As filed with the Securities and Exchange Commission, February 8, 2002
Registration Number 333-76338
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO.1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Interneuron Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
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Delaware 04-3047911
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02421-7966
(781) 861-8444
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
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Glenn L. Cooper, M.D.,
President, Chief Executive Officer and Chairman
One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02421-7966
(781) 861-8444
(Name, address, including zip code and telephone number, including area code,
of agent for service)
-----------------
Josef B. Volman, Esq.
Ann M. Fox, Esq.
Burns & Levinson LLP
125 Summer Street
Boston, MA 02110-1624
(617) 345-3000
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
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, as amended (the "Securities Act") other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
Proposed
Proposed maximum
maximum aggregate Amount of
Title of each Amount to be offering price offering registration fee
class of securities to be registered registered per Share(1) price(1) (1)(2)(3)
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Common Stock, $.001 par value per Share 3,175,000 $10.855 $34,464,625 $8,237.05
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(1) Estimated in accordance with Rule 457(c) of the Securities Act solely for
the purpose of computing the amount of registration fee based on the
average of the high and low prices of the registrant's Common Stock as
reported on The Nasdaq National Market on December 27, 2001.
(2) Calculated in accordance with Rule 457(o) of the Securities Act.
(3) Previously paid.
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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.
ii
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PART I
INFORMATION REQUIRED IN PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 8, 2002
PROSPECTUS
3,175,000 Shares
Interneuron Pharmaceuticals, Inc.
One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02421-7966
(781) 861-8444
Common Stock
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This prospectus relates to the public resale, from time to time, of up to
3,175,000 shares of our Common Stock, par value $.001 per share (the "Shares"),
by certain Selling Stockholders listed on page 12 of this prospectus under the
section entitled "Selling Stockholders". We will not receive any proceeds from
the sale of the Shares by the Selling Stockholders covered by this prospectus.
Our Common Stock is listed on The Nasdaq National Market under the symbol
"IPIC." On February 6, 2002, the closing sale price for our Common Stock was
$9.89 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is February , 2002.
PROSPECTUS TABLE OF CONTENTS
Page
Number
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS........................................................ 3
THE COMPANY.............................................................................................. 3
RISK FACTORS:
Our products are early stage and may not be successful or achieve market acceptance................... 4
We rely on the favorable outcome of clinical trials of our products................................... 4
We will depend on Pfizer to develop, manufacture and market pagoclone................................. 4
We could be materially harmed if our agreements were terminated....................................... 4
We will rely on third parties to commercialize and manufacture our products........................... 5
Our failure to acquire and develop additional product candidates will impair our ability to grow...... 5
We need additional funds in the future................................................................ 5
We have a history of losses and expect losses to continue............................................. 6
We may not be profitable in the future................................................................ 6
We have product liability exposure and insurance uncertainties related to our products................ 7
The outcome of the Redux litigation could materially harm us.......................................... 7
We have limited patent protection on our products..................................................... 7
We may depend on market exclusivity for trospium and other products................................... 8
Our products may be unable to compete successfully with other products................................ 8
Our company is controlled by certain stockholders..................................................... 9
We may issue preferred stock with preferential rights that could affect your rights and prevent a
takeover of the business............................................................................ 9
We have never paid any dividends on our Common Stock.................................................. 10
Our stock price is volatile........................................................................... 10
Our stock price could be negatively affected if our shares are sold, if we issue additional shares or
if third parties exercise registration rights....................................................... 10
Our stockholders could be diluted if we issue our shares subject to options, warrants, stock awards
or other arrangements............................................................................... 11
USE OF PROCEEDS.......................................................................................... 12
SELLING STOCKHOLDERS..................................................................................... 12
PLAN OF DISTRIBUTION..................................................................................... 13
WHERE YOU CAN FIND MORE INFORMATION...................................................................... 15
INFORMATION INCORPORATED BY REFERENCE.................................................................... 15
LEGAL MATTERS............................................................................................ 16
EXPERTS.................................................................................................. 16
INDEMNIFICATION OF OFFICERS AND DIRECTORS................................................................ 16
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES............................................................................................ 18
2
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Statements in this prospectus, and the documents incorporated by reference
into this prospectus, that are not statements or descriptions of historical
facts are "forward-looking" statements under Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Private
Securities Litigation Reform Act of 1995 and are subject to numerous risks and
uncertainties. These and other forward-looking statements made by us in reports
that we file with the Securities and Exchange Commission, press releases, and
public statements of our officers, corporate spokespersons or our
representatives are based on a number of assumptions and relate to, without
limitation: our ability to successfully develop, obtain regulatory approval for
and commercialize any products; our ability to enter into corporate
collaborations or to obtain sufficient additional capital to fund operations;
and the Redux(TM)-related litigation. The words "believe," "expect,"
"anticipate," "intend," "plan," "estimate" or other expressions which predict
or indicate future events and trends and do not relate to historical matters
identify forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements as they involve risks and
uncertainties and such forward-looking statements may turn out to be wrong.
Actual results could differ materially from those currently anticipated due to
a number of factors, including those set forth under "Risk Factors" and
elsewhere in, or incorporated by reference into, this prospectus. These factors
include, but are not limited to: uncertainties relating to clinical trials,
regulatory approval and commercialization of our products; the early stage of
products under development; need for additional funds and corporate partners;
history of operating losses and expectation of future losses; product liability
and insurance uncertainties; risks relating to the Redux-related litigation;
dependence on third parties for manufacturing and marketing; competition; risks
associated with contractual arrangements; limited patents and proprietary
rights; and other risks. The forward-looking statements represent our judgment
and expectations as of the date of this prospectus. We assume no obligation to
update any such forward-looking statements. See "Risk Factors."
THE COMPANY
Interneuron Pharmaceuticals, Inc. is a biopharmaceutical company engaged in
the development and commercialization of a diversified portfolio of product
candidates, including multiple compounds in late stage clinical development. We
are currently developing or have certain rights to six compounds. The names of
these compounds and their intended uses are as follows: pagoclone for the
treatment of panic and generalized anxiety disorders, trospium for the
treatment of overactive bladder, IP 501 for the treatment of cirrhosis of the
liver, citicoline for the treatment of strokes caused by blood clots, PRO 2000
for the prevention of infection by the human immunodeficiency virus and other
sexually transmitted pathogens,or disease causing agents, and dersalazine for
the treatment of inflammatory bowel disease.
We are a Delaware corporation and were incorporated in March 1990. Our
principal executive offices are located at One Ledgemont Center, 99 Hayden
Avenue, Lexington, Massachusetts 02421-7966, and our telephone number is (781)
861-8444.
In this prospectus, the terms "Interneuron", "we", "us" and "our" includes
Interneuron Pharmaceuticals, Inc. and its subsisdiaries.
3
RISK FACTORS
The following factors should be reviewed carefully, in conjunction with the
other information contained in this prospectus. These factors, among others,
could cause actual results to differ materially from those currently
anticipated and contained in forward-looking statements made in this prospectus
and presented elsewhere by Company management from time to time. See "Special
Note Regarding Forward Looking Statements."
Our products are early stage and may not be successful or achieve market
acceptance.
We currently have rights to six compounds which are in various stages of
testing and have not been approved by the United States Food and Drug
Administration. The products we are developing are subject to the risk that any
or all of them are found to be ineffective or unsafe, or otherwise may fail to
receive necessary regulatory clearances. We are unable to predict whether any
of our products will receive regulatory clearances or be successfully
manufactured or marketed. Further, due to the extended testing and regulatory
review process required before marketing clearance can be obtained, the time
frames for commercialization of any products or procedures are long and
uncertain. Even if our products receive regulatory clearance, our products may
not achieve or maintain market acceptance.
We rely on the favorable outcome of clinical trials of our products.
Before obtaining regulatory approval for the commercial sale of any of the
pharmaceutical products we are developing, we or our licensees must demonstrate
that the product is safe and efficacious for use in each target indication. The
process of obtaining U.S. Food and Drug Administration and other regulatory
approval is lengthy and expensive. If clinical trials do not demonstrate the
safety and efficacy of certain products under development, we will be
materially adversely affected. The results of pre-clinical studies and early
clinical trials may not predict results that will be obtained in large-scale
testing or use. Clinical trials of products we are developing may not
demonstrate the safety and efficacy of such products. Regardless of clinical
trial results, the FDA may not approve marketing of the product. The costs to
obtain regulatory approvals could be considerable and the failure to obtain, or
delays in obtaining regulatory approval could have a significant negative
effect on our business performance and financial results. Even if pre-market
approval of a product is obtained, the FDA is authorized to impose
post-marketing requirements. A number of companies in the pharmaceutical
industry, including our company, have suffered significant setbacks in advanced
clinical trials or have not received FDA approval, even after promising results
in earlier trials. In 1998, we withdrew our New Drug Application for
citicoline, a compound designed to treat ischemic stroke, after the failure to
meet our primary objective in a small Phase III clinical study.
We will depend on Pfizer to develop, manufacture and market pagoclone.
Under our agreement with Pfizer Inc., we licensed to Pfizer exclusive,
worldwide rights to develop and commercialize pagoclone, a compound under
development for the treatment of panic and generalized anxiety disorders. This
agreement terminates when certain patents on pagoclone expire or when Pfizer
stops researching, developing or selling pagoclone. The agreement may also be
terminated earlier by Pfizer on six months notice to us. To date, we have
received $16,750,000 under the agreement, and we will be entitled to receive up
to an additional $62,000,000 in payments contingent upon the achievement of
clinical and regulatory milestones. Pfizer will also pay us royalties on net
sales if pagoclone is commercialized. Under our agreement with Pfizer, we do
not have control over the development or commercialization of pagoclone. We
would be materially adversely affected if Pfizer does not successfully develop
pagoclone. We will be dependent on Pfizer to manufacture pagoclone under
current Good Manufacturing Practices regulations. We will also be dependent on
Pfizer for the marketing and distribution of pagoclone.
We could be materially harmed if our agreements were terminated.
Our agreements with licensors and licensees generally provide the other
party with rights to terminate the agreement, in whole or in part, under
certain circumstances. Many of our agreements require us to diligently
4
pursue development of the underlying product or risk loss of the license or
incur penalties. Depending upon the importance to us of the product that is
subject to any such agreement, this could materially adversely affect our
business. Termination of our agreement with Pfizer related to Pfizer's
development and commercialization of our compound pagoclone, our agreement with
Aventis S.A., under which we license our compound pagoclone, or our agreement
with Madaus A.G., under which we license our compound trospium, could
substantially reduce the likelihood of successful commercialization of our
products which would materially harm us.
We will rely on third parties to commercialize and manufacture our products.
We require substantial additional funds to complete development of our
products and anticipate forming partnerships to manufacture and market our
products. We seek corporate partners to fund development and commercialization
of our products. We may not be successful in finding corporate partners or
obtaining other financing and, if obtained, the terms of any such arrangements
may not be favorable to us. If we are not able to obtain any such corporate
partners or financing, development of our products could be delayed or
curtailed, which could materially adversely affect our operations and financial
condition.
Any collaborative partners may not be successful in commercializing our
products or may terminate their collaborative agreements with us. If we obtain
any collaborative arrangements, we will depend on the efforts of these
collaborative partners and we will have limited or no control over the
development, manufacture and commercialization of the products subject to the
collaboration. If certain of our collaborative partners terminate the related
agreements or fail to develop, manufacture or commercialize products, we would
be materially adversely affected. Because we will generally retain a royalty
interest in sales of products licensed to third parties, our revenues may be
less than if we marketed products directly.
We currently contract with third parties for all of our manufacturing needs
and do not manufacture any of our own products or product candidates. Typically
purchase orders for supplies of clinical compounds are filled on an
as-requested basis and are not the subject of long-term contracts. As a result,
we cannot be certain that manufacturing sources will continue to be available
or that we can continue to out-source the manufacturing of any of our products
or product candidates on reasonable terms or at all. Any manufacturing
facilities for any of our compounds are subject to U.S. Food and Drug
Administration inspection both before and after New Drug Application approval
to determine compliance with current Good Manufacturing Practices requirements.
Facilities used to produce our compounds may not have complied, or may not be
able to maintain compliance, with current Good Manufacturing Practices. The
current Good Manufacturing Practices regulations are complex and failure to be
in compliance could lead to non-approval or delayed approval of the New Drug
Applications. This would delay product launch or, if approval is obtained, may
result in remedial action, penalties and delays in production of material
acceptable to the FDA.
Our failure to acquire and develop additional product candidates will impair
our ability to grow.
Unlike most pharmaceutical companies, we generally do not conduct our own
internal research to discover new drug compounds. Instead, we depend on the
licensing of compounds from others for development. Therefore, in order to
continue to grow, we must continue to acquire and develop additional compounds.
The success of this strategy depends upon our ability to continue to identify,
select and acquire compounds that meet the criteria we have established.
Identifying suitable compounds is a lengthy and complex process. In addition,
we compete with other companies with substantially greater financial, marketing
and sales resources for the acquisition of compounds. We may not be able to
acquire the rights to additional compounds on terms we find acceptable or at
all.
We need additional funds in the future.
We continue to expend substantial funds for product development activities,
research and development, pre-clinical and clinical testing, operating
expenses, regulatory approval, licensing and other strategic relationships
5
and manufacturing. In fiscal 2001, we used approximately $2,000,000 to fund
operating activities. We expect the cash used in operating activities in fiscal
2002 to increase significantly as we continue to fund our development
activities. Accordingly, we may require additional funds after fiscal 2002. We
may seek additional funds during or after fiscal 2002 through corporate
collaborations or public or private equity or debt financings. If we raise
additional funds by issuing equity securities, existing stockholders will be
diluted and future investors may be granted rights superior to those of
existing stockholders. There can be no assurance, however, that additional
financing will be available on terms acceptable to us or at all. If we sell
securities in a private offering, we may have to sell such shares at a discount
from the market price of our stock which could have a depressive effect on our
stock price. In addition, future resales of shares in the public market sold in
a private offering could negatively affect our stock price.
Our cash requirements and cash resources will vary significantly depending
upon the following principal factors:
. the progress of research and development programs;
. costs and results of pre-clinical and clinical testing;
. the timing and cost of obtaining regulatory approvals;
. whether we are successful in either in-licensing or out-licensing products;
. whether Pfizer is successful in developing pagoclone and the timing of any
milestone payments related to our agreement with Pfizer;
. whether we are successful in defending against our Redux product liability
litigation; and
. the timing and extent of reimbursement from insurers.
As a result of the uncertainties and costs associated with business
development activities, market conditions, the Redux-related litigation and
other factors generally affecting our ability to raise additional funds, we may
not be able to obtain sufficient additional funds to satisfy cash requirements
in the future or may be required to obtain financing on terms that are not
favorable to us. We may have to curtail our operations or delay development of
our products.
We have a history of losses and expect losses to continue.
Other than in fiscal 2000, we have incurred substantial net losses over the
past five fiscal years including net losses of $55,000,000, $70,000,000,
$38,000,000, and $1,500,000 for fiscal years 1997, 1998, 1999 and 2001,
respectively. Through September 30, 2001, we had accumulated net losses since
inception of approximately $251,000,000. We expect to have losses and use cash
in operating activities for the foreseeable future. We will be required to
conduct significant development and clinical testing activities for the
products we are developing and these activities are expected to result in
continued operating losses and use of cash for the foreseeable future. We
cannot predict the extent of future losses or the time required to achieve
profitability. In addition, payments made by us in connection with product
liability litigation would result in significant charges to operations and
would materially adversely affect our results of operations and financial
condition.
We may not be profitable in the future.
We may never achieve or sustain profitability in the future. Our cumulative
revenues received through September 30, 2001 were approximately $144,000,000,
of which approximately $73,000,000 was derived from Redux, which was withdrawn
from the market in September 1997. We expect to continue to experience
fluctuations in revenue as a result of the timing of regulatory filings or
approvals, product launches, license fees, royalties, product shipments, and
milestone payments.
6
We have product liability exposure and insurance uncertainties related to our
products.
The use of products in clinical trials and the marketing of products may
expose us to substantial product liability claims and adverse publicity.
Certain of our agreements require us to obtain specified levels of insurance
coverage, naming the other party as an additional insured. We currently
maintain product liability insurance in the amount of $20,000,000. We may not
be able to maintain or obtain insurance coverage, or to obtain insurance in
amounts sufficient to protect us or other named parties against liability, at a
reasonable cost, or at all. In addition, any insurance obtained may not cover
any particular liability claim. One of our insurers is in liquidation
proceedings and may not be able to reimburse us under our policy. Another
insurer has claimed it is entitled to recover twenty million dollars that it
has paid to us under our policy. We cannot predict the extent to which the
Redux-related litigation may affect our ability to obtain sufficient product
liability insurance for other products at costs acceptable to us. We have
indemnified certain licensors and licensees and may be required to indemnify
additional licensors or licensees against product liability claims incurred by
them as a result of products we develop or market. If uninsured or
insufficiently insured product liability claims arise, or if a successful
indemnification claim was made against us, our business and financial condition
could be materially adversely affected.
The outcome of the Redux litigation could materially harm us.
On September 15, 1997, we announced a market withdrawal of our first
prescription product, the weight loss medication Redux (dexfenfluramine
hydrochloride capsules) C-IV, which had been launched by American Home Products
Corporation, our licensee, in June 1996. Following the withdrawal, we have been
named, together with other pharmaceutical companies, as a defendant in
approximately 3,200 product liability legal actions, many of which purport to
be class actions, in federal and state courts involving the use of Redux and
other weight loss drugs. In related litigation, we have been sued by one of our
insurers, alleging that we compromised its subrogation rights by entering into
an agreement with American Home Products Corporation providing us with certain
indemnification and release of claims related to Redux.
The existence of such litigation may continue to materially adversely affect
our business, including our ability to obtain sufficient financing to fund
operations. In addition, although we are unable to predict the outcome of any
such litigation, if successful uninsured or insufficiently insured claims, or
if a successful indemnification claim, were made against us, our business,
financial condition and results of operations could be materially adversely
affected. In addition, the costs and uncertainties associated with these legal
actions have had, and may continue to have, an adverse effect on the market
price of our Common Stock and on our ability to obtain corporate collaborations
or additional financing to satisfy cash requirements, to retain and attract
qualified personnel, to develop and commercialize products on a timely and
adequate basis, to acquire rights to additional products, and to obtain product
liability insurance for other products at costs acceptable to us, or at all,
any or all of which may materially adversely affect our business, financial
condition and results of operations. The American Home Products Indemnity and
Release Agreement provides for indemnification of Redux-related claims brought
by plaintiffs who have elected not to stay in American Home Products' national
class action settlement of diet drug litigation and by those claimants who
allege primary pulmonary hypertension, a serious disease involving the blood
vessels in the lungs. This agreement also provides for funding of all defense
costs related to all Redux-related claims. However, uninsured or insufficiently
insured Redux-related claims or Redux-related claims which are not covered by
the American Home Products Indemnity and Release Agreement may arise. Any such
claims, if successful, could have a material adverse effect on our business,
results of operations and financial condition.
We have limited patent protection on our products.
Our compounds are currently covered by approximately 200 registered patents
and patent applications. The issued patents expire between the years 2003 and
2017. Our future success will depend to a significant extent on our ability to:
. obtain and enforce patent protection on our products and technologies;
7
. maintain trade secrets; and
. operate and commercialize products without infringing on the patents or
proprietary rights of others.
Our patents may not afford any competitive advantages and may be challenged
or circumvented by third parties. Further, patents may not issue on pending
patent applications. Because of the extensive time required for development,
testing and regulatory review of a potential product, it is possible that
before a potential product can be commercialized, any related patent may
expire, or remain in existence for only a short period following
commercialization, reducing any advantage of the patent.
Our license to trospium, a compound under development for treatment of
overactive bladder, does not include any patents expected to be used in
commercializing the product.
Our licensed U.S. patent covering the administration of citicoline to treat
patients afflicted with conditions associated with the inadequate release of
brain acetylcholine expires in 2003. This patent, along with the additional
patents issued to us relating to citicoline, may not afford protection against
competitors of citicoline to treat ischemic stroke.
Our business may be materially adversely affected if we fail to obtain and
retain needed patents, licenses or proprietary information. Others may
independently develop similar products. Furthermore, litigation may be
necessary:
. to enforce any of our patents;
. to determine the scope and validity of the patent rights of others; or
. in response to legal action against us claiming damages for infringement
of patent rights or other proprietary rights or seeking to enjoin
commercial activities relating to the affected product or process.
The outcome of any litigation is highly uncertain. Any litigation may also
result in significant use of management and financial resources.
To the extent that consultants, key employees or other third parties apply
technological information independently developed by them or by others to our
proposed products, disputes may arise as to the proprietary rights to such
information which may not be resolved in our favor. Most of our consultants are
employed by or have consulting agreements with third parties and any inventions
discovered by such individuals will not necessarily become our property. There
is a risk that other parties may breach confidentiality agreements or that our
trade secrets become known or independently discovered by competitors, which
could adversely affect us.
We may depend on market exclusivity for trospium and other products.
Assuming regulatory approvals are obtained, our ability to commercialize
successfully certain drugs, including trospium, may depend on the availability
of market exclusivity or patent extension under the Drug Price Competition and
Patent Term Restoration Act of 1984, which is commonly known as the
Waxman-Hatch Act, which provides protections for certain new products. Under
the Waxman-Hatch Act, a company which does not have a patent on a compound may
obtain five years of market exclusivity if the United States Food and Drug
Administration determines such compound to be a new chemical entity. If we
receive favorable treatment under the Waxman-Hatch Act for trospium, we can
obtain market exclusively for a period of five years from the date of United
States Food and Drug Administration approval. The marketing of trospium could
be materially adversely affected if marketing exclusivity is not available to
us.
Our products may be unable to compete successfully with other products.
Competition from other pharmaceutical companies is intense and is expected
to increase. We are aware of existing products and of products under
development by our competitors that address diseases we are targeting
8
and competitors have developed or are developing products or technologies that
are, or may compete with our products.
. Pagoclone would compete with a number of drugs available and under
development to treat anxiety or panic disorders, including serotonergic
drugs such as BuSpar, Paxil, Zoloft, Prozac and Effexor and
benzodiazepines such as Valium and Xanax.
. Trospium would compete with other therapies for overactive bladder,
including anticholinergics, such as Detrol and Detrol LA and Ditropan and
Ditropan XL. In addition, we are aware of other companies evaluating
specific antimuscaranic and antispasmodics for overactive bladder in
pre-clinical and clinical development, including darifenacin by Pfizer Inc.
. With respect to citicoline, Genentech, Inc. markets Activase, a
thrombolytic agent, as a treatment for stroke. We are aware that other
companies are conducting clinical trials on a number of other products for
stroke which could also compete with citicoline.
. In addition to PRO 2000, many new substances are being evaluated for the
prevention of HIV transmission. Among the most advanced are BufferGel,
Savvy, Emmelle, Carraguard and cellulose sulfate gel.
. Dersalazine initially would compete with various formulations of
5-aminosalicylic acid often used as first line therapy for inflammatory
bowel disease and including Asacol, Dipentum, Pentasa and Colazal.
Many of the other companies who market or are expected to market competitive
drugs or other products are large, multinational companies who have
substantially greater marketing and financial resources and experience than us.
We may not be able to develop products that are more effective or achieve
greater market acceptance than competitive products. In addition, our
competitors may develop products that are safer or more effective or less
expensive than those we are developing or that would render our products less
competitive or obsolete. As a result, our products may not be able to compete
successfully. In addition, royalties payable to us under certain conditions may
be reduced or eliminated if there is generic competition.
Many companies in the pharmaceutical industry also have substantially
greater experience in undertaking pre-clinical and clinical testing of
products, obtaining regulatory approvals and manufacturing and marketing
products. In addition, we compete with universities and other research
institutions in the development of products, technologies and processes.
Our company is controlled by certain stockholders.
Our executive officers, directors and principal stockholders (including
individuals or entities related to such stockholders) own or control
approximately 24% (excluding any options or warrants) of our outstanding Common
Stock. Accordingly, these officers, directors and stockholders may have the
ability to exert significant influence over the election of our Board of
Directors and to determine corporate actions requiring stockholder approval.
We may issue preferred stock with preferential rights that could affect your
rights and prevent a takeover of the business.
Our Board of Directors has the authority, without further approval of our
stockholders, to fix the rights and preferences, and to issue up to 5,000,000
shares of preferred stock, 244,425 of which are currently issued and
outstanding. In addition, vesting of shares of our Common Stock subject to
stock awards under our 1997 Equity Incentive Plan accelerates and outstanding
options under our stock option plans become immediately exercisable upon
certain changes in control of Interneuron, except under certain conditions. In
addition, Delaware corporate law imposes limitations on certain business
combinations. These provisions could, under certain circumstances, delay or
prevent a change in control of the Company and, accordingly, could adversely
affect the price of our Common Stock.
9
We have never paid any dividends on our Common Stock.
We have not paid any cash dividends on our Common Stock since inception and
do not expect to do so in the foreseeable future. Any dividends will be subject
to the preferential cumulative dividend of $0.1253 per share and $1.00 per
share payable on our outstanding Series B Preferred Stock and Series C
Preferred Stock, respectively, held by American Home Products Corporation and
dividends payable on any other preferred stock we may issue.
Our stock price is volatile.
The market prices for our securities and for securities of emerging growth
companies have historically been highly volatile. Future announcements
concerning us or our competitors may have a significant impact on the market
price of our Common Stock. Factors which may affect our market price include:
. results of clinical studies and regulatory reviews;
. changes in the levels we spend to develop, acquire or license new
compounds;
. announcements by our corporate collaboration partners concerning our
products, about which we generally have very limited control, if any, over
the timing or content;
. market conditions in the pharmaceutical and biotechnology industries;
. competitive products;
. financings or corporate collaborations;
. sales or the possibility of sales of our Common Stock;
. our results of operations and financial condition including variability in
quarterly operating results due to timing and recognition of revenues and
expenses, receipt of licensing, milestone and royalty payments, and
regulatory progress and delays;
. proprietary rights;
. Redux-related litigation developments;
. public concern as to the safety or commercial value of our products; and
. general economic conditions.
The high and low sales prices of our Common Stock as reported by Nasdaq
National Market were: $6.25 and $1.13 for fiscal 1999, $8.75 and $1.34 for
fiscal 2000, $10.00 and $1.16 for fiscal 2001 and $12.32 and $4.55 for the
quarter ended December 31, 2001.
The uncertainties associated with the Redux-related litigation have
adversely affected and may continue to adversely affect the market price of our
Common Stock. Furthermore, the stock market has experienced significant price
and volume fluctuation unrelated to the operating performance of particular
companies. These market fluctuations may also adversely affect the market price
of our Common Stock.
Our stock price could be negatively affected if our shares are sold, if we
issue additional shares or if third parties exercise registration rights.
As of December 31, 2001, we had 46,426,349 shares of Common Stock
outstanding. Substantially all of these shares, other than 3,125,000 which are
covered by this prospectus, are unrestricted securities and may be sold to the
public by the owners without restriction. However, some of our stockholders own
restricted securities, and they may have to rely on Rule 144 of the Securities
Act of 1933 which regulates the sale of restricted securities. In general,
under Rule 144 as currently in effect, a person (or persons whose shares are
aggregated), including persons who may be deemed to be "affiliates" of our
company as that term is defined under the
10
Securities Act of 1933, is entitled to sell within any three-month period a
number of restricted shares beneficially owned for at least one year that does
not exceed the greater of:
(i) one percent of the then outstanding shares of Common Stock, or
(ii) the average weekly trading volume in the Common Stock during the
four calendar weeks preceding such sale.
Sales of restricted securities under Rule 144 of the Securities Act of 1933
are also subject to certain requirements as to the manner of sale, notice and
the availability of current public information about us. However, a person who
is not an affiliate and has beneficially owned such shares for at least two
years is entitled to sell such shares without regard to the volume or other
requirements.
American Home Products Corporation has the right, under certain
circumstances, to require us to register for public sale 622,222 shares of
Common Stock issuable to it upon conversion of the Series B and C Preferred
Stock it owns. We have outstanding registration statements on Form S-3 relating
to the resale of our shares of Common Stock and on Form S-8 relating to shares
issuable under our 1989 Stock Option Plan, 1994 Long-Term Incentive Plan, 1995
Employee Stock Purchase Plan, 1997 Equity Incentive Plan, 1998 Employee Stock
Option Plan and 2000 Stock Option Plan.
The recipients of shares of our Common Stock under the 1997 Equity Incentive
Plan can sell these shares immediately upon the expiration of certain waiting
periods called vesting periods. As of December 31, 2001, of the 1,736,918
shares of Common Stock issued or issuable pursuant to stock awards under the
1997 Equity Incentive Plan, 1,511,918 shares were issued after expiration of
vesting periods and 225,000 shares subject to outstanding awards vest through
April 2002. The vesting dates are subject to extension if they occur during a
"Black Out Period." Black Out Periods generally are periods in which the
recipient is unable to sell the shares subject to the award at the applicable
vesting date due to legal or contractual restrictions. The vesting dates are
also subject to acceleration under certain circumstances, including certain
changes in control of the Company, except under certain conditions.
Sales of the shares of Common Stock subject to restricted stock awards, the
possibility of sales of such shares, private sales of securities or the
possibility of resale of such shares in the public market may adversely affect
the market price of our Common Stock.
Our stockholders could be diluted if we issue our shares subject to options,
warrants, stock awards or other arrangements.
As of December 31, 2001, we had reserved the following shares of Common
Stock for issuance:
. 10,473,000 shares issuable upon exercise of outstanding options and
warrants, certain of which may be subject to anti-dilution provisions
which provide for the adjustment to the conversion price and number of
shares for option and warrant holders if we issue additional securities
below certain prices;
. 225,000 shares issuable, at nominal consideration, upon vesting of stock
awards under the Company's 1997 Equity Incentive Plan;
. 622,222 shares upon conversion of Preferred Stock owned by American Home
Products Corporation, subject to anti-dilution provisions; and
. 987,000 shares reserved for grant and issuance under the Company's stock
option plans, stock purchase plan and equity incentive plan.
We may grant additional options, warrants or stock awards. In addition, we
may be required to issue additional shares of Common Stock in connection with
technology acquisitions. To the extent such shares are issued, the interest of
holders of Common Stock will be diluted.
11
USE OF PROCEEDS
To the extent any of the Shares are sold, each Selling Stockholder will
receive all the net proceeds from the sale of those Shares. We will not receive
any of the net proceeds from the sale of the Shares offered by the Selling
Stockholders. See "Plan of Distribution."
SELLING STOCKHOLDERS
We are registering for resale the Shares held by the Selling Stockholders
identified below to permit the Selling Stockholders to resell the Shares.
Pursuant to the Stock Purchase Agreements dated as of December 20, 2001 between
us and each of the Selling Stockholders, other than Mr. Sharrock, we issued and
sold 3,125,000 shares for an aggregate purchase price of $25,000,000 (the
"Offering"). In addition to the shares sold in the Offering, we are also
registering for resale 50,000 shares which are issuable upon exercise of an
option we granted to Mr. Sharrock, one of our Directors. The Selling
Stockholders may, from time-to-time, offer and resell such shares after the
effective date of this prospectus. We agreed that all such shares of Common
Stock are to be registered with the Securities and Exchange Commission.
The table below presents information as of January 4, 2002, regarding the
Selling Stockholders and the Shares that they may offer and sell from
time-to-time under this prospectus. This table is prepared based on information
supplied to us by the listed Selling Stockholders. The table assumes that the
Selling Stockholders sell all of the Shares offered under this prospectus.
However, because the Selling Stockholders may offer from time-to-time all,
some, or none of their Shares pursuant to this prospectus, or in another
permitted manner, we cannot assure you as to the actual number of the Shares
that will be sold by the Selling Stockholders or that will be held by the
Selling Stockholders after completion of the sales. Information concerning the
Selling Stockholders may change from time-to-time, and changed information will
be presented in a supplement to this prospectus if and when necessary and
required.
We have agreed, among other things, to bear certain expenses in connection
with the registration and sale of the Shares being offered by the Selling
Stockholders. See "Plan of Distribution."
Shares Owned by Shares Owned by
Selling Stockholder Number of Selling Stockholder
Prior to Offering(2) Shares After Offering(2) (3)
------------------- Being --------------------
Name of Selling Stockholder(1) Number Percent Offered Number Percent
------------------------------ --------- ------- --------- ------- -------
Ascend Offshore Fund, LTD................ 100,000(4) * 69,520 0 0.0%
Ascend Partners, L.P..................... 100,000(4) * 14,690 0 0.0%
Ascend Partners Sapient, L.P............. 100,000(4) * 15,790 0 0.0%
Bridgewood Capital Partners, L.P......... 153,600 * 42,800 110,800 *
Crestwood Capital International, Ltd..... 717,800 1.5% 202,000 515,800 1.1%
Crestwood Capital Partners, L.P.......... 1,218,800 2.6% 342,500 876,300 1.9%
Crestwood Capital Partners II, L.P....... 134,800 * 37,700 97,100 *
Edelman, Joseph.......................... 1,890,900(5) 4.1% 300,000 390,900(6) *
Les Fils Dreyfus & Cie................... 175,000(7) * 150,000 25,000 *
Perceptive Life Sciences Master Fund, LTD 1,890,900(5) 4.1% 1,200,000 390,900(6) *
Sharrock, David.......................... 229,334(8) * 50,000 179,334(9) *
Welch Capital Partners II, L.L.C......... 217,650 * 204,080 13,570 *
Welch Entrepreneurial Fund, L.P.......... 404,610 * 296,730 107,880 *
Welch Life Sciences Fund, L.P............ 442,940 1.0% 249,190 193,750 *
---------
Totals................................ 3,175,000
=========
--------
* Less than 1%
12
(1) Other than David Sharrock, a Director of the Company, none of the other
Selling Stockholders nor any of their affiliates, officers, directors or
principal equity holders has held any position or office or has had any
material relationship with us within the past three years.
(2) Other than the percentages for Mr. Sharrock, the percentages are based on
46,426,349 shares of our Common Stock that were outstanding on December 31,
2001. The percentages for Mr. Sharrock are based on 46,650,683 shares of
our Common Stock that would be outstanding if Mr. Sharrock exercised the
options which he holds that are exercisable within 60 days of January 4,
2002.
(3) Assumes that all shares to be offered are sold pursuant to this offering
and that no other shares of Common Stock are acquired or disposed of by the
Selling Stockholder.
(4) Includes 69,520 shares directly owned by Ascend Offshore Fund, LTD, 14,690
shares directly owned by Ascend Partners, L.P. and 15,790 shares directly
owned by Ascend Partners Sapient, L.P.
(5) Includes 340,000 shares directly owned by Mr. Edelman, 96,300 shares
directly owned by First New York Securities, LLC and 1,454,600 shares
directly owned by Perceptive Life Sciences Master Fund, LTD.
(6) Includes 40,000 shares directly owned by Mr. Edelman, 96,300 shares
directly owned by First New York Securities, LLC and 254,600 shares
directly owned by Perceptive Life Sciences Master Fund, LTD.
(7) Includes 25,000 shares directly owned by Les Fils Dreyfus & Cie prior to
the Offering.
(8) Includes 5,000 shares owned directly and 224,334 shares issuable upon
exercise of options exercisable within 60 days of January 4, 2002.
(9) Includes 5,000 shares owned directly and 174,334 shares issuable upon
exercise of options exercisable within 60 days of January 4, 2002.
PLAN OF DISTRIBUTION
The Selling Stockholders and those who purchase the Shares from the Selling
Stockholders will act independently of us in making decisions with respect to
the timing, manner and size of any sale of the Shares. The sales may be made on
The Nasdaq National Market, on other exchanges or in the over-the-counter
market or otherwise, including by those means described below, at prices and at
terms then prevailing or at prices related to the then current market price of
our Common Stock, or in privately negotiated transactions. Such persons may or
may not effect such transactions by selling the Shares to or through
broker-dealers. The Shares may be sold by one or more of, or a combination of,
the following:
. cross trades or block trades in which the broker-dealer so engaged will
attempt to sell the Shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction;
. purchases by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this prospectus;
. "at the market" to or through market makers or into an existing market for
the Shares;
. an exchange distribution in accordance with the rules of such exchange;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers which may include long sales or short sales effected
after the effective date of the Registration Statement of which this
prospectus is a part;
. transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
. in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
. any combination of the foregoing practices; or
. any other lawful method.
In addition, any of the Shares covered by this prospectus which qualify for
sale pursuant to Rule 144 or another applicable exemption under the Securities
Act may be sold under Rule 144 or such exemption rather than pursuant to this
prospectus.
13
To the extent required, this prospectus may be amended or supplemented from
time-to-time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the stockholders may arrange for other broker-dealers
to participate in the resales.
The Selling Stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the Shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the Shares in
the course of hedging the positions they assume with Selling Stockholders. The
Selling Stockholders also may sell the Shares short and deliver the Shares to
close out such short positions. The Selling Stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the Shares. The broker-dealer may then resell or otherwise
transfer such Shares pursuant to this prospectus. The Selling Stockholders also
may loan the Shares to a broker-dealer or pledge the Shares. The broker-dealer
may sell the Shares so loaned, or upon a default the lender may sell the
pledged Shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the Shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and may be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act in connection with sales of the Shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the Shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because Selling
Stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the Selling Stockholders will be subject to the
prospectus delivery requirements of the Securities Act. We have not been
advised that any Selling Stockholders have entered into any agreements,
understandings or arrangements with any underwriters or broker- dealers
regarding the sale of their Shares.
The Shares may be sold through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states
the Shares may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market-making activities with respect to the Shares for a period of two
business days prior to the commencement of such distribution. In addition, each
Selling Stockholder will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
the Shares by the Selling Stockholders. We will make copies of this prospectus
available to the Selling Stockholders, and we have informed them of the need
for delivery of copies of this prospectus to purchasers at or prior to the time
of any sale of the Shares.
We will file a supplement to this prospectus, if required, pursuant to Rule
424(b) under the Securities Act upon being notified by a Selling Stockholder
that any material arrangement has been entered into with a broker- dealer for
the sale of the Shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer.
Such supplement will disclose:
. the name of each such Selling Stockholder and of the participating
broker-dealer(s);
. the number and type of shares involved;
. the price at which such shares were sold;
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
14
. that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
. other facts material to the transaction.
In addition, upon being notified by a Selling Stockholder that a donee or
pledgee of such Selling Stockholder intends to sell the Shares, we will
consider filing an amendment to this prospectus for purposes of registering the
Shares, but only if the donee or pledgee pays for all fees and costs related
thereto.
We will bear all costs, expenses, and fees in connection with the
registration of the Shares. The Selling Stockholders will bear all selling
commissions and underwriting discounts, if any, attributable, to the sales of
the Shares. We have agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. Pursuant
to the Stock Purchase Agreements, the Selling Stockholders have agreed to
indemnify us against certain civil liabilities, including certain liabilities
under the Securities Act. Also, the Selling Stockholders may agree to indemnify
any broker-dealer or agent that participates in transactions involving sales of
the Securities against certain liabilities, including liabilities arising under
the Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. a Registration Statement on Form S-3, as
amended, under the Securities Act covering the Shares offered by this
prospectus. This prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits thereto. Statements made in this
prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete and in each instance such statement is
qualified by reference to each such contract, agreement or document.
We are subject to the informational requirements of the Exchange Act, and in
accordance therewith file reports and other information with the Commission.
These annual, quarterly and special reports, proxy statements and other
information may be inspected, and copies of these materials may be obtained
upon payment of the prescribed fees, at the Commission's Public Reference Room,
Room 1024, 450 Fifth Street, Suite 1300, N.W., Washington, D.C. 20549. In
addition, we are required to file electronic versions of these materials with
the Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system. Please call the Commission at 1-800-SEC-0330 for more
information about the operation of the public reference room. The Commission
also maintains a Web site at http://www.sec.gov that contains reports, proxy
statements and other information regarding issuers that file electronically
with the Commission. Our Common Stock is quoted on The Nasdaq National Market.
Reports, proxy statements and other information concerning us may also be
reviewed at our Internet Site: http://www.interneuron.com.
INFORMATION INCORPORATED BY REFERENCE
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT ON FORM S-3 WE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE. WE HAVE
NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE
NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT PAGE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE
OF COMMON STOCK.
This prospectus does not contain all of the information set forth in the
Registration Statement. The Commission allows us to "incorporate by reference"
information that we file with them, which means that we
15
can disclose important information to you by referring you to those documents.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede this information. Further, all filings we
make under the Exchange Act after the date of the initial Registration
Statement and prior to effectiveness of the Registration Statement shall be
deemed to be incorporated by reference into this prospectus. We incorporate by
reference the documents listed below and any future filings we will make with
the Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act:
(i) Our Annual Report on Form 10-K for the fiscal year ended September
30, 2001, including all material incorporated by reference therein;
(ii) Our Current Report on Form 8-K having a report date of December 18,
2001;
(iii) Our Current Report on Form 8-K having a report date of December 21,
2001;
(iv) All other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act, since September 30, 2001; and
(v) The description of our Common Stock, $.001 par value per share, which
is set forth in our Registration Statement on Form 8-A declared effective on
March 8, 1990, as amended.
We will provide without charge to each person, including any beneficial
owner, to whom this prospectus is delivered, upon written or oral request of
such person, a copy of any and all of the documents that have been incorporated
by reference in this prospectus (not including exhibits to such documents,
unless such exhibits are specifically incorporated by reference in this
prospectus or into such documents). Such request may be directed to:
Interneuron Pharmaceuticals, Inc., One Ledgemont Center, 99 Hayden Avenue,
Lexington, Massachusetts 02421-7966, Attention: Chief Financial Officer,
telephone (781) 861-8444.
LEGAL MATTERS
The validity of the securities offered hereby were passed upon for us by
Burns & Levinson LLP, Boston, Massachusetts.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K of Interneuron Pharmaceuticals, Inc. for the year
ended September 30, 2001, have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article Seventh of the our Restated Certificate of Incorporation, as
amended, states that we shall indemnify any person to the full extent permitted
by the Business Corporation Law of the State of Delaware, as the same now
exists or may hereafter be amended.
In addition to our Restated Certificate of Incorporation, Article V of our
By-Laws states that we shall, to the fullest extent permitted by the laws of
the state of incorporation, indemnify any and all persons whom we shall have
the power to indemnify against any and all of the costs, expenses, liabilities
or other matters incurred by such person by reason of having been officers or
directors of the Company, any subsidiary of the Company or of any other
corporation for which such person acted as officer or director at the request
of the Company.
16
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if
the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe the person's conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the person's conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145 further provides that to the extent a director, officer or
former director or officer, of a corporation has been successful in the defense
of any action, suit or proceeding referred to in subsection (a) and (b) or in
the defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith. Section 145 also
provides that expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation, upon such terms and
conditions, if any, as the corporation deems appropriate, in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in Section 145.
Section 145 additionally provides that the indemnification provided by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and that the scope of indemnification
extends to directors, officers, employees, or agents of a constituent
corporation absorbed in a consolidation or merger and persons serving in that
capacity at the request of the constituent corporation for another.
Section 145 also empowers a corporation to purchase and maintain insurance
on behalf of any person who is or was a director or officer of the corporation
against any liability asserted against such person or incurred by such person
in any such capacity or arising out of such persons status as such whether or
not the corporation would have the power to indemnify such person against such
liabilities under Section 145.
17
We also have indemnification agreements with our officers and directors and
have director and officer liability insurance.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company as discussed in the previous section of this prospectus entitled
"Indemnification of Officers and Directors", the Company has been informed 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.
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance And Distribution
The expenses relating to the Registration of the Shares will be borne by us.
All amounts except SEC fees are estimates.
SEC registration fee........ $ 8,237.05
Legal fees and expenses..... 15,000.00
Accounting fees and expenses 5,000.00
Miscellaneous............... 1,762.95
----------
Total.................... $30,000.00
==========
Item 16. Exhibits
Exhibit
Number Description of Document
------ -----------------------
3.4 Restated Certificate of Incorporation of Registrant, as amended(1)
3.5 By-Laws of Registrant(2)
5.1* Opinion of Burns & Levinson LLP
23.1 Consent of PricewaterhouseCoopers LLP(3)
23.2* Consent of Burns & Levinson LLP (included in Exhibit 5.1)
24.1* Power of Attorney (See Signature Page)
--------
(1) Incorporated by reference to Exhibit 3.5 of the Registrant's Quarterly
Report on Form 10-Q for the period ended March 31, 1997.
(2) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-32408) declared effective on March 8, 1990.
(3) Filed with this Document.
* Previously filed.
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 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;
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 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 15(d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or 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.
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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 Amendment No. 1 to
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Lexington, Commonwealth
of Massachusetts, on the 8/th/ day of February, 2002.
INTERNEURON PHARMACEUTICALS, INC.
By: /s/ GLENN L. COOPER
-----------------------------
Glenn L. Cooper, M.D.
President, Chief Executive
Officer and Chairman
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement on Form S-3 has been signed by the following
persons in the capacities and on the dates indicated:
/s/ GLENN L. COOPER President, Chief Executive February 8, 2002
----------------------------- Officerand Chairman
Glenn L. Cooper, M.D.
----------------------------- Director February , 2002
Lindsay Rosenwald, M.D.
* Director February 8, 2002
-----------------------------
Harry J. Gary
* Director February 8, 2002
-----------------------------
Alexander M. Haig, Jr.
* Director February 8, 2002
-----------------------------
Malcolm Morville, Ph.D.
* Director February 8, 2002
-----------------------------
Lee J. Schroeder
* Director February 8, 2002
-----------------------------
David Sharrock
/s/ MICHAEL W. ROGERS Executive Vice President, February 8, 2002
----------------------------- ChiefFinancial Officer and
Michael W. Rogers Treasurer(Principal Financial
Officer)
* Senior Vice President, February 8, 2002
----------------------------- Finance(Principal Account
Dale Ritter Officer)
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*By the signatures set forth below, the undersigned, pursuant to the duly
authorized powers of attorney filed with the Securities and Exchange Commission
have signed this Amendment No. 1 to Registration Statement on Form S-3 on
behalf of the person indicated in the City of Lexington, Commonwealth of
Massachusetts, on the 8/th/ day of February, 2002.
By: /s/ GLENN L. COOPER
-------------------------
Glenn L. Cooper, M.D.
Attorney-in-Fact
By: /s/ MICHAEL W. ROGERS
-------------------------
Michael W. Rogers
Attorney-in-Fact
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