As filed with the Securities and Exchange Commission, January 4, 2002
Registration Number 333-______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_____________
Interneuron Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
_____________
Delaware 04-3047911
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
_____________
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)
_____________
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
_____________
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
Title of each class of maximum maximum Amount of
securities to be Amount to be offering price per aggregate offering registration
registered registered Share (1) price (1) fee (1) (2)
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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.
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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.
================================================================================
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PART I
INFORMATION REQUIRED IN PROSPECTUS
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.
SUBJECT TO COMPLETION, DATED JANUARY 4, 2002
PROSPECTUS
3,175,000 Shares
Interneuron Pharmaceuticals, Inc.
One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02421-7966
(781) 861-8444
Common Stock
____________
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 16 of this prospectus under the
section entitled "Selling Stockholders". On December 20, 2001, 3,125,000 of the
Shares were issued to all but one of the Selling Stockholders. The remaining
50,000 shares of our Common Stock hereby registered for resale are issuable upon
exercise of an option granted by us to the other Selling Stockholder. 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 January 3, 2002, the closing sale price for our Common Stock was
$12.50 per share.
____________
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS"
BEGINNING ON PAGE 5 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 January ___, 2002.
PROSPECTUS TABLE OF CONTENTS
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Page
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Number
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS ....................................................... 4
THE COMPANY ............................................................................................. 4
RISK FACTORS:
Our products are early stage and may not be successful
or achieve market acceptance .......................................................... 5
We rely on the favorable outcome of clinical trials of our products ............................ 5
We will depend on Pfizer to develop, manufacture and market pagoclone .......................... 5
We could be materially harmed if our agreements were terrminated ............................... 6
We will rely on third parties to commercialize and manufacture our products .................... 6
Our failure to acquire and develop additional product candidates will impair our ability
to grow ............................................................................... 6
We need additional funds in the future ......................................................... 7
We have a history of losses and expect losses to continue ...................................... 7
We may not be profitable in the future ......................................................... 8
We have product liability exposure and insurance uncertainties related to our products ......... 8
The outcome of the Redux litigation could materially harm us ................................... 8
If we fail to comply with government regulations it could negatively affect our business........ 9
We have limited patent protection on our products .............................................. 9
We may depend on market exclusivity for trospium and other products ............................ 10
Our products may be unable to compete successfully with other products ......................... 10
We may be affected by changes in pharmaceutical pricing and reimbursement ...................... 11
We depend upon key personnel and consultants ................................................... 12
Our company is controlled by certain stockholders .............................................. 12
We may issue preferred stock with preferential rights that could affect your rights and
prevent a takeover of the business .................................................... 12
We have never paid any dividends on our Common Stock ........................................... 12
Our stock price is volatile .................................................................... 13
Our stock price could be negatively affected if our shares are sold, if we issue
additional shares or if third parties exercise registration rights .................... 13
Our stockholders could be diluted if we issue our shares subject to options, warrants, stock
awards or other arrangements .......................................................... 14
USE OF PROCEEDS ......................................................................................... 15
SELLING STOCKHOLDERS .................................................................................... 15
PLAN OF DISTRIBUTION .................................................................................... 16
WHERE YOU CAN FIND MORE INFORMATION ..................................................................... 19
INFORMATION INCORPORATED BY REFERENCE ................................................................... 19
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LEGAL MATTERS ........................................................................................... 20
EXPERTS ................................................................................................. 20
INDEMNIFICATION OF OFFICERS AND DIRECTORS ............................................................... 20
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ..................... 22
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Statements in this prospectus, and the documents incorporated by reference
to 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;
government regulation; risks associated with contractual arrangements; limited
patents and proprietary rights; dependence on key personnel; uncertainty
regarding pharmaceutical pricing and reimbursement 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."
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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, listed in order of development stage: pagoclone for panic and
generalized anxiety disorders, trospium for overactive bladder, IP 501 for
cirrhosis of the liver, citicoline for ischemic stroke, PRO 2000 for the
prevention of infection by the human immunodeficiency virus and other sexually
transmitted pathogens, and dersalazine for 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.
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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 are investigating for therapeutic potential a variety of pharmaceutical
compounds, and other products at various stages of development. 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 do not have control over the
development or commercialization of pagoclone, a compound under development for
the treatment of panic and generalized anxiety disorders. 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.
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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 pursue
development of the underlying product or risk loss of the license or incur
penalties. Termination of certain of our agreements could substantially reduce
the likelihood of successful commercialization of a particular product.
Depending upon the importance to us of the product that is subject to any such
agreement, this could materially adversely affect our business. In particular,
termination of our agreement with Pfizer would materially adversely affect 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
these manufacturing contracts are short term. 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 cGMP. The cGMP regulations are complex and failure to be in compliance
could lead to non-approval or delayed approval of the NDA. 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.
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, other companies with substantially greater financial,
marketing and sales resources, may compete with us 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.
-6-
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 and
manufacturing. 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.
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.
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We may not be profitable in the future.
We may never achieve or sustain profitability in the future. The majority
of our revenues had been 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.
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 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 AHP 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 AHP Indemnity and Release Agreement
provides certain indemnification and funding related to Redux claims. However,
uninsured or insufficiently insured Redux-related claims or Redux-related claims
which are not covered
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by the AHP 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.
If we fail to comply with government regulations it could negatively affect our
business.
Our research, development and pre-clinical and clinical trial activities
and the manufacturing and marketing of our products and product candidates are
subject to an extensive regulatory approval process by the U.S. Food and Drug
Administration and other regulatory agencies in the U.S. and other countries.
The process of obtaining required regulatory approvals for drugs, including
conducting pre-clinical and clinical testing, is lengthy, expensive and
uncertain. Even after such time and expenditures, we may not obtain necessary
regulatory approvals for clinical testing or for the manufacturing or marketing
of any products. Regulatory approval may entail limitations on the indicated
usage of a drug, which may reduce the drug's market potential. Even if
regulatory clearance is obtained, post-market evaluation of the products, if
required, could result in restrictions on a product's marketing or withdrawal of
the product from the market as well as possible civil or criminal sanctions. We
will depend upon the manufacturers of our products to comply with current Good
Manufacturing Practices. We also depend on laboratories and medical institutions
conducting pre-clinical studies and clinical trials to maintain both good
laboratory and good clinical practices. We may not be able to obtain on a timely
basis, or at all, cGMP manufacturers capable of producing product to meet our
requirements, which would materially adversely affect our ability to
commercialize these products.
In addition, we and our collaborative partners may be subject to regulation
under state and federal laws, including requirements regarding occupational
safety, laboratory practices, environmental protection and hazardous substance
control, and may be subject to other local, state, federal and foreign
regulations. We cannot predict the impact of such regulation on us, although it
could be material and adverse.
We have limited patent protection on our products.
Our future success will depend to a significant extent on our ability to:
. obtain and enforce patent protection on our products and technologies;
. 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,
-9-
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. 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 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.
-10-
. 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 to competing with universities and other research institutions in the
development of products, technologies and processes, we may compete with other
companies in acquiring rights to products or technologies.
We may be affected by changes in pharmaceutical pricing and reimbursement.
Efforts of governmental and third-party payors to contain or reduce the
cost of health care will affect our business. Successful commercialization of
many of our products may depend on the availability of reimbursement for the
cost of such products and related treatment from third-party health care payors,
such as the government, private insurance plans and managed care organizations.
Third-party payors are increasingly challenging the price of medical products
and services. Such reimbursement may not be available for any of our products at
all or for the duration of the recommended treatment with the drug, which could
materially adversely affect our ability to commercialize the drug. The
increasing emphasis on managed care in the U.S. continues to increase the
pressure on pharmaceutical pricing.
There have been, and we anticipate that there will continue to be, a number
of proposals to implement government control over the pricing or profitability
of prescription pharmaceuticals, as is currently the case in many foreign
markets. The announcement or adoption of such proposals could adversely affect
us. Furthermore, our ability to commercialize our products may be adversely
affected to the extent that such proposals materially adversely affect the
business, financial condition and profitability of companies that are
prospective collaborative partners.
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We depend upon key personnel and consultants.
We are dependent on certain executive officers and scientific personnel and
our business would be adversely affected by the loss of certain of these
individuals. In addition, we rely on independent consultants to design and
supervise clinical trials and assist in preparation of U.S. Food and Drug
Administration submissions.
Competition for qualified employees among pharmaceutical and biotechnology
companies is intense, and the loss of any qualified employees, or an inability
to attract, retain and motivate highly skilled employees, could adversely affect
our business and prospects. The uncertainties associated with the ongoing
Redux-related litigation has adversely affected our ability to recruit and
retain qualified personnel. We may not be able to attract additional qualified
employees or retain our existing personnel.
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 shares, of
preferred stock. 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.
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.
-12-
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 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 eligible for sale without restriction or under
Rule 144. 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 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
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(ii) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding such sale.
Sales under Rule 144 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 registration rights relating to
622,222 shares of Common Stock issuable upon conversion of issued and
outstanding Series B and C Preferred Stock. 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 when the shares vest. 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 vested and issued 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;
. 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.
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------------------
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."
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Shares Owned by
Selling Stockholder Shares Owned by Selling
Prior to Stockholder After
Offering (2) Offering (2) (3)
----------------------- ---------------------------------
Number of
Name of Shares
Selling Stockholder (1) Number Percent Being 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 150,000(7) * 150,000 0 0.0%
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%
(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) Assumes that Les Fils Dreyfus & Cie is the beneficial owner of only the
150,000 shares it acquired in the Offering and did not beneficially own any of
the Company's Common Stock 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;
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. 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.
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
-17-
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;
. 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.
-18-
------------------
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 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 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;
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(ii) All other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act, since September 30, 2001; and
(iii) 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.
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,
-20-
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
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whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 145.
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.
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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
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ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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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 (3)
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.
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.
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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.
(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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lexington, Commonwealth of Massachusetts, on the
4th day of January, 2002.
INTERNEURON PHARMACEUTICALS, INC.
/s/ Glenn L. Cooper, M.D.
-----------------------------------------------
By: Glenn L. Cooper, M.D.
President, Chief Executive Officer and Chairman
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints jointly and severally, Glenn L.
Cooper, M.D. and Michael W. Rogers, and each of them, his or her true and lawful
attorney-in-fact and agent, each with the full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
way and all capacities, to sign any and all amendments (including post-effective
amendments and registration statements filed pursuant to Rule 462) to this
Registration Statement and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
/s/ Glenn L. Cooper, M.D. President, Chief Executive Officer January 4, 2002
------------------------------------ and Chairman
Glenn L. Cooper, M.D.
Director January __, 2002
------------------------------------
Lindsay Rosenwald, M.D.
/s/ Harry J. Gray Director January 4, 2002
------------------------------------
Harry J. Gray
/s/ Alexander M. Haig, Jr. Director January 4, 2002
------------------------------------
Alexander M. Haig, Jr.
/s/ Malcolm Morville, Ph.D. Director January 4, 2002
------------------------------------
Malcolm Morville, Ph.D.
/s/ Lee J. Schroeder Director January 4, 2002
------------------------------------
Lee J. Schroeder
/s/ David Sharrock Director January 4, 2002
------------------------------------
David Sharrock
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/s/ Michael W. Rogers Executive Vice President, Chief January 4, 2002
------------------------------------ Financial Officer and Treasurer
Michael W. Rogers (Principal Financial Officer)
/s/ Dale Ritter Senior Vice President, Finance January 4, 2002
------------------------------------ (Principal Accounting Officer)
Dale Ritter
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