<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1998
REGISTRATION NO. 333-476-LA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE
AMENDMENT NO. 4
ON FORM S-3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SUPERGEN, INC.
(Name of small business issuer in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2834 91-184-1574
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
</TABLE>
TWO ANNABEL LANE, SUITE 220
SAN RAMON, CALIFORNIA 94583
(925) 327-0200
(Address and telephone number of principal executive offices)
------------------------
JOSEPH RUBINFELD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
SUPERGEN, INC.
TWO ANNABEL LANE, SUITE 220
SAN RAMON, CALIFORNIA 94583
(925) 327-0200
(Name, address, and telephone number of agent for service)
------------------------
COPIES TO:
JOHN V. ROOS, ESQ.
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
DATE OF COMMENCEMENT OF SALE TO THE PUBLIC:
March 13, 1996
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT PRICE PER PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES REGISTERED REGISTERED SECURITY(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par value (2)(3).... 4,025,000 $7.50 $30,187,500 --
Common Stock Purchase Warrants
("Warrants") (2)(4).................... 4,025,000 0.00 0 --
Common Stock issuable upon exercise of
Warrants (5)(6)........................ 4,025,000 11.25 45,281,250 --
Representative's Warrant (7)(8)......... 1 5.00 5 --
Common Stock issuable upon exercise of
Representative's Warrant (8)(9)........ 350,000 9.00 3,150,000 --
Warrants issuable upon exercise of
Representative's Warrant (8)(9)........ 350,000 0.00 0 --
Common Stock underlying Warrants
issuable upon exercise of
Representative's Warrant (6)(9)........ 350,000 11.25 3,937,500 --
Totals.................................. -- -- 82,556,255 $28,468(10)
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457.
(2) The Common Stock and Warrants were registered as component parts of a Unit.
On March 13, 1996, a total of 4,025,000 Units were registered, each Unit
consisting of one share of Common Stock and one Warrant. For the purposes of
calculation of the registration fee, each share of Common Stock sold as a
component part of the Units had been assumed to have a proposed maximum
offering price per share of $7.50, and each Warrant was assumed to have a
proposed maximum offering price per Warrant of $0.00.
(3) Includes 525,000 shares included in the 525,000 Units that the underwriters
for the Company's initial public offering (the "Underwriters") were to
purchase to cover over-allotments in connection with the Registrant's sale
of the Units.
(4) Includes 525,000 Warrants included in the 525,000 Units that the
Underwriters were to purchase to cover over-allotments in connection with
the Registrant's sale of the Units.
(5) Includes 525,000 shares issuable upon exercise of Warrants included in the
525,000 Units that the Underwriters were to purchase to cover over-
allotments in connection with the Registrant's sale of the Units. Such
shares were registered for resale by the Purchasers thereof and their
assigns and transferees on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933.
(6) An indeterminate number of additional shares of Common Stock were
registered, as provided in the Warrants and the Representative's Warrant, in
the event provisions against dilution therein become operative.
(7) In connection with the Registrant's sale of the Units, the Registrant
granted to the Representative of the several Underwriters (the
"Representative") a warrant to purchase 350,000 Units (the "Representative's
Warrant"). The price paid by the Representative for the Representative's
Warrant was $5.
(8) The exercise price of the Representative's Warrant was expected to be $9.00
per Unit, based upon an assumed maximum initial public offering price of
$7.50. For purposes of calculation of the registration fee, each share of
Common Stock included in a Unit issuable upon exercise of the
Representative's Warrant had been assumed to have a proposed maximum
offering price of $9.00, and each Warrant included in a Unit issuable upon
exercise of the Representative's Warrant had been assumed to have a proposed
maximum offering price of $0.00.
(9) Such shares and Warrants were registered for resale by the Representative
and its assigns and transferees on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933.
(10) The fee paid pursuant to this Post-Effective Amendment No. 4 is $0: A total
of $28,468 was previously paid.
<PAGE>
4,724,302 SHARES
[LOGO]
COMMON STOCK
This Prospectus relates to 4,024,302 shares of SuperGen, Inc.'s ("SuperGen"
or the "Company") common stock, $.001 par value (the "Common Stock") issuable
upon the exercise of 4,024,302 warrants (the "Warrants") issued in connection
with the Company's initial public offering (the "Initial Offering"). As part of
the Initial Offering, 3,500,000 units (the "Units") were issued on March 13,
1996 and 524,302 Units were issued on April 11, 1996 upon exercise of the
underwriter's overallotment option (the "Initial Offering"). Each Unit consisted
of one share of the Common Stock and one Warrant. The Units separated
immediately upon issuance, and the Common Stock and Warrants that made up the
Units trade only as separate securities. Each Warrant entitles the holder
thereof to purchase one share of Common Stock at a price of $9.00 per share,
subject to adjustment under certain circumstances. The Warrants are exercisable
at any time, unless previously redeemed, until March 13, 2001, subject to
certain conditions. The Company may redeem the Warrants, in whole or in part, at
any time upon at least thirty days written notice to the registered holders
thereof, at a price of $.25 per Warrant, provided that the closing bid price of
the Common Stock has exceeded $18.00 for the 20 consecutive trading days
immediately preceding the date of the notice of redemption.
In addition, this Prospectus relates to 350,000 shares of Common Stock and
350,000 Warrants issuable upon the exercise of a warrant (the "Representative's
Warrant") issued to Paulson Investment Company Inc. (the "Representative"), as
representative of the several underwriters in the Initial Offering, as well as
the 350,000 shares of Common Stock issuable upon exercise of the Warrants
included in the Representative's Warrant. The exercise price of the
Representative's Warrant is $7.20 per Unit and the Representative's Warrant is
exercisable at any time until March 13, 2001.
The exercise price of the Warrants and the Representative's Warrant was
determined by negotiations between the Company and the Representative in
connection with the Initial Offering. Among the factors considered in
determining the exercise price of the Warrants at the Initial Offering were the
history and the prospects of the Company at the time of the Initial Offering and
the industry in which it operated at such time, the status and development
prospects for the Company's proposed products at such time and the trends of
such results, the experience and qualifications of the Company's executive
officers at such time and the general condition of the securities markets as of
such time. The Company will receive proceeds from the exercise of the Warrants,
the Representative's Warrant and the Warrants issuable upon exercise of the
Representative's Warrant (collectively, "All Warrants"). See "Description of
Securities-- Representative's Warrant" and "Description of
Securities--Warrants."
The Common Stock and Warrants commenced trading on the Nasdaq National
Market on March 13, 1996 and are listed on the Nasdaq National Market under the
symbols "SUPG" and "SUPGW," respectively.
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS AND THE
REPRESENTATIVE'S WARRANT INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING AT PAGE 4.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS PROCEEDS TO
PRICE AND COMMISSIONS COMPANY
<S> <C> <C> <C>
Per Share of Common Stock.......... $(1) $-- $(1)
Total.............................. $40,030,893 $958,469(2) $39,072,424(3)
</TABLE>
(1) The exercise price of the Warrants (including the 350,000 Warrants issuable
upon exercise of the Representative's Warrant) is $9.00 per share. The
exercise price for the Representative's Warrant is $7.20 per Unit.
(2) The Company intends to pay brokers and agents a solicitation fee equal to
$.25 per share of Common Stock issued upon exercise of Warrants by holders
solicited by such brokers and agents. See "Plan of Distribution."
(3) Before deducting estimated expenses payable by the Company estimated at
$10,000 and after deducting $1,694,718 of proceeds received by the Company
upon exercise of 190,425 Warrants prior to June 12, 1998 and $144,000 of
proceeds received by the Company upon the partial exercise of the
Representative's Warrant for 20,000 Units prior to June 12, 1998.
THE DATE OF THIS PROSPECTUS IS JULY 1, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request, a copy of any and all of the information that has been incorporated by
reference in this Prospectus, other than exhibits to such information, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates. Requests should be submitted by telephone to
(925) 327-0200 or in writing to SuperGen, Inc., Two Annabel Lane, Suite 220, San
Ramon, California 94583, Attn: Investor Relations.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
7 World Trade Center, Suite 1300, New York, New York 10048 and Suite 1400,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, such material concerning the Company can also be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W. Washington, D.C. 20006. The Commission also maintains a World Wide Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1993, as
amended (the "Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and related exhibits for further information with respect
to the Company and the securities offered hereby. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and, in such instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commission
(Commission File No. 0-27628) under the Exchange Act, are hereby incorporated by
reference into this Prospectus: (a) the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997; (b) the Company's Proxy Statement for
the 1998 Annual Meeting of Shareholders, filed pursuant to Section 14 of the
Exchange Act; and (c) the Company's Report on Form 10-Q for the fiscal quarter
ended March 31, 1998.
Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering made
hereby shall be deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. Any statement or
information contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement of information contained herein modifies or replaces
such a statement or such information filed previously. Any such statement or
information so modified or replaced shall not be deemed, except as so modified
or replaced, to constitute a part of this Prospectus. Such incorporation by
reference shall not be deemed specifically to incorporate by reference the
information referred to in Item 402(a)(8) of Regulation S-K under the Securities
Act.
------------------------
This prospectus includes trademarks and registered trademarks of the Company
and trademarks and registered trademarks of other companies.
------------------------
2
<PAGE>
THE COMPANY
THE FOLLOWING DISCUSSION AND CERTAIN DISCUSSIONS INCORPORATED BY REFERENCE
CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. THESE FORWARD-LOOKING
STATEMENTS REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS CONCERNING FUTURE
EVENTS AND INCLUDE STATEMENTS, AMONG OTHERS, REGARDING THE TIMING AND PROGRESS
OF THE DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS, RECEIVING REGULATORY
APPROVALS, ACQUIRING ADDITIONAL PRODUCTS AND TECHNOLOGIES, SOURCING OF BULK
GENERICS AND THE MANUFACTURING OF FINISHED PRODUCTS ANTICIPATING THE MARKET
OPPORTUNITIES FOR ITS EXTRA AND PROPRIETARY PRODUCTS, INCURRING OPERATING LOSSES
AND REQUIRING ADDITIONAL CAPITAL, AND DISCOURAGING CERTAIN TYPES OF COERCIVE
TAKEOVER PRACTICES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED
IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE FAILURE TO RECEIVE
APPROPRIATE REGULATORY APPROVALS OF MARKETING OR MANUFACTURING ACTIVITIES ON A
TIMELY BASIS, LACK OF MARKET ACCEPTANCE OF AND DEMAND FOR THE COMPANY'S
PRODUCTS, INTENSE PRICE OR PRODUCT COMPETITION, LACK OF AVAILABLE SUPPLY OF BULK
GENERICS, FAILURE TO SELL EXISTING INVENTORIES AT PRICES SUFFICIENT TO COVER
RELATED COSTS, FAILURE TO OBTAIN ADDITIONAL FINANCING AND OTHER FACTORS SET
FORTH IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE. SEE "RISK
FACTORS."
SuperGen, Inc. ("SuperGen" or the "Company") is an emerging pharmaceutical
company dedicated to the acquisition, rapid development and commercialization of
products for the treatment of life-threatening diseases, particularly cancer.
The Company seeks to minimize the time, expense and technical risk associated
with drug commercialization by identifying, acquiring and developing
pharmaceutical compounds in the later stages of development rather than
committing significant resources to the research phase of drug discovery.
SuperGen's commercialization efforts are now focused on two proprietary
compounds, Nipent and RFS 2000, and on the Extra platform, its proprietary drug
delivery technology that the Company believes has the potential to significantly
enhance many established and widely used anti-cancer drugs. SuperGen is managed
by a team of senior executives, many of whom played a leading role in developing
and commercializing successful anti-cancer drugs at Bristol-Myers Squibb Company
and other leading pharmaceutical companies.
SuperGen was incorporated in March 1991 as a California corporation. The
Company changed its state of incorporation to Delaware on November 3, 1997.
SuperGen's executive offices are located at Two Annabel Lane, Suite 220, San
Ramon, California, and its telephone number at that address is (925) 327-0200.
3
<PAGE>
RISK FACTORS
IN EVALUATING THE COMPANY AND ITS BUSINESS, PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS IN ADDITION TO THE OTHER INFORMATION
CONTAINED ELSEWHERE HEREIN. BECAUSE ANY INVESTMENT IN THE COMPANY'S CAPITAL
STOCK INVOLVES A HIGH DEGREE OF RISK, ONLY INVESTORS WHO CAN ACCOMMODATE SUCH
RISKS, INCLUDING A COMPLETE LOSS OF THEIR INVESTMENT, SHOULD PURCHASE COMMON
STOCK THROUGH THE EXERCISE OF THE WARRANTS.
HISTORY OF OPERATING LOSSES; FUTURE PROFITABILITY UNCERTAIN. Since its
inception in 1991 through March 31, 1998, the Company incurred losses of
approximately $44.1 million (including non-cash charges of approximately $7.5
million for the acquisition of in-process research and development),
substantially all of which resulted from research and development and general
and administrative expenses. The Company expects to continue to incur
substantial operating losses at least through late 1999 and perhaps beyond.
Since its inception, substantially all of the Company's revenues have come from
sales of Nipent, and the Company will likely continue to be dependent on sales
of Nipent for some time. Although the Company has received marketing approval to
sell Nipent manufactured at its designated vendor's manufacturing sites, the
Company's ability to achieve a profitable level of operations in the future will
depend in large part on its ability to develop, obtain regulatory approval for
and successfully market Nipent for other indications, as well as bringing
several of the Company's other proprietary products to market. The Company's
future operating results will also depend upon a variety of other factors,
including the price, volume and timing of sales of the Company's products; the
mix between Nipent sales in the United States and those under a supply agreement
with Warner-Lambert Company for sales outside North America; variations in gross
margins of the Company's products, which may be affected by the sales mix
referred to above and by competitive pricing pressures; regulatory approvals of
new products or expanded labeling of existing products; changes in the Company's
level of research and development, including the timing of any expansion of
clinical trials; and acquisitions of products or technology. The likelihood of
the long-term success of the Company must be considered in light of the
expenses, difficulties and delays frequently encountered in the development and
commercialization of new pharmaceutical products, competition, as well as the
burdensome regulatory environment in which the Company operates. There can be no
assurance that the Company will ever achieve significant revenues or profitable
operations.
EARLY STAGE OF DEVELOPMENT OF PROPRIETARY PRODUCTS; UNCERTAINTY OF PRODUCT
DEVELOPMENT. While the Company's proposed proprietary products are in the
development rather than the research stage, significant development remains
prior to the time any of these proposed products may be brought to market. The
Company believes that, although results obtained to date in its preclinical and
pilot clinical studies support further development of its potential proprietary
products, such results are not necessarily indicative of results of further
testing, including controlled human clinical testing. All of the potential
proprietary products currently under development by the Company will require
extensive clinical testing prior to submission of any regulatory application for
commercial use. Such proposed proprietary products, as well as the Company's
proposed Extra and generic products, are subject to the risks of failure
inherent in the development of pharmaceutical products, including the
possibilities that some of the Company's potential products will be found to be
unsafe or ineffective or otherwise fail to receive necessary regulatory
clearances; that the products, if safe and effective, will be difficult to
manufacture on a large scale or uneconomical to market; that the proprietary
rights of third parties will preclude the Company from marketing such products;
or that third parties will market superior or equivalent products for treatment
of the same diseases. As a result, there can be no assurance that any of the
Company's products currently under development will be successfully developed,
receive required governmental regulatory approvals on a timely basis, if at all,
become commercially viable or achieve market acceptance. Further, the Company
has only limited experience in conducting clinical trials and other aspects of
the regulatory process.
Generic products and Extra products based on generic products are also
subject to the additional risks related to their dependence on the expiration or
anticipated expiration of the patents for the underlying
4
<PAGE>
drug. For instance, although the original period of exclusivity for Taxol
expired in December 1997 and the patent for cisplatin expired in December 1996,
there remain issues relating to additional patents outstanding. There can be no
assurance that the issues relating to these patents will be resolved favorably
or in a timely manner or that such patent or other intellectual property issues
will not affect other Extra and generic products or potential products of the
Company. Unfavorable resolution or significant delays in the resolution of such
issues would significantly limit, and perhaps prevent, the Company's ability to
compete in these marketplaces and could have a material adverse effect on the
Company's business, results of operations and cash flows. In addition, because
of the lack of proprietary protection of generic products, in the event generic
products are brought to market, such products will face intense competition and
the potential for significant price and gross profit margin erosion. See
"--Competition."
ADDITIONAL FINANCING REQUIREMENTS. The Company's need for additional
funding is expected to be substantial and will be determined by many factors,
including the progress of the Company's development programs; the availability
of additional drugs or drug candidates for acquisition or in-licensing; future
revenue growth, if any; the amount of cash generated, if any, by the Company's
operations; the timing and receipt of regulatory approvals; the costs involved
in preparing, filing, prosecuting, maintaining, enforcing and defending patent
claims and other intellectual property rights; developments related to
reimbursement matters; competing technological and market developments; and the
need for additional office and manufacturing facilities to accommodate any
growth. The Company anticipates that its existing capital resources will be
adequate to fund operations and capital expenditures for the next fifteen
months. However, if the Company experiences unanticipated cash requirements
during the interim period, the Company could require additional funds much
sooner. The source, availability and terms of such funding have not been
determined. Although funds may be received from the sale of equity securities or
the exercise of outstanding warrants and options to acquire common stock of the
Company, there is no assurance any such funding will occur, or if it occurs,
will be on terms favorable to the Company. Failure to obtain adequate financing
in a timely manner would have a material adverse effect on the Company's
business, results of operations and cash flows. If funds are raised by issuing
additional equity securities or should the outstanding warrants be exercised,
results per share could be adversely affected and such effects could be
material.
NEED TO COMPLY WITH GOVERNMENTAL REGULATION AND TO OBTAIN PRODUCT
APPROVALS. The research, testing, manufacturing, labeling, distribution,
marketing and advertising of products such as the Company's existing and
proposed products and its ongoing research and development activities are
subject to extensive regulation by governmental regulatory authorities in the
United States, and other countries. The United States Food and Drug
Administration (the "FDA") and comparable agencies in foreign countries impose
substantial requirements on the introduction of new pharmaceutical products
through lengthy and detailed clinical testing procedures, sampling activities
and other costly and time consuming compliance procedures. The Company's
proprietary nongeneric drugs and the Company's Extra drugs may require
substantial clinical trials and FDA review as new drugs. The Company's generic
drugs require both approval of the bulk source of the drug and FDA approval of
the final formulation. While the Company has obtained clearance from the FDA
related to its Nipent manufacturing processes, marketing approval for internally
developed mitomycin and approval of sources of bulk drugs for certain of its
Extra and generic products, it has yet to receive marketing approval for any of
its internally developed proprietary products. There can be no assurance that
any further manufacturing or marketing approvals will be obtained.
The Company cannot predict with certainty if or when it might submit its
products currently under development for regulatory review. Once the Company
submits its potential products for review, there can be no assurance that FDA or
other regulatory approvals for any pharmaceutical products developed by the
Company will be granted on a timely basis or at all. For example, the Company
had initially believed that the approval process for its Extra products would be
abbreviated. However, the FDA is reviewing Mito Extra as a new drug. A delay in
obtaining or failure to obtain such approvals would have a material adverse
5
<PAGE>
effect on the Company's business, results of operations and cash flows. Failure
to comply with regulatory requirements could subject the Company to regulatory
or judicial enforcement actions, including, but not limited to, product recalls
or seizures, injunctions, civil penalties, criminal prosecution, refusals to
approve new products and withdrawal of existing approvals, as well as
potentially enhanced product liability exposure. Sales of the Company's products
outside the United States will be subject to regulatory requirements governing
clinical trials and marketing approval. These requirements vary widely from
country to country and could delay introduction of the Company's products in
those countries.
UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY TECHNOLOGY. The
Company actively pursues a policy of seeking patent protection for its
proprietary products and technologies. The Company has a number of United States
patents and also has licenses to or assignments of numerous issued United States
patents. However, there can be no assurance that the Company's patent position
will provide it with significant protection against competitors. Litigation
could be necessary to protect the Company's patent position, and there can be no
assurance that the Company will have the required resources to pursue such
litigation or otherwise to protect its patent rights. In addition to pursuing
patent protection in appropriate cases, the Company also relies on trade secret
protection for its unpatented proprietary technology. However, trade secrets are
difficult to protect. There can be no assurance that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets, that such
trade secrets will not be disclosed or that the Company can effectively protect
its rights to unpatented trade secrets.
The Company's rights to its potential proprietary products are dependent
upon compliance with certain licenses and agreements, which require, among other
things, certain royalty and other payments, the Company reasonably exploiting
the underlying technology of the applicable patents, as well as compliance with
certain regulatory filings. Failure to comply with such licenses and agreements
could result in loss of the Company's underlying rights to one or more of these
potential products, which would have a material adverse effect on the Company's
business, results of operations and cash flows.
There can be no assurance that claims against the company will not be raised
in the future based on patents held by others or that, if raised, such claims
will not be successful. Such other persons could bring legal actions against the
Company claiming damages and seeking to enjoin clinical testing, manufacturing
and marketing of the affected product. If any actions are successful, in
addition to any potential liability for damages, the Company could be required
to obtain a license in order to continue to manufacture or market the affected
product. There can be no assurance that the Company would prevail in any such
action or that any license required under any such patent would be made
available on acceptable terms, if at all. There has been, and the Company
believes that there will continue to be, significant litigation in the
pharmaceutical industry regarding patent and other intellectual property rights.
If the Company becomes involved in any litigation, it could consume a
substantial portion of the Company's resources, regardless of the outcome of
such litigation.
COMPETITION. There are many companies, both public and private, including
leading pharmaceutical companies, that are engaged in the development and sale
of products for certain of the applications being pursued by the Company. The
Company's competitors and probable competitors include Ortho Biotech, Amgen
Inc., Gensia, Inc., Bristol-Myers Squibb Company and Immunex Corp., among
others. Most of these companies have substantially greater financial, research
and development, manufacturing and marketing experience and resources than the
Company does and represent substantial long-term competition for the Company.
Such companies may succeed in developing pharmaceutical products that are more
effective or less costly than any that may be developed or marketed by the
Company.
Factors affecting competition in the pharmaceutical industry vary depending
on the extent to which the competitor is able to achieve a competitive advantage
based on proprietary technology. If the Company is able to establish and
maintain a significant proprietary position with respect to its proprietary
products, competition will likely depend primarily on the effectiveness of the
product and the number, gravity and
6
<PAGE>
severity of its unwanted side effects as compared to alternative products.
Competition with respect to generic products is based primarily on price and, to
a lesser extent, on name recognition and the reputation of the manufacturer in
its target markets. Moreover, the number of competitors offering a particular
generic product could dramatically affect price and gross margin for that
product, or an Extra product based on such generic product. The Company may be
at a disadvantage in competing with more established companies on the basis of
price or market reputation. In addition, a significant number of Extra products
currently in development by the Company consist of, or are based upon, generic
products for which patent protection has expired or is expected to expire.
Increased competition in a particular generic market would likely lead to
significant price erosion for the Company's generic products and Extra products
based on such generic products, which would have a negative effect on the
Company's sales and potential gross profit margins. For example, the Company
believes that the total estimated U.S. sales for mitomycin, bleomycin, etoposide
and cisplatin, as well as other of the Company's proposed generic products and
generic products upon which the Company proposes to base its Extra products,
have decreased in recent years due to increased competition. The Company further
believes that sales and unit prices of these generics may continue to decrease
as a result of competitive factors, including the introduction of additional
generics as well as other cancer drugs, the desire of some companies to increase
their market share, new formulations for these drugs and the use of different
therapies.
The industry in which the Company competes is characterized by extensive
research and development efforts and rapid technological progress. Although the
Company believes that its proprietary position may give it a competitive
advantage with respect to its proposed non-generic drugs, new developments are
expected to continue and there can be no assurance that discoveries by others
will not render the Company's current and potential products noncompetitive. The
Company's competitive position also depends on its ability to attract and retain
qualified scientific and other personnel, develop effective proprietary
products, implement development and marketing plans, obtain patent protection
and secure adequate capital resources.
MANUFACTURING LIMITATIONS; RELIANCE ON THIRD PARTIES. The Company
currently relies on vendors for manufacturing activities related to Nipent and
the Company's generic version of mitomycin. The facilities used by these vendors
have passed plant inspections required by the FDA prior to market clearance of
all pharmaceutical products. These inspections are conducted by the FDA to
ensure compliance with current Good Manufacturing Practices ("cGMP") regulations
enforced by the FDA. In the event that the facilities fail to maintain their
cGMP status, or there is an interruption at any of these facilities due to the
occurrence of a fire, natural disaster, equipment failure or other condition,
there can be no assurance that the Company will be able to locate other
facilities which are FDA-approved for manufacturing activities in a timely
manner or on terms commercially acceptable to the Company.
In addition, the Company stores the majority of its Nipent crude concentrate
at a single storage location and expects to continue to do so. Improper storage,
fire, natural disaster, theft or other conditions at this location which lead to
the loss or destruction of crude concentrate could have a material adverse
effect on the Company's business, results of operations and cash flows. The
Company is currently negotiating a long-term agreement with the vendor which
purifies its current supply of crude concentrate to continue its purification
services. However, there can be no assurance that the Company will be able to
finalize such an agreement. In the event that the Company is not able to do so,
the Company's supply of Nipent would be interrupted while it seeks to locate
another facility and to have such a facility approved by the FDA. Such a delay
could have a material adverse effect on the Company's business, results of
operations and cash flows. The Company will encounter similar issues with
respect to any potential products that the FDA clears for sale. The Company must
establish and maintain relationships with manufacturers to produce and package
its finished pharmaceutical products, including RFS 2000. In addition, the
facilities used by these contract manufacturers must be cleared by the FDA. If
the Company is unable to obtain or retain third-party manufacturing on
commercially acceptable terms or obtain necessary FDA clearances to manufacture
the products currently being developed, it may not be able to commercialize
pharmaceutical products as planned. The Company's dependence upon third parties
for the
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manufacture of pharmaceutical products may materially adversely affect the
Company's profit margins and its ability to develop and deliver pharmaceutical
products on a timely and competitive basis.
The Company currently relies on foreign manufacturers for the production of
certain of its bulk Extra and generic formulations and on domestic manufacturers
to supply sufficient quantities of compounds to conduct clinical trials on its
proposed proprietary products. If the Company is unable to contract for or
obtain a sufficient supply of its potential pharmaceutical products on
acceptable terms, or such supplies are delayed or contaminated, there could be
significant reductions in sales, delays in bringing the Company's proposed
proprietary, Extra and generic products to market, as well as delays in the
Company's preclinical and human clinical testing schedule, and delays in
submission of products for regulatory approval and initiation of new development
programs, any of which could have a material adverse effect on the Company's
business, results of operations and cash flows.
The Company does not currently intend to manufacture any pharmaceutical
products itself, although it may choose to do so in the future. Should the
Company determine to manufacture products itself, the Company would be subject
to the regulatory requirements described above, would be subject to similar
risks regarding delays or difficulties encountered in manufacturing any such
pharmaceutical products and would require additional facilities and substantial
additional capital. In addition, the Company has only limited experience in
manufacturing pharmaceutical products. There can be no assurance that the
Company would be able to manufacture any such products successfully and in a
cost-effective manner.
DEPENDENCE ON KEY PERSONNEL. The Company's success is dependent on certain
key management and scientific personnel, including Dr. Joseph Rubinfeld, the
loss of whose services could significantly delay the achievement of the
Company's planned development objectives. The Company currently maintains a key
man life insurance policy in the amount of $2.1 million on Dr. Rubinfeld. The
Company is currently in the process of searching for a new Chief Financial
Officer to replace Henry Settle, who resigned as Chief Financial Officer in
March 1998 but has agreed to remain as an employee for a reasonable period until
his successor is hired. The loss of key personnel, or the inability to attract
and retain the additional, highly skilled personnel required for the expansion
of the Company's activities, could have a material adverse effect on the
Company's business, results of operations and cash flows.
HEALTH CARE REFORM AND POTENTIAL LIMITATIONS ON THIRD-PARTY REIMBURSEMENT
RELATED MATTERS. The levels of revenues and profitability of pharmaceutical
companies may be affected by the continuing effort of governmental and
third-party payors to contain or reduce the costs of health care through various
means. The Company cannot predict the effect health care reforms may have on its
business, and there can be no assurance that any such reforms will not have a
material adverse effect on the Company. In addition, in both the United States
and elsewhere, sales of prescription pharmaceuticals are dependent in part on
the availability of reimbursement to the consumer from third-party payors, such
as government and private insurance plans. Third-party payors are increasingly
challenging the prices charged for medical products and services. There can be
no assurance that the Company's current and proposed products will be considered
cost-effective and that reimbursement to the consumer will be available or will
be sufficient to allow the Company to sell its products on a competitive basis.
RISK OF PRODUCT LIABILITY. Clinical trials or marketing of any of the
Company's current and potential pharmaceutical products may expose the Company
to liability claims from the use of such pharmaceutical products. The Company
currently carries product liability insurance; however, there can be no
assurance that the Company will be able to maintain insurance on acceptable
terms for its clinical and commercial activities or that such insurance would be
sufficient to cover any potential product liability claim or recall. Failure to
have sufficient coverage could have a material adverse effect on the Company's
business, results of operations and cash flows.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS. The Company is subject to
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of hazardous materials and
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certain waste products. The Company currently maintains a supply of several
hazardous materials at the Company's facilities. While the Company currently
outsources its research and development programs involving the controlled use of
biohazardous materials, if in the future the Company conducts such programs
itself, there can be no assurance that the Company would not be required to
incur significant cost to comply with environmental laws and regulations. In the
event of an accident, the Company could be held liable for any damages that
result, and such liability could exceed the resources of the Company.
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS. Certain provisions of
the Company's Certificate of Incorporation and Bylaws could discourage potential
acquisition proposals, could delay or prevent a change in control of the Company
and could make removal of management more difficult. Such provisions could
diminish the opportunities for a stockholder to participate in tender offers,
including tender offers that are priced above the then-current market value of
the Common Stock. The provisions may also inhibit increases in the market price
of the Common Stock and Warrants that could result from takeover attempts. For
example, the Board of Directors of the Company, without further stockholder
approval, may issue up to 2,000,000 shares of Preferred Stock, in one or more
series, with such terms as the Board of Directors may determine, including
rights such as voting, dividend and conversion rights, which could adversely
affect the voting power and other rights of the holders of Common Stock.
Preferred Stock thus may be issued quickly with terms calculated to delay or
prevent a change in control of the Company or make removal of management more
difficult. Additionally, the issuance of Preferred Stock may have the effect of
decreasing the market price of the Common Stock. The Company's Certificate of
Incorporation and Bylaws also provide that Stockholder action can be taken only
at an annual or special meeting of stockholders and may not be taken by written
consent. In addition, the Company is subject to Section 203 of the Delaware
General Corporation Law, which could have the effect of delaying, deferring or
preventing a change of control. In general, the statute prohibits a
publicly-held Delaware corporation from engaging in a business combination with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner.
CONTROL BY EXISTING STOCKHOLDERS. As of June 12, 1998, the Company's
officers and directors beneficially owned approximately 40% of the Company's
outstanding shares of Common Stock. Beneficial ownership includes shares of
Common Stock subject to options exercisable within 60 days of June 12, 1998.
Accordingly, these stockholders, if they were to act as a group, may be able to
elect all of the Company's directors, and otherwise control matters requiring
approval by the stockholders of the Company, including approval of significant
corporate transactions. Such concentration of ownership and the lack of
cumulative voting may also have the effect of delaying or preventing a change in
control of the Company.
POSSIBLE VOLATILITY OF COMMON STOCK PRICE. The trading prices of the
Company's Common Stock and warrants are subject to significant fluctuations in
response to such factors as, among others, variations in the Company's
anticipated or actual results of operations, announcements of new products or
technological innovations by the Company or its competitors, FDA approval or
rejection of pending applications and changes in earnings estimates by analysts.
Moreover, the stock market has from time to time experienced extreme price and
volume fluctuations, which have particularly affected the market prices for
emerging growth companies and which have often been unrelated to the operating
performance of such companies. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock and warrants. In the past,
following periods of volatility in the market price of a company's common stock,
securities class action litigation has occurred against the issuing company.
There can be no assurance that such litigation will not occur in the future with
respect to the Company. Such litigation could result in substantial costs and a
diversion of management's attention and resources, which could have a material
adverse effect on the Company's business and results of operations. Any adverse
determination in such litigation could also subject the Company to significant
liabilities.
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CONTINGENT ISSUANCE OF ADDITIONAL SHARES. The exercise of All Warrants
would result in the issuance of 4,513,877 shares of Common Stock. The price
which the Company may receive for the Common Stock issued upon exercise of such
warrants may be less than the market price of the Common Stock at the time of
such exercise. For the life of such warrants the holders are given the
opportunity to profit from a rise in the market price for the Common Stock. So
long as such warrants are not exercised, the terms under which the Company could
obtain additional equity may be adversely affected. Moreover, the holders of
such warrants might be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain any needed capital by a new offering
of its securities on terms more favorable than those provided for by such
warrants. In addition, should all or substantially all of these warrants be
exercised, the resulting increase in the amount of the Company's Common Stock in
the trading market may adversely affect the market price of the Common Stock.
REDEMPTION OF WARRANTS. The Warrants are subject to redemption at $0.25 per
Warrant on 30 days written notice provided that the closing bid price of the
Common Stock for the 20 consecutive trading days immediately preceding the date
of the notice of redemption exceeds $18.00. In the event the Company exercises
the right to redeem the Warrants, a holder would be forced either to exercise
the Warrant or accept the redemption price. See "Description of
Securities--Warrants."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE THE
WARRANTS. Holders of All Warrants will be able to exercise such warrants only
if a current prospectus relating to the Common Stock underlying such warrants is
then in effect, and only if such Common Stock is qualified for sale or exempt
from qualification under applicable state securities law of the state in which
such holders of such Warrants reside.
The Warrants are separately transferable. Although the Units were not
knowingly sold to purchasers in jurisdictions in which the Units are not
registered or otherwise qualified for sale, purchasers may buy Warrants in the
after market in, or may move to, jurisdictions in which the shares underlying
the Warrants are not so registered or qualified during the period that the
Warrants are exercisable. In this event, the Company would be unable to issue
shares to those persons desiring to exercise their Warrants, and holders of
Warrants would have no choice but to attempt to sell the Warrants in a
jurisdiction where such sale is permissible or allow them to expire unexercised.
See "Description of Securities--Warrants."
USE OF PROCEEDS
In the event that All Warrants are exercised, of which there is no
assurance, the Company could realize up to $39,072,424(1), before deducting the
estimated expenses related to this Prospectus. Such proceeds will be considered
uncommitted funds and may be used by the Company as working capital and general
corporate purposes, including research and development and marketing and sales
for products the Company is currently marketing and products which the Company
may develop.
The Company believes that the existing cash, cash equivalents and marketable
securities will satisfy its budgeted cash requirements for the fifteen months
from the date of this Prospectus, based upon the Company's current operating
plan. The Company's current operating plan shows that at the end of such fifteen
month period, the Company will require substantial additional capital. See "Risk
Factors-- Additional Financing Requirements."
DIVIDEND POLICY
The Company has not declared or paid cash dividends on its Common Stock. The
Company currently intends to retain all future earnings to fund the operation of
its business and, therefore, does not anticipate
- ------------------------
(1) After deducting $1,694,718 received by the Company from 190,425 Warrants
exercised prior to June 12, 1998 and $144,000 of proceeds received by the
Company upon the partial exercise of the Representative's Warrant for 20,000
Units prior to June 12, 1998.
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paying dividends in the foreseeable future. Future cash dividends, if any, will
be determined by the Board of Directors.
PLAN OF DISTRIBUTION
The Warrants and the Common Stock issuable upon exercise of the Warrants may
be sold from time to time by the holders thereof or by pledgees, donees,
transferees or other successors in interest. Such sales may be made in any one
or more transactions (which may involve block transactions) on The Nasdaq Stock
Market, or any exchange on which the Warrants and the Common Stock may then be
listed, in the over-the-counter market or otherwise in negotiated transactions
or a combination of such methods of sale, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The holders of the Warrants and the Common Stock that is
issuable upon exercise of the Warrants may effect such transactions by selling
Warrants or shares to or through broker-dealers, and such broker-dealers may
sell the Warrants and the Common Stock issuable upon exercise of the Warrants as
agent or may purchase such Warrants or shares of Common Stock as principal and
resell them for their own account pursuant to this Prospectus. Such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the holders and/or purchasers the Warrants and
the Common Stock that is issuable upon exercise of the Warrants, for whom they
may act as agent (which compensation may be in excess of customary commissions).
In connection with such sales, the holders and any participating brokers or
dealers may be deemed to be "underwriters" as defined in the Securities Act.
From time to time, the Company intends to retain brokers and agents to
solicit the holders of Warrants to exercise their Warrants. The Company intends
to pay such brokers and agents a solicitation fee of $.25 per share of Common
Stock issued upon exercise of Warrants by holders solicited by such brokers and
agents. In addition, the Company has agreed that if it elects to redeem the
Warrants, it will retain the Representative as the Company's solicitation agent
("Warrant Solicitation Agent"). The Company has agreed to pay the Warrant
Solicitation Agent for its services a solicitation fee equal to 2% of the total
amount paid by the holders of the Warrants whom the Warrant Solicitation Agent
solicited to exercise the Warrants. Any exercise will be presumed to be
unsolicited unless the customer states in writing that the transaction was
solicited by a broker or agent or the Warrant Solicitation Agent, as the case
may be, and designates in writing the registered representative as the broker or
agent or Warrant Solicitation Agent, as the case may be, entitled to receive
compensation for the exercise. The fee is not payable for the exercise of any
Warrant held by a broker or agent or the Warrant Solicitation Agent, as the case
may be, in a discretionary account at the time of exercise, unless a broker or
agent or the Warrant Solicitation Agent, as the case may be, receives from the
customer prior specific written approval of such exercise.
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DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 40,000,000 shares of
Common Stock and 2,000,000 shares of Preferred Stock.
COMMON STOCK
The Company's authorized common stock consists of 40,000,000 shares of
Common Stock. As of June 12, 1998, there were issued and outstanding 20,368,439
shares of Common Stock of the Company. The holders of Common Stock are entitled
to one vote for each share held of record on all matters submitted to a vote of
stockholders. Subject to preferences that may be applicable to outstanding
shares of Preferred Stock, if any, the holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Company's Board of
Directors out of funds legally available therefor. Holders of Common Stock have
no preemptive, subscription or redemption rights, and there are no redemption,
conversion or similar rights with respect to such shares. The outstanding shares
of Common Stock are fully paid and nonassessable. The Company's Certificate of
Incorporation does not provide for cumulative voting rights.
PREFERRED STOCK
The Company is authorized to issue up to 2,000,000 shares of undesignated
Preferred Stock. The Board of Directors has the authority to issue the
undesignated Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued shares of undesignated Preferred Stock, as well as to fix the number of
shares constituting any series and the designation of such series, without any
further vote or action by the shareholders. The Board of Directors, without
stockholder approval, may issue Preferred Stock with voting and conversion
rights which could materially adversely affect the voting power of the holders
of Common Stock. The issuance of Preferred Stock could also decrease the amount
of earnings and assets available for distribution to holders of Common Stock. In
addition, the issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company. At present, the
Company has no plans to issue any shares of Preferred Stock. See "Risk
Factors--Anti-takeover Effects of Certain Charter Provisions."
WARRANTS
REPRESENTATIVE'S WARRANT
The Company has issued the Representative's Warrant and has reserved 660,000
shares of Common Stock for issuance upon exercise of the outstanding portion of
such warrant (including the Warrants issuable upon exercise of the
Representative's Warrant). The Representative's Warrant will entitle the holder
to acquire 330,000 Units at an exercise price of $7.20 per Unit. The
Representative's Warrant is exercisable at any time until March 13, 2001.
THE WARRANTS
Each Warrant entitles the holder to purchase one share of Common Stock at a
price of $9.00 per share. The Warrants, subject to certain conditions, are
exercisable at any time until March 13, 2001, unless earlier redeemed. The
Warrants are redeemable by the Company, at $.25 per Warrant, upon thirty (30)
days written notice, if the closing bid price (as defined in the Warrant
Agreement described below) per share of the Common Stock for the twenty (20)
consecutive trading days immediately preceding the date notice of redemption is
given exceeds $18.00. If the Company gives notice of its intention to redeem, a
holder would be forced either to exercise his or her Warrant before the date
specified in the redemption notice or accept the redemption price.
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The Warrants were issued in registered form under a Warrant Agreement (the
"Warrant Agreement") between the Company and ChaseMellon Shareholder Services,
L.L.C. (formerly First Interstate Bank of California), as warrant agent (the
"Warrant Agent"). The shares of Common Stock underlying the Warrants, when
issued upon exercise of a Warrant, will be fully paid and nonassessable, and the
Company will pay any transfer tax incurred as a result of the issuance of Common
Stock to the holder upon its exercise.
The Warrants and the Representative's Warrant contain provisions that
protect the holders against dilution by adjustment of the exercise price. Such
adjustments will occur in the event, among others, that the Company makes
certain distributions to holders of its Common Stock. The Company is not
required to issue fractional shares upon the exercise of a Warrant or
Representative's Warrant. The holder of a Warrant or Representative's Warrant
will not possess any rights as a stockholder of the Company until such holder
exercises the Warrant or Representative's Warrant.
A Warrant may be exercised upon surrender of the Warrant Certificate on or
before the expiration date of the Warrant at the offices of the Warrant Agent,
with the form of "Election To Purchase" on the reverse side of the Warrant
Certificate completed and executed as indicated, accompanied by payment of the
exercise price (by certified or bank check payable to the order of the Company)
for the number of shares with respect to which the Warrant is being exercised.
For a holder to exercise All Warrants, there must be a current registration
statement in effect with the Commission and qualification in effect under
applicable state securities laws (or applicable exemptions from state
qualification requirements) with respect to the issuance of shares or other
securities underlying All Warrants. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement with respect
to such securities under the Securities Act to be filed and to become and remain
effective in anticipation of and prior to the exercise of the Warrants and to
take such other actions under the laws of various states as may be required to
cause the sale of Common Stock (or other securities) upon exercise of All
Warrants to be lawful. If a current registration statement is not in effect at
the time a Warrant is exercised, the Company may at its option redeem the
Warrant by paying to the holder cash equal to the difference between the market
price of the Common Stock on the exercise date and the exercise price of All
Warrants. The Company will not be required to honor the exercise of Warrants if,
in the opinion of the Company's Board of Directors upon advice of counsel, the
sale of securities upon exercise would be unlawful.
The foregoing discussion of certain terms and provisions of the Warrants and
Representative's Warrant is qualified in its entirety by reference to the
detailed provisions of the Warrant Agreement and Representative's Warrant
Certificate, the form of each of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
For the life of All Warrants, the holders thereof have the opportunity to
profit from a rise in the market price of the Common Stock without assuming the
risk of ownership of the shares of Common Stock issuable upon the exercise of
the warrants. The warrant holders may be expected to exercise their warrants at
a time when the Company would, in all likelihood, be able to obtain any needed
capital by an offering of Common Stock on terms more favorable than those
provided for by the warrants. Further, the terms on which the Company could
obtain additional capital during the life of the Warrants may be adversely
affected. See "Risk Factors--Additional Financing Requirements" and "Contingent
Issuance of Additional Shares."
OTHER WARRANTS AND OPTIONS
The Company has issued and has outstanding warrants to acquire up to 164,736
shares of Common Stock at an exercise price of $5.00 per share of Common Stock
subject to the warrant. The warrants expire at varying dates through February
2001. The Company may redeem the warrants, at any time upon at least thirty (30)
days written notice, at a price of $.25 per share of Common Stock subject to the
warrant,
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provided that the average closing price of the Common Stock for the 10
consecutive trading days immediately preceding the notice of redemption equals
or exceeds $10.00 per share. The Company has issued and has outstanding warrants
to acquire up to 1,275,000 shares of Common Stock at an exercise price of $13.50
per share. Of this total, the Company may redeem up to 775,000 warrants, at any
time upon at least 30 days written notice, at a total price of $.50, provided
that the closing price of the common stock for the 30 consecutive trading days
immediately preceding the notice of redemption exceeds $27.00 per share. These
warrants expire in June 2007.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion sets forth certain federal income tax consequences,
under current law, relating to the exercise of the Representative's Warrant and
the Warrants. The discussion is a summary and does not purport to deal with all
aspects of federal taxation that may be applicable to an investor, nor does it
consider specific facts and circumstances that may be relevant to a particular
investor's tax position. Certain holders (such as dealers in securities,
insurance companies, tax exempt organizations, foreign persons and those holding
Common Stock or Warrants as part of a straddle or hedge transaction) may be
subject to special rules that are not addressed in this discussion. This
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended, and on administrative and judicial interpretations as of the date
hereof, all of which are subject to change. ALL INVESTORS SHOULD CONSULT THEIR
OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THIS OFFERING,
INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
ALLOCATION OF PURCHASE PRICE
Each Unit as a whole had a tax basis equal to the cost of the Unit. The
measure of income or loss from certain transactions described below depends upon
the tax basis of the Warrant and the share of Common Stock composing the Unit.
The tax basis for each of the Warrants and the Common Stock was determined by
allocating the cost of the Unit among the securities which composed the Unit in
proportion to the relative fair market values of those elements at the time of
acquisition.
EXERCISE AND SALE OF WARRANTS
No gain or loss will be recognized by a holder of a Warrant on the purchase
of shares of Common Stock for cash pursuant to an exercise of a Warrant (except
that gain will be recognized to the extent cash is received in lieu of
fractional shares). The tax basis of Common Stock received upon exercise of a
Warrant will equal the sum of the holder's tax basis for the exercised Warrant
and the exercise price. The holding period of the Common Stock acquired upon the
exercise of the Warrant will begin on the date the Warrant is exercised and the
Common Stock is purchased (i.e., it does not include the period during which the
Warrant was held).
Gain or loss from the sale or other disposition of a Warrant (or loss in the
event the Warrant expires unexercised as discussed below) will be capital gain
or loss to its holder if the Common Stock to which the Warrant relates would
have been a capital asset in the hands of such holder. Such capital gain or loss
will be long-term capital gain or loss if the holder has held the Warrant for
more than one year at the time of the sale, disposition or lapse. On August 5,
1997, legislation was enacted which reduces to 20%, in the case of an
individual, the rate of tax on long-term capital gains on property held for more
than 18 months. Gain on capital assets held between 12 months and 18 months is
subject to tax at a maximum rate of 28%.
SALE OF COMMON STOCK
The sale of Common Stock should generally result in the recognition of gain
or loss to the holder thereof in an amount equal to the difference between the
amount realized and such holder's tax basis in
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the Common Stock. If the Common Stock constitutes a capital asset in the hands
of the holder, gain or loss upon the sale of the Common Stock will be
characterized as long-term or short-term capital gain or loss, depending on
whether the Common Stock has been held for more than one year. The rate of tax
is reduced to 20%, in the case of an individual, on property held as a capital
asset for more than 18 months. Gain on capital assets held between 12 months and
18 months is subject to tax at a maximum rate of 28%.
EXPIRATION OF WARRANTS WITHOUT EXERCISE
If a holder of a Warrant allows it to expire without exercise, the
expiration will be treated as a sale or exchange of the Warrant on the
expiration date. The holder will have a taxable loss equal to the amount of such
holder's tax basis in the lapsed Warrant. If the Warrant constitutes a capital
asset in the hands of the holder, such taxable loss will be characterized as
long-term or short-term capital loss depending upon whether the Warrant was held
for more than one year.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
Certain provisions of law, and the Company's current Certificate of
Incorporation and Bylaws, could make more difficult the acquisition of the
Company by means of a tender offer, a proxy contest or otherwise and the removal
of incumbent officers and directors. These provisions include: (i) authorization
of the issuance of up to 2,000,000 shares of Preferred Stock, with such
characteristics, and potential effects on the acquisition of the Company, as are
described in "Preferred Stock" above; (ii) elimination of cumulative voting; and
(iii) elimination of stockholder action by written consent. The Bylaws establish
procedures, including advance notice procedures, with regard to nomination,
other than by or at the direction of the Board of Directors, of candidates for
election as directors or for stockholder proposals to be submitted at
stockholder meetings. The Company is also subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203 of the
Delaware General Corporation Law prevents a person owning 15% or more of a
corporation's outstanding voting stock ("Interested Stockholder") from engaging
in a "business combination" (as defined in the Delaware General Corporation Law)
with a Delaware corporation for three years following the date such person
become an Interested Stockholder, subject to certain exceptions such as the
approval of the board of directors and of the holders of at least two-thirds of
the outstanding shares of voting stock not owned by the interested stockholder.
These provisions are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of the Company to negotiate first with the Company. The Company
believes that the benefits of increased protection of the Company's potential
ability to negotiate with the proponent of an unfriendly or unsolicited proposal
to acquire or restructure the Company outweigh the disadvantages of discouraging
such proposals because, among other things, negotiation of such proposals could
result in an improvement of their terms. See "Risk Factors--Anti-Takeover
Effects of Certain Charter Provisions."
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's securities is ChaseMellon
Shareholder Services, L.L.C.
15
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has adopted provisions in its current Certificate of
Incorporation which (i) eliminate the personal liability of its directors to the
Company for monetary damages to the fullest extent permissible under Delaware
law; and (ii) authorize the Company to indemnify its directors and officers to
the fullest extent permitted by law. Such limitation of liability does not
affect the availability of equitable remedies, such as injunctive relief or
rescission. The Company's Certificate of Incorporation also includes a provision
eliminating to the fullest extent permitted by Delaware law, the personal
liability of its directors for monetary damages for breach of fiduciary duty as
a director. In addition, the Bylaws of the Company provide that it will be
required to indemnify its officers and directors to the maximum extent and in
the manner permitted by the Delaware General Corporation Law.
The Company has entered into separate indemnification agreements with each
its officers, directors and key employees that contain provisions which are in
some respects broader than the specific indemnification provisions contained in
the Delaware General Corporation Law. The indemnification agreements may require
the Company, among other things, to indemnify such officers and directors
against certain liabilities that may arise by reason of their status or service
as directors of officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them, as to which they could be indemnified, and to obtain
director's and officer's insurance, if available on reasonable terms. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 (the
"Securities Act") 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 Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
At present, the Company is not aware of any pending litigation involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.
LEGAL MATTERS
The validity of the issuance of Common Stock upon exercise of the
Representative's Warrant, the Warrants issuable upon exercise of the
Representative's Warrant and the outstanding Warrants will be passed upon for
the Company by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California.
EXPERTS
The consolidated financial statements of SuperGen, Inc. included in
SuperGen, Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1997,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, COMMON STOCK OR WARRANTS IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. SUBJECT TO ANY DUTIES AND OBLIGATIONS UNDER APPLICABLE SECURITIES
LAWS TO UPDATE INFORMATION CONTAINED HEREIN OR INCORPORATED BY REFERENCE HEREIN,
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Additional Information.................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 3
Risk Factors.............................................................. 4
Use of Proceeds........................................................... 10
Dividend Policy........................................................... 10
Plan of Distribution...................................................... 11
Description of Securities................................................. 12
Indemnification........................................................... 16
Legal Matters............................................................. 16
Experts................................................................... 16
</TABLE>
4,724,302 SHARES
[LOGO]
COMMON STOCK
---------------------
PROSPECTUS
---------------------
JULY 1, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth estimated expenses payable by the Company in
connection with this update of the Prospectus dated March 13, 1996.
<TABLE>
<CAPTION>
AMOUNT TO BE PAID
-----------------
<S> <C>
Legal fees and expenses.................................................... $ 5,000
Accounting fees and expenses............................................... 5,000
-------
Total...................................................................... $ 10,000
-------
-------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation's Law authorizes a
corporation to indemnify its directors, officers, employees or other agents in
terms sufficiently broad to permit indemnification (including reimbursement for
expenses incurred) under certain circumstances for liabilities arising under the
Securities Act. The Company's Certificate of Incorporation (Exhibit 3.1 hereto)
and Bylaws (Exhibit 3.2 hereto) provide indemnification of its directors and
officers to the maximum extent permitted by the Delaware General Corporation
Law. In addition, the Company has entered into Indemnification Agreements
(Exhibit 10.1 hereto) with its directors and officers. Reference is also made to
Section 8 of the Underwriting Agreement contained in Exhibit 1.1 hereto,
indemnifying officers and directors of the Registrant against certain
liabilities.
II-1
<PAGE>
ITEM 16. EXHIBITS.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF DOCUMENT NUMBERED PAGE
- --------------- -------------------------------------------------------------------------------- -----------------
<C> <S> <C>
(a)1.1 Form of Underwriting Agreement.
(b)3.1 Certificate of Incorporation of the Registrant.
(c)3.2 Bylaws, as amended, of the Registrant.
(c)4.1 Specimen Common Stock Certificate.
(a)4.2 Form of Representative's Warrant.
(a)4.3 Form of Warrant Agreement (including form of Common Stock Purchase Warrant).
(a)5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
(a)24.1 Power of Attorney.
</TABLE>
- ------------------------
(a) Previously filed.
(b) Incorporated by reference from the Registrant's Proxy Statement filed with
the Securities and Exchange Commission on April 25, 1997.
(c) Incorporated by reference from the Registrant's Report on Form 10-K filed
with the Securities and Exchange Commission on March 19, 1998.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
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, 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.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus 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>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies it has reasonable grounds to believe that it meets all of
the requirements of filing on Form S-3 and authorizes this Post-Effective
Amendment on Form S-3 to the Registration Statement on Form SB-2 to be signed on
its behalf by the undersigned, in the City of San Ramon, State of California, on
the 1st day of July, 1998.
<TABLE>
<S> <C> <C>
SUPERGEN, INC.
By: /s/ JOSEPH RUBINFELD
-----------------------------------------
Joseph Rubinfeld
CHIEF EXECUTIVE OFFICER,
PRESIDENT AND DIRECTOR
</TABLE>
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
stated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chief Executive Officer,
President and Director
/s/ JOSEPH RUBINFELD (Principal Executive
- ------------------------------ Officer and Principal July 1, 1998
Joseph Rubinfeld Financial
and Accounting Officer)
- ------------------------------ Director
Lawrence J. Ellison
/s/ J. GREGORY SWENDSEN*
- ------------------------------ Director July 1, 1998
J. Gregory Swendsen
/s/ DANIEL ZURR*
- ------------------------------ Director July 1, 1998
Daniel Zurr
/s/ DENIS BURGER*
- ------------------------------ Director July 1, 1998
Denis Burger
/s/ JULIUS VIDA*
- ------------------------------ Director July 1, 1998
Julius Vida
*By: /s/ JOSEPH RUBINFELD
-------------------------
Joseph Rubinfeld
ATTORNEY-IN-FACT
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF DOCUMENT NUMBERED PAGE
- --------------- -------------------------------------------------------------------------------- -----------------
<C> <S> <C>
(a)1.1 Form of Underwriting Agreement.
(b)3.1 Certificate of Incorporation of the Registrant.
(c)3.2 Bylaws, as amended, of the Registrant.
(c)4.1 Specimen Common Stock Certificate.
(a)4.2 Form of Representative's Warrant.
(a)4.3 Form of Warrant Agreement (including form of Common Stock Purchase Warrant).
(a)5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
(a)24.1 Power of Attorney.
</TABLE>
- ------------------------
(a) Previously filed.
(b) Incorporated by reference from the Registrant's Proxy Statement filed with
the Securities and Exchange Commission on April 25, 1997.
(c) Incorporated by reference from the Registrant's Report on Form 10-K filed
with the Securities and Exchange Commission on March 19, 1998.
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 4 on Form S-3 to Form SB-2 in the Registration Statement (Form
S-3, No. 333-476-LA) and related Prospectus of SuperGen, Inc. for the
registration of 4,724,302 shares of its common stock and to the incorporation by
reference therein of our report dated February 13, 1998, with respect to the
consolidated financial statements of SuperGen, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Palo Alto, California
June 26, 1998
