the public markets.
Amgen, which holds approximately 640,095 shares of our common stock and warrants
to purchase an additional 700,000 shares, has rights to register the shares of
common stock underlying these options and warrants with the SEC for sale in the
public market. Amgen may exercise its registration rights at any time. The
exercise of these registration rights would permit the resale of some or all of
such shares in the public market.
If we were to initiate a public offering of our shares in the future to
raise additional capital, Amgen could require us to include their shares in the
registration. If Amgen requests inclusion in the registration, the sale of its
shares could limit our ability to raise the desired additional capital. We
cannot predict what effect, if any, sales of shares of our common stock by Amgen
or the availability for sale such shares will have on the market prices of our
common stock prevailing from time to time. The possibility that substantial
amounts of our common stock may be sold in the public market could create a
downward force on the prevailing market prices for our common stock. This
possibility could also impair our ability to raise capital through the sale of
our stock.
During the term of the outstanding warrants and options, the holders can
take advantage of a rise in the market price of our common stock by purchasing
the shares underlying their warrants and options from us and then reselling
those shares on the public market. The holders can profit from the difference
between the price they have to pay to us to issue the shares to them and the
higher price for which they can sell the shares on the public market.
Accordingly, holders of options and warrants will most likely exercise them at
times when the market price of our common stock is high relative to the exercise
prices of the options and warrants with the intention of promptly reselling the
shares in the public market.
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<PAGE> 33
This practice could negatively affect our other stockholders in certain
ways, including the following:
- placing downward pressure on the market price for our
common stock by adding to the volume of our shares
available for sale at a given time;
- diluting the interests of other stockholder by issuing
shares at below-market prices upon the exercise of options
and warrants; and
- limiting our ability to sell shares our self to the public
market since we might want to raise capital at times that
our stock price is relatively higher.
EFFECTING A CHANGE OF CONTROL OF GUILFORD WOULD BE DIFFICULT, WHICH MAY
DISCOURAGE OFFERS FOR SHARES OF OUR COMMON STOCK.
Our certificate of incorporation and the Delaware General Corporation Law
contain provisions that may delay or prevent an attempt by a third party to
acquire control of us. These provisions include the requirements of Section 203
of the Delaware General Corporation Law. In general, Section 203 prohibits
designated types of business combinations, including mergers, for a period of
three years between us and any third party who owns 15% or more of our common
stock. This provision does not apply if:
- our Board of Directors approves of the transaction before
the third party acquires 15% of our stock,
- the third party acquires at least 85% of our stock at the
time its ownership goes past the 15% level, or
- our Board of Directors and two-thirds of the shares of our
common stock not held by the third party vote in favor of
the transaction.
We have also adopted a stockholder rights plan intended to deter hostile
or coercive attempts to acquire us. Under the plan, if any person or group
acquires more than 20% of our common stock without approval of the Board of
Directors under specified circumstances, our other stockholders have the right
to purchase shares of our common stock, or shares of the acquiring company, at a
substantial discount to the public market price. The plan thus makes an
acquisition much more costly to a potential acquirer.
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<PAGE> 34
Our certificate of incorporation also authorizes us to issue up to
4,700,000 shares of preferred stock in one or more different series with terms
fixed by the Board of Directors. We do not have to obtain stockholder approval
to issue preferred stock in this manner. Issuance of these shares of preferred
stock could have the effect of making it more difficult for a person or group to
acquire control of us. No shares of our preferred stock are currently
outstanding. While our Board of Directors has no current intentions or plans to
issue any preferred stock, issuance of these shares could also be used as an
anti-takeover device.
OUR OPERATIONS AND BUSINESS COULD BE DISRUPTED OR DAMAGED IF OUR SYSTEMS AND
PRODUCTS ARE NOT YEAR 2000 COMPLIANT.
We have conducted and continue to conduct a review of our internal
computer systems to determine whether these systems will experience a so-called
"Year 2000 problem". We have also made inquiries of third parties with which we
do business with respect to their computer systems, to determine whether their
systems will experience a Year 2000 problem. A Year 2000 problem would result
from a computer system, which includes embedded software in computer chips,
recognizing the first two digits of a year after the year 1999 as "19" instead
of "20", thereby reading the wrong year.
While at this point we believe we have identified and replaced or
corrected all internal computer systems that would cause a significant Year 2000
problem, we cannot be sure that we have not missed one or more internal computer
systems that could be adversely affected by the Year 2000 problem. If our
remediation efforts later prove to be inadequate, this failure could disrupt
important operations that could affect the manufacture of GLIADEL as well as
research, development and commercialization of our potential products. We would
then be at a competitive disadvantage relative to companies that have corrected
Year 2000 problems.
In addition, the third parties with which we do business may not identify
and replace in a timely manner those of their computer systems that will fail or
not properly function because of a Year 2000 problem. These third parties
include our corporate partners such as RPR and Amgen, our banks and the
financial institutions that hold our financial assets, and our significant
vendors. Other than making inquiries of these third parties and assessing their
responses, we are not in a position to verify independently the Year 2000
compliance status of these third parties. In most cases we have limited or no
ability to directly influence the Year 2000 compliance activities of these third
parties. Failure of any or all of these third parties to achieve substantial
Year 2000 compliance could have a material adverse effect on our business,
financial condition and results of operations.
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<PAGE> 35
Finally, our ability to continue to manufacture GLIADEL, conduct our
research and product development programs, and function as a viable business
enterprise depends on the continued availability of various basic infrastructure
systems. These include electric power, telecommunications and transportation
systems. We cannot be sure that the Year 2000 issue will not disrupt these
infrastructure systems. If such disruptions were to occur in the Baltimore,
Maryland metropolitan region where our manufacturing facilities and research and
development laboratories are located and/or the East Coast of the United States,
these disruptions could very well have a material adverse effect on our
business, financial condition, results of operations, or business prospects.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also read
and copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-732-0330 for further information on the public reference rooms.
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 these 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 supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the selling stockholder sells all of its common stock:
- Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
- Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999;
- The description of our common stock contained in Form 8-A
filed on March 25, 1994.
To obtain a copy of these filings at no cost, you may write or
telephone us at the following address:
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<PAGE> 36
Corporate Secretary
Guilford Pharmaceuticals Inc.
6611 Tributary Street
Baltimore, MD 21224
(410) 631-6300
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common
stock.
SELLING STOCKHOLDER
This prospectus relates to the offering by Bear, Stearns
Securities Corp. as nominee for Bear, Stearns International Limited of up to
312,933 shares of common stock. Bear, Stearns acquired the common stock through
the exercise of a warrant acquired in a private placement.
During the past three years, Bear, Stearns had no material
relationship with Guilford. Bear, Stearns is selling 312,933 shares of our
common stock, which represents 1.6% of our outstanding common stock. After the
offering, the selling stockholder will not own any shares.
The selling stockholder does not have to sell all of the shares it
owns.
PLAN OF DISTRIBUTION
Guilford has registered the shares of common stock on behalf of
the selling stockholder, including its pledgees, donees, transferees or other
successors in interest.
The selling stockholder may sell the common stock from time to
time. The selling stockholder may make these sales on one or more exchanges, in
the over-the-counter market or otherwise, at prices and terms that are
then-prevailing or at prices related to the then-current market price, or in
privately negotiated transactions. The selling stockholder may use one or more
of the following methods to sell the common stock:
- a block trade in which the selling stockholder's
broker or dealer will attempt to sell the shares as
agent, but may position and resell all or a portion
of the block as a principal to facilitate the
transaction;
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<PAGE> 37
- a broker or dealer may purchase the common stock as
a principal and then resell the common stock for its
own account pursuant to this prospectus; and
- ordinary brokerage transactions and transactions in
which the broker solicits purchasers.
In addition, from time to time, the selling stockholder may engage in options
transactions, regardless of whether the options are listed on an options
exchange or otherwise, short sales, short sales against the box, puts and
calls and other transactions in Guilford's securities or derivatives thereof,
and may sell and deliver the common stock in connection therewith.
Any securities which are covered by this prospectus which qualify
for sale pursuant to Rule 144, may be sold under Rule 144 rather than pursuant
to this prospectus.
LEGAL MATTERS
Certain legal matters with respect to the common shares offered
hereby has been passed upon for Guilford by Hogan & Hartson L.L.P., Baltimore,
Maryland.
EXPERTS
The consolidated financial statements of Guilford Pharmaceuticals
Inc. and subsidiaries as of December 31, 1998 and 1997, and for each of the
years in the three-year period ended December 31, 1998, have been incorporated
by reference in the Guilford Pharmaceuticals Inc. Annual Report (Form 10-K)
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of such firm as experts in accounting and auditing.
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<PAGE> 38
================================================================================
------------------------
TABLE OF CONTENTS PAGE
----
The Company .................................... 1
Risk Factors .................................... 1
Where You Can
Find More
Information .................................... 32
Use of Proceeds .................................... 33
Selling Stockholder .................................... 33
Plan of Distribution .................................... 33
Legal Matters .................................... 34
Experts .................................... 34
GUILFORD
PHARMACEUTICALS
INC.
312,933 SHARES
COMMON STOCK
------------------------
PROSPECTUS
------------------------
July , 1999
================================================================================
<PAGE> 39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Company in connection with the issuance and distribution of the securities being
registered hereby. All the amounts are estimates, except the Commission
registration fee. The selling stockholders will bear the cost of all selling
commissions and underwriting discounts with respect to the sale of any
securities by them.
Securities and Exchange Commission registration fee............. $ 1,006
Legal fees and expenses ........................................ 10,000
Accounting and Miscellaneous expenses........................... 8,994
Total.......................................... $20,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL"), a corporation may indemnify its directors, officers, employees and
agents and its former directors, officers, employees and agents and those who
serve, at the corporation's request, in such capacities with another enterprise,
against expenses (including attorney's fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner he or
she reasonably believed to be in (or not opposed to) the best interests of the
corporation and, in the case of a criminal action, such person must have had no
reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in an action or suit by or in the right of
the corporation, where such person has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that such person fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.
Article NINTH of the Company's Amended and Restated Certificate of
Incorporation, as amended, provides that the Company will indemnify its
directors and officers to the full extent permitted by law and that no director
shall be liable for monetary damages to the Registrant or its stockholders for
any breach of fiduciary duty, except to the extent provided by applicable law
(i) for any breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL, or (iv) for any transaction from which such director derived an
improper personal benefit. In addition, under indemnification agreements with
its directors, the Registrant is obligated, to the fullest extent permissible by
the DGCL, as it currently exists or may be amended, to indemnify and hold
harmless its directors, from and against all expense, liability and loss
reasonably incurred or suffered by such directors.
II-1
<PAGE> 40
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Exhibit
Number Exhibit Description
- ------ -------------------
5 Opinion of Hogan & Hartson L.L.P.
23.1 Consent of KPMG LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion filed
as Exhibit 5).
24 Powers of Attorney (included in the Signature Page to this
Registration Statement).
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Securities and Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 41
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 42
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 Baltimore, State of Maryland on July 7, 1999.
Guilford Pharmaceuticals Inc.
By: /s/ Craig R. Smith M.D.
-----------------------------------
Craig R. Smith M.D.
Chief Executive Officer,
President, and Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Craig
R. Smith, M.D., Andrew R. Jordan, Thomas C. Seoh, Jordan P. Karp and Michael J.
Silver, and each of them, with full power of substitution and resubstitution and
each with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission or any state, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their, his or her substitutes
or substitute, 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.
Date: July 7, 1999 /s/ CRAIG R. SMITH M.D.
---------------------------------------
Craig R. Smith M.D.
Chief Executive Officer,
President, and Director
(Principal Executive Officer)
Date: July 7, 1999 /s/ ANDREW R. JORDAN
---------------------------------------
Andrew R. Jordan
Financial Officer and Treasurer
(Principal Financial and Principal
Accounting Officer)
Date: July 7, 1999 /s/ SOLOMON H. SNYDER, M.D.
---------------------------------------
Solomon H. Snyder, M.D.
Director
Date: July 7, 1999
---------------------------------------
Richard L. Casey
Director
Date: July 7, 1999
---------------------------------------
George L. Bunting, Jr.
Director
II-4
<PAGE> 43
Date: July 7, 1999
---------------------------------------
W. Leigh Thompson, M.D., Ph.D.
Director
Date: July 7, 1999 /s/ ELIZABETH M. GREETHAM
---------------------------------------
Elizabeth M. Greetham
Director
Date: July 7, 1999 /s/ JOSEPH KLEIN, III
---------------------------------------
Joseph Klein III
Director
II-5
<PAGE> 44
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------ -------------------
5 Opinion of Hogan & Hartson L.L.P.
23.1 Consent of KPMG LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion
filed as Exhibit 5).
24 Powers of Attorney (included in the Signature Page to this
Registration Statement).
<PAGE> 1
EXHIBIT 5
HOGAN & HARTSON L.L.P.
111 SOUTH CALVERT STREET
BALTIMORE, MARYLAND 21202
July 7, 1999
Board of Directors
Guilford Pharmaceuticals Inc.
6611 Tributary Street
Baltimore, Maryland 21224
Ladies and Gentlemen:
We are acting as counsel to Guilford Pharmaceuticals Inc, a
Delaware corporation (the "COMPANY"), in connection with its registration
statement on Form S-3, as amended (the "REGISTRATION STATEMENT"), filed with
the Securities and Exchange Commission relating to the proposed public
offering of up to 312,933 shares of the Company's common stock, par value
$0.01 per share, all of which shares (the "SHARES") are to be sold by Bear,
Stearns Securities Corp., as nominee for Bear, Stearns International Limited.
This opinion letter is furnished to you at your request to enable you to fulfill
the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. Section
229.601(b)(5), in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of
the following documents:
1. An executed copy of the Registration Statement.
2. The Certificate of Incorporation of the Company, as
certified by the Secretary of State of the State of
Delaware on July 1, 1999 and by the Assistant Secretary of
the Company on the date hereof as being complete, accurate,
and in effect.
3. The Bylaws of the Company, as certified by the Assistant
Secretary of the Company on the date hereof as being
complete, accurate, and in effect.
4. Resolutions of the Board of Directors of the Company
adopted on March 14, 1994, as certified by the Assistant
Secretary of the Company on the date hereof as being
complete, accurate, and in
<PAGE> 2
effect, relating to the issuance and sale of the Shares and
arrangements in connection therewith.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the legal capacity of all natural persons,
the accuracy and completeness of all documents submitted to us, the
authenticity of all original documents, and the conformity to authentic
original documents of all documents submitted to us as copies (including
telecopies). This opinion letter is given, and all statements herein are
made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on
Delaware corporate law. We express no opinion herein as to any other laws,
statutes, ordinances, rules, or regulations.
Based upon, subject to and limited by the foregoing, we are of
the opinion that assuming receipt by the Company of the consideration for the
Shares as specified in the resolutions of the Board of Directors, the Shares
are validly issued, fully paid and nonassessable
This opinion letter has been prepared for your use in connection
with the Registration Statement and speaks as of the date hereof. We assume
no obligation to advise you of any changes in the foregoing subsequent to the
delivery of this opinion letter.
We hereby consent to the filing of this opinion letter as Exhibit
5.01 to the Registration Statement and to the reference to this firm under
the caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that
we are an "expert" within the meaning of the Securities Act of 1933, as
amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Guilford Pharmaceuticals Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Registration Statement.
KPMG LLP
Philadelphia, Pennsylvania
July 7, 1999
