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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2001
REGISTRATION NO. ___-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEOTHERAPEUTICS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 93-079187
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 788-6700
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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ALVIN J. GLASKY, PH.D.
CHIEF EXECUTIVE OFFICER
157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 788-6700
(Name, Address, Including Zip Code and Telephone Number, Including Area
Code, of Agent for Service)
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Copies to:
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Alan W. Pettis, Esq.
Latham & Watkins
650 Town Center Drive, Twentieth Floor
Costa Mesa, California 92626
(714) 540-1235
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practical 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, 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 of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE FEE
------------------- -------------- ---------------- ---------------- -------------
Common Stock 900,000 shares $4.85(2) $4,365,500 $1,091.25
Total 900,000 $4,365,500 $1,091.25
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(1) In the event of a stock split, stock dividend, or similar transaction
involving the Company's common stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover
the additional shares in accordance with Rule 416(a) under the
Securities Act.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933 based on the average of the high and low sales prices of the
Registrant's common stock on the Nasdaq Stock Market on May 10, 2001.
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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Subject To Completion, dated May 15, 2001
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
UP TO 900,000 SHARES OF
NEOTHERAPEUTICS, INC.
COMMON STOCK
Our common stock is traded on the Nasdaq National Market under the
symbol "NEOT." On May 14, 2001, the closing price of our common stock was $5.00.
This prospectus relates to the sale of up to 900,000 shares of our
common stock by Montrose Investments Ltd. and Strong River Investments, Ltd. We
will not receive any of the proceeds from the sale of these shares.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 1
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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 the prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is May ___, 2001
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
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ABOUT NEOTHERAPEUTICS..................................................................... 1
RISK FACTORS.............................................................................. 1
FORWARD-LOOKING STATEMENTS................................................................ 8
ISSUANCE OF COMMON STOCK TO THE SELLING STOCKHOLDERS...................................... 8
USE OF PROCEEDS........................................................................... 8
SELLING STOCKHOLDERS...................................................................... 9
PLAN OF DISTRIBUTION...................................................................... 9
VALIDITY OF COMMON STOCK.................................................................. 11
EXPERTS .................................................................................. 11
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.................................... 11
WHERE YOU CAN FIND MORE INFORMATION....................................................... 11
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ABOUT NEOTHERAPEUTICS
NeoTherapeutics, Inc. is a development stage biopharmaceutical company
engaged in the discovery and development of novel therapeutic drugs intended to
treat neurological diseases and conditions, such as memory deficits associated
with Alzheimer's disease and aging, spinal cord injuries, Parkinson's disease
and other neurodegenerative and psychiatric diseases. We have also recently
become engaged in research involving functional genomics and the development of
oncology drugs. Our lead product candidate, Neotrofin(TM) (AIT-082, leteprinim
potassium), and other compounds under development, are based on our patented
technology. This technology uses small synthetic molecules to create non-toxic
compounds, intended to be administered orally or by injection, that are capable
of passing through the blood-brain barrier to rapidly act upon specific target
cells in specific locations in the central nervous system, including the brain.
Animal and laboratory tests have shown that Neotrofin(TM) appears to selectively
increase the production of certain neurotrophic factors, a type of large
protein, in selected areas of the brain and in the spinal cord. These
neurotrophic factors regulate nerve cell growth and function. Our technology has
been developed to capitalize on the beneficial effects of these proteins, which
have been widely acknowledged to be closely involved in the early formation and
differentiation of the central nervous system. We believe that Neotrofin(TM)
could have therapeutic and regenerative effects. NeoGene Technologies, Inc., a
subsidiary of NeoTherapeutics, Inc., is engaged in functional genemics research.
On November 16, 2000, we formed another subsidiary, NeoOncoRx, Inc., for the
purpose of in-licensing anti-cancer compounds which are in the clinical trial
stages of development.
We were incorporated in Colorado in December 1987 and reincorporated in
Delaware in June 1997. Our executive offices are located at 157 Technology
Drive, Irvine, California 92618. Our telephone number is (949) 788-6700. Our web
site address is www.neotherapeutics.com. Information contained in our web site
does not constitute part of this prospectus.
RISK FACTORS
Your investment in our common stock involves a high degree of risk. You
should consider the risks described below and the other information contained in
this prospectus carefully before deciding to invest in our common stock. If any
of the following risks actually occur, our business, financial condition and
operating results would be harmed. As a result, the trading price of our common
stock could decline, and you could lose a part or all of your investment.
OUR LOSSES WILL CONTINUE TO INCREASE AS WE EXPAND OUR DEVELOPMENT EFFORTS, AND
OUR EFFORTS MAY NEVER RESULT IN PROFITABILITY.
Our cumulative losses during the period from our inception in 1987
through December 31, 2000 were approximately $96.2 million, almost all of which
consisted of research and development and general and administrative expenses.
We lost approximately $11.6 million in 1998, $26.0 million in 1999 and
approximately $46.4 million in 2000. We expect our losses to decrease in the
year 2001, but to increase in the future as we expand our clinical trials and
increase our research and development activities. We currently do not sell any
products and we may never achieve significant revenues or become profitable.
Even if we eventually generate revenues from sales, we nevertheless expect to
incur significant operating losses over the next several years.
OUR POTENTIAL DRUG PRODUCTS ARE IN AN EARLY STAGE OF CLINICAL AND PRECLINICAL
DEVELOPMENT AND MAY NOT PROVE SAFE OR EFFECTIVE ENOUGH TO OBTAIN REGULATORY
APPROVAL TO SELL ANY OF THEM.
We currently are testing our first potential drug product in human
clinical trials. Our other proposed products are in preclinical development. We
cannot be certain that any of our potential or proposed products will prove to
be safe or effective in treating disorders of the central nervous system or any
other diseases. All of our potential drugs will require additional research and
development, testing and regulatory clearance before we can sell them. We cannot
be certain that we will receive regulatory approval to sell any of our potential
drugs. We do not expect to have any products commercially available for at least
two years, if at all.
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IF WE ARE UNABLE TO OBTAIN SUBSTANTIAL ADDITIONAL FUNDING ON ACCEPTABLE TERMS,
WE MAY HAVE TO DELAY OR ELIMINATE ONE OR MORE OF OUR DEVELOPMENT PROGRAMS.
We currently are spending cash at a rate in excess of approximately $2.3
million per month, and we expect this rate of spending to continue for at least
the following 12 months. We have declined to exercise our option to issue the
first $10.0 million of convertible debentures pursuant to a letter agreement
dated April 17, 2001, and are consequently obliged to pay a break-up fee of $1.0
million (see Note 15 to the audited financial statements in our Amendment No. 1
on Form 10-K/A our Annual Report on Form 10-K filed on April 25, 2001). We are
currently negotiating replacement financing with the same investors, however we
cannot assure you that these negotiations will be successful. We believe that,
together with periodic sales of common stock such as the $3.5 million, the $5.0
million and the $6.0 million sales in February, March and April 2001,
respectively, assuming that we are able to negotiate replacement financing for
the convertible debentures and assuming that the holders of our Class B Warrants
continue to exercise our Class B Warrants in response to our call notices, our
cash and capital resources will satisfy our current funding requirements for at
least the next twelve months. If the market price of our common stock is less
than $2.00 per share, we may not be able to use our Class B Warrants as a
financing source. Should we not be able to continue periodic sales of our common
stock, successfully negotiate replacement financing for our convertible
debentures or utilize our Class B Warrants, we may have to seek additional
funding. We may not be able to obtain additional funds on acceptable terms or at
all. If adequate funds are not available, we will have to delay or eliminate one
or more of our development programs.
We expect that we will need substantial additional funds to complete
development and clinical trials of Neotrofin(TM), our lead drug candidate,
before we will be able to submit it to the FDA for approval for commercial sale,
and to support the continued development of Neoquin(TM), our lead anti-cancer
drug candidate. Our capital requirements will depend on many factors, including:
- continued scientific progress in research and development;
- the progress of preclinical and clinical testing;
- the cost involved in filing, prosecuting and enforcing patent
claims;
- the effect of competing technological developments;
- the cost of manufacturing scale-up;
- the cost of commercialization activities;
- the time and cost involved in obtaining regulatory approvals;
and
- our ability to establish collaborative and other arrangements
with third parties, such as licensing and manufacturing
agreements.
We expect to seek additional funding through public or private
financings or collaborative or other arrangements with third parties. We may not
obtain additional funds on acceptable terms, if at all. If adequate funds are
not available, we will have to delay or eliminate one or more of our development
programs.
COMPETITION FOR PATIENTS IN CONDUCTING CLINICAL TRIALS AND EXTENSIVE REGULATIONS
GOVERNING THE CONDUCT OF CLINICAL TRIALS MAY PREVENT OR DELAY APPROVAL OF A DRUG
CANDIDATE AND STRAIN OUR LIMITED FINANCIAL RESOURCES.
Many pharmaceutical companies are conducting clinical trials in patients
with Alzheimer's disease. As a result, we must compete with them for clinical
sites, physicians and the limited number of patients with Alzheimer's disease
who fulfill the stringent requirements for participation in clinical trials.
This competition may increase costs of our clinical trials and delay the
introduction of our potential products.
ANY FAILURE TO COMPLY WITH EXTENSIVE GOVERNMENTAL REGULATION COULD PREVENT OR
DELAY PRODUCT APPROVAL OR CAUSE GOVERNMENTAL AUTHORITIES TO DISALLOW OUR
PRODUCTS AFTER APPROVAL AND SUBJECT US TO CRIMINAL OR CIVIL LIABILITIES.
The U.S. Food and Drug Administration, or FDA, and comparable agencies
in foreign countries impose many requirements on the introduction of new drugs
through lengthy and detailed clinical testing procedures, and other costly and
time consuming compliance procedures. These requirements make it difficult to
estimate when Neotrofin(TM) or any other potential product will be available
commercially, if at all.
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Our proprietary compounds will require substantial clinical trials and
FDA review as new drugs. Even if we successfully enroll patients in our clinical
trials, patients may not respond to our potential drug products. We think it is
prudent to expect setbacks. Failure to comply with the regulations applicable to
such testing may delay, suspend or cancel our clinical trials, or the FDA might
not accept the test results. The FDA, or any comparable regulatory agency in
another country, may suspend clinical trials at any time if it concludes that
the trials expose subjects participating in such trials to unacceptable health
risks. Further, human clinical testing may not show any current or future
product candidate to be safe and effective to the satisfaction of the FDA or
comparable regulatory agencies or the data derived therefrom may be unsuitable
for submission to the FDA or other regulatory agencies.
We cannot predict with certainty when we might submit any of our
proposed products currently under development for regulatory review. Once we
submit a proposed product for review, the FDA or other regulatory agencies may
not issue their approvals on a timely basis, if at all. If we are delayed or
fail to obtain such approvals, our business may be damaged. If we fail to comply
with regulatory requirements, either prior to approval or in marketing our
products after approval, we could be subject to regulatory or judicial
enforcement actions. These actions could result in:
- product recalls or seizures;
- injunctions;
- civil penalties;
- criminal prosecution;
- refusals to approve new products and withdrawal of existing
approvals; and
- enhanced exposure to product liabilities.
THE LOSS OF KEY RESEARCHERS OR MANAGERS COULD HINDER OUR DRUG DEVELOPMENT
PROCESS SIGNIFICANTLY AND MIGHT CAUSE OUR BUSINESS TO FAIL.
Our success depends upon the contributions of our key management and
scientific personnel, especially Dr. Alvin Glasky, our Chief Executive Officer
and Chief Scientific Officer. Our loss of the services of Dr. Glasky or any
other key personnel could delay or preclude us from achieving our business
objectives. Although we currently have key-man life insurance on Dr. Alvin
Glasky in the face amount of $2 million, the loss of Dr. Glasky's services would
damage our research and development efforts substantially.
We also will need substantial additional expertise in finance and
marketing and other areas in order to achieve our business objectives.
Competition for qualified personnel among pharmaceutical companies is intense,
and the loss of key personnel, or the inability to attract and retain the
additional skilled personnel required for the expansion of our business, could
damage our business.
IF WE CANNOT PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS ADEQUATELY, THE
VALUE OF OUR RESEARCH COULD DECLINE AS OUR COMPETITORS APPROPRIATE PORTIONS OF
OUR RESEARCH.
We actively pursue patent protection for our proprietary products and
technologies. We hold four U.S. patents and currently have fifteen U.S. patent
applications pending. In addition, we have numerous foreign patents issued and
patent applications pending corresponding to our U.S. patents. However, our
patents may not protect us against our competitors. We may have to file suit to
protect our patents or to defend our use of our patents against infringement
claims brought by others. Because we have limited cash resources, we may not be
able to afford to pursue or defend against litigation in order to protect our
patent rights.
We also rely on trade secret protection for our unpatented proprietary
technology. However, trade secrets are difficult to protect. While we enter into
proprietary information agreements with our employees and consultants, these
agreements may not successfully protect our trade secrets or other proprietary
information.
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WE ARE A SMALL COMPANY RELATIVE TO OUR PRINCIPAL COMPETITORS AND OUR LIMITED
FINANCIAL AND RESEARCH RESOURCES MAY LIMIT OUR ABILITY TO DEVELOP AND MARKET NEW
PRODUCTS.
Many companies, both public and private, including well-known
pharmaceutical companies, are developing products to treat Alzheimer's disease
and certain of the other applications we are pursuing. Most of these companies
have substantially greater financial, research and development, manufacturing
and marketing experience and resources than we do. As a result, our competitors
may develop additional drugs that are more effective or less costly than any
drug which we may develop.
OUR LACK OF EXPERIENCE AT CONDUCTING CLINICAL TRIALS OURSELVES MAY DELAY THE
TRIALS AND INCREASE OUR COSTS.
We intend to conduct some future clinical trials ourselves rather than
hiring outside contractors. We believe this conversion may reduce the costs
associated with the trials and give us more control over the trials. However,
while some of our management has had experience at conducting clinical trials,
we have never done so as a company. Our lack of experience may delay the trials
and increase our costs. We think it is prudent to expect setbacks as we make
this transition.
OUR MANAGEMENT HAS LIMITED MANUFACTURING AND MARKETING EXPERIENCE AND MAY BE
UNABLE TO MANAGE OUR GROWTH OR MANUFACTURE AND MARKET OUR PRODUCTS SUCCESSFULLY.
To date, we have engaged exclusively in the development of
pharmaceutical technology and products. Our management has substantial
experience in pharmaceutical company operations, but has limited experience in
manufacturing or procuring products in commercial quantities or in marketing
pharmaceutical products. Our management has only limited experience in
negotiating, establishing and maintaining strategic relationships, conducting
clinical trials and other later-stage phases of the regulatory approval process.
If we receive FDA approval of any of our potential products, we may
decide to establish a commercial-scale manufacturing facility for our products.
The establishment of such a facility will require substantial additional funds
and personnel, and we will need to comply with extensive regulations applicable
to such a facility. These requirements and the associated growth would strain
our existing management and operations. Our ability to manage such growth
depends upon the ability of our officers and key employees to:
- broaden our management team;
- develop additional expertise among existing management
personnel;
- attract, hire and retain skilled employees; and
- implement and improve our operational, management information
and financial control systems.
FAILURE TO OBTAIN ADEQUATE REIMBURSEMENT FROM GOVERNMENT HEALTH ADMINISTRATION
AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS COULD MATERIALLY
ADVERSELY AFFECT OUR FUTURE BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.
Our ability to market and sell our products will depend in part on the
extent to which reimbursement for the cost of our products and related
treatments will be available from government health administration authorities,
private health insurers and other organizations. Third party payers are
increasingly challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement statements of
newly approved health care products. We cannot be certain that any products
approved for marketing will be considered cost effective or that reimbursement
will be available or that allowed reimbursement will be adequate. In addition,
payers' reimbursement policies could adversely affect our ability to sell our
products on a profitable basis.
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HOLDERS OF OUR CONVERTIBLE PREFERRED STOCK, DEBENTURES AND WARRANTS COULD ENGAGE
IN SHORT SELLING TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OR EXERCISE OF THE SECURITIES AND DECREASE THE EXERCISE PRICE OF THE
WARRANTS. IF THIS OCCURS, THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE.
The holders of shares of preferred stock issued by our subsidiary,
NeoGene Technologies, Inc., have rights to exchange those shares for shares of
our convertible preferred stock. If we hold less than $5 million in cash and
cash equivalents at the time of the exchanges, the holders of NeoGene's Series A
Preferred Stock have the right to exchange those shares into our convertible
debentures. If those exchange rights are exercised, the number of shares of
common stock issuable upon conversion of the convertible preferred stock or
debentures will vary with the market price of our common stock. The shares of
our convertible preferred stock or debentures will generally be convertible into
common stock at a conversion price equal to 101% or 100% of the average of
either the lowest ten or the lowest seven, respectively, closing bid prices of
our common stock in the previous 30 trading days, and subject to caps of either
120% or 150% of the market price of our common stock at the time of the
exchange, in each case depending upon the series of NeoGene preferred stock
exchanged. In addition, on April 17, 2001, we entered into an agreement with two
investors that commit the investors to purchase convertible debentures in two
tranches. Should we not issue the convertible debentures, we will be obligated
to pay penalties of up to $1,000,000 to the investors. If issued, the
convertible debentures will generally be convertible into common stock at a
conversion price equal to an initial conversion price of 120% of the average per
share market value of our common stock over the five trading days preceding the
date of issuance or, after 90 days from the date of issuance, the lesser of the
initial conversion price or 101% of the average of the ten lowest per share
market values of our common stock in the previous 30 trading days from the date
of conversion. Consequently, the number of shares of common stock issuable upon
conversion of the convertible preferred stock or debentures will vary with the
market price of our stock. The number of shares of our common stock are issuable
upon conversion of any of these securities increases as the price of our common
stock decreases. Increased sales volume of our common stock could put downward
pressure on the market price of the shares. This fact could encourage holders of
the securities to sell short our common stock prior to conversion of the
securities, thereby potentially causing the market price to decline and a
greater number of shares to become issuable upon conversion of the preferred
stock or debentures. The holders of the securities could then convert their
securities and use the shares of common stock received upon conversion to cover
their short positions. The holders of the securities could thereby profit by the
decline in the market price of the common stock caused by their short selling.
Similarly, the exercise price of our outstanding Class B Warrants, if we
deliver a redemption notice, is equal to the lesser of $33.75 per share (subject
to adjustment for stock splits, reverse splits and combinations) and 97% (or 95%
if the market price of our common stock is less than $5.00 per share) of the
closing bid price of our common stock on the trading day after the redemption
notice is delivered. This fact could give the holders of our Class B Warrants
incentive to sell short our common stock after receipt of a redemption notice,
which could cause the market price to decline. The holders of the Class B
Warrants could then exercise their Class B Warrants and use the shares of common
stock received upon exercise to cover their short positions and thereby profit
by the decline in the market price of the common stock caused by their short
selling.
Additionally, it is important to note that a significant amount of the
NeoGene preferred stock and our warrants are owned by three investors. This fact
gives these investors greater influence over the market price of our stock. Two
of these investors entered into the April 17, 2001 letter agreement for the
purchase of convertible debentures.
THE TRADING PRICE OF OUR COMMON STOCK AND THE TERMS OF OUR CONVERTIBLE
SECURITIES AND WARRANTS MUST COMPLY WITH THE LISTING REQUIREMENTS OF THE NASDAQ
NATIONAL MARKET OR WE COULD BE DELISTED AND THE LIQUIDITY OF OUR COMMON STOCK
WOULD DECLINE.
Our common stock are listed on the Nasdaq National Market. To remain
listed on this market, we must meet Nasdaq's listing maintenance standards and
abide by Nasdaq's rules governing listed companies. If the price of our common
stock falls below $1.00 per share for an extended period, or if we fail to meet
other Nasdaq standards or violate Nasdaq rules, our common stock could be
delisted from the Nasdaq National Market.
Nasdaq has established certain rules regarding the issuance of "future
priced securities." These rules may apply to the preferred stock or debentures
we may issue in exchange for NeoGene preferred stock or the convertible
debentures we may issue pursuant to the April 17, 2001 letter agreement, because
the number of shares of our
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common stock issuable upon conversion of these securities is based upon a future
price of our common stock. Nasdaq's concerns regarding these securities include
the following:
Stockholders must approve significant issuances of listed securities at
a discount to market or book value. Nasdaq rules prohibit an issuer of listed
securities from issuing 20% or more of its outstanding capital stock at less
than the greater of book value or then current market value without obtaining
prior stockholder consent. We did not obtain stockholder consent prior to
issuing the NeoGene preferred stock and granting the exchange right to the
holders of the NeoGene preferred stock or prior to signing the April 17, 2001
agreement. In the absence of stockholder approval, the securities issued in
these transactions by their term may not be converted into 20% or more of the
number of shares of our common stock outstanding at the time the securities are
issued. We anticipate, but are not assured of, obtaining this approval at our
Annual Meeting of Stockholders to be held on June 11, 2001. Should the
stockholders not approve this financing, we would be required to refund the sale
proceeds and pay significant penalties.
Public interest concerns. Nasdaq may terminate the listing of a security
if necessary to prevent fraudulent and manipulative acts and practices or to
protect investors and the public interest. With respect to future priced
securities, Nasdaq has indicated that it may delist a security if the returns
with respect to the future priced security become excessive compared to the
returns being earned by public investors in the issuer's securities.
Furthermore, certain requirements for continued listing, such as the
$1.00 minimum bid price requirement, are outside of our control. Accordingly,
there is a risk that Nasdaq may delist our common stock.
If our common stock is delisted, we likely would seek to list our common
stock on the Nasdaq SmallCap Market or for quotation on the American Stock
Exchange or a regional stock exchange. However, listing or quotation on such
market or exchange could reduce the market liquidity for our common stock. If
our common stock were not listed or quoted on another market or exchange,
trading of our common stock would be conducted in the over-the-counter market on
an electronic bulletin board established for unlisted securities or in what are
commonly referred to as the "pink sheets." As a result, an investor would find
it more difficult to dispose of, or to obtain accurate quotations for the price
of, our common stock. In addition, delisting from the Nasdaq National Market and
failure to obtain listing or quotation on such other market or exchange would
subject our common stock to so-called "penny stock" rules. These rules impose
additional sales practice and market-making requirements on broker-dealers who
sell and/or make a market in such securities. Consequently, if our common stock
is delisted from the Nasdaq National Market and we fail to obtain listing or
quotation on another market or exchange, broker-dealers may be less willing or
able to sell and/or make a market in our common stock and purchasers of our
common stock may have more difficulty selling such common stock in the secondary
market. In either case, the market liquidity of our common stock would decline.
THERE ARE A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK ELIGIBLE FOR FUTURE
SALE IN THE PUBLIC MARKET. THE SALE OF THESE SHARES COULD CAUSE THE MARKET PRICE
OF OUR COMMON STOCK TO FALL.
There were 18,431,791 shares of our common stock outstanding as of May
1, 2001. In addition, security holders held options and warrants as of May 1,
2001 which, if exercised, would obligate us to issue up to an additional
11,948,643 shares of common stock. A substantial number of those shares, when we
issue them upon exercise, will be available for immediate resale in the public
market. In addition, we have the ability to sell up to approximately $35 million
of our common stock pursuant to a shelf registration that will be eligible for
immediate resale in the market. Furthermore, these numbers do not include the
number of shares of common stock that may become issuable upon conversion of the
securities that we may be required to issue in exchange for shares of NeoGene
preferred stock. While this number of shares cannot be accurately determined at
this time, assuming an average conversion price of $5.00 per share, up to
1,790,000 shares could be issuable and available for resale upon conversion of
these securities. The market price of our common stock could fall as a result of
such resales.
ANY FUTURE EQUITY ISSUANCES BY US MAY HAVE DILUTIVE AND OTHER EFFECTS ON OUR
EXISTING STOCKHOLDERS.
We have financed our operations, and we expect to continue to finance
our operations, by issuing and selling equity securities. Any issuances by us of
equity securities may have a dilutive impact on our other stockholders.
Additionally, such issuances would cause our net income or loss per share to
decrease in future periods. As a result, the market price of our common stock
could drop. In addition, if we issue common stock upon
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the exercise or conversion of our warrants and other convertible securities, it
may be issued at a discount to its then-prevailing market price. These
discounted sales could cause the market price of our common stock to drop.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS, AND MAY NOT HAVE SUFFICIENT
PRODUCT LIABILITY INSURANCE.
Although we currently carry product liability insurance, it is possible
that the amounts of such coverage will be insufficient to protect us from future
claims. Further, we cannot be certain that we will be able to obtain or maintain
additional insurance on acceptable terms for our clinical and commercial
activities or that such additional insurance would be sufficient to cover any
potential product liability claim or recall. Failure to maintain sufficient
insurance coverage could have a material adverse effect on our business and
results of operations.
THE USE OF HAZARDOUS MATERIALS IN OUR RESEARCH AND DEVELOPMENT EFFORTS IMPOSES
CERTAIN COMPLIANCE COSTS ON US AND MAY SUBJECT US TO LIABILITY FOR CLAIMS
ARISING FROM THE USE OR MISUSE OF THESE MATERIALS.
Our research and development efforts involve the use of hazardous
materials. We are subject to federal, state and local laws and regulations
governing the storage, use and disposal of such materials and certain waste
products. We believe that our safety procedures for handling and disposing of
such materials comply with the standards prescribed by federal, state and local
regulations. However, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. If there was an accident, we could
be held liable for any damages that result. Such liability could exceed our
resources. We may incur substantially increased costs to comply with
environmental regulations if we develop our own commercial manufacturing
facility.
THE MARKET PRICE AND VOLUME OF OUR COMMON STOCK FLUCTUATE SIGNIFICANTLY AND
COULD RESULT IN SUBSTANTIAL LOSSES FOR INDIVIDUAL INVESTORS.
The stock market from time to time experiences significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may cause the market price
of our common stock to drop. In addition, the market price of our common stock
is highly volatile. Factors that may cause the market price of our common stock
to drop include fluctuations in our results of operations, timing and
announcements of our technological innovations or new products or those of our
competitors, FDA and foreign regulatory actions, developments with respect to
patents and proprietary rights, public concern as to the safety of products
developed by us or others, changes in health care policy in the United States
and in foreign countries, changes in stock market analyst recommendations
regarding our common stock, the pharmaceutical industry generally and general
market conditions. In addition, the market price of our common stock may drop if
our results of operations fail to meet the expectations of stock market analysts
and investors.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUBSTANTIAL PERCENTAGE OF OUR COMMON
STOCK. THEIR OWNERSHIP COULD ALLOW THEM TO EXERCISE SIGNIFICANT CONTROL OVER
CORPORATE DECISIONS AND TO IMPLEMENT CORPORATE ACTS THAT ARE NOT IN THE BEST
INTERESTS OF OUR STOCKHOLDERS AS A GROUP.
Our directors and executive officers beneficially own approximately
12.6% of our outstanding common stock as of March 30, 2001. In addition, several
of our stockholders, including Montrose Investments Ltd. and Strong River
Investments, Inc. and Societe Generale have agreed that they will vote any and
all shares of our common stock that they own as recommended by our board of
directors in any meeting of our stockholders. Therefore, our directors and
executive officers, if they acted together, could exert substantial influence
over matters requiring approval by our stockholders. These matters would include
the election of directors and the approval of mergers or other business
combination transactions. This concentration of ownership and voting power may
discourage or prevent someone from acquiring our business.
EFFECT OF CERTAIN CHARTER AND BYLAWS PROVISIONS AND STOCKHOLDER RIGHTS PLAN.
Certain provisions of our Certificate of Incorporation and Bylaws may
make it more difficult for someone to acquire control of us. These provisions
may make it more difficult for stockholders to take certain corporate actions
and could delay or discourage prevent someone from acquiring our business. These
provisions could limit the price that certain investors might be willing to pay
for shares of our common stock.
On December 13, 2000, we adopted a Stockholder Rights Plan pursuant to
which we have distributed rights to purchase units of our capital Series B
Junior Participating Preferred Stock. The rights become exercisable upon the
earlier of ten days after a person or group of affiliated or associated persons
has acquired 20% or more of the
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outstanding shares of our common stock or ten days after a tender offer has
commenced that would result in a person or group beneficially owning 20% or more
of our outstanding common stock. These rights could delay or discourage someone
from acquiring our business.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any forward-looking statements. The risks and
uncertainties include those noted in "Risk Factors" above and in the documents
incorporated by reference.
We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
We also may make additional disclosures in our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we may file
from time to time with the Securities and Exchange Commission. Please also note
that we provide a cautionary discussion of risks and uncertainties under the
section entitled "Risk Factors" in our Annual Report on Form 10-K. These are
factors that we think could cause our actual results to differ materially from
expected results. Other factors besides those listed here could also adversely
affect us. This discussion is provided as permitted by the Private Securities
Litigation Reform Act of 1995.
ISSUANCE OF COMMON STOCK TO THE SELLING STOCKHOLDERS
On September 29, 2000, we entered into a securities purchase agreement
with Montrose Investments Ltd. and Strong River Investments, Inc. for the
issuance and sale of common stock and warrants for aggregate consideration of
$8,000,000. Pursuant to the securities purchase agreement, among other equity
securities issued, we issued Adjustable Warrants to purchase, at an exercise
price of $0.001 per share, a number of shares of common stock to be determined
at two vesting dates. The first vesting date was January 31, 2001 and the second
vesting date was March 15, 2001.
The number of shares of common stock issuable at each vesting date under
the Adjustable Warrants, was determined by a formula based on the ten lowest
closing bid prices of our common stock during the 30 consecutive trading days
prior to each vesting date. A total of 1,070,758 shares vested on the first
vesting date. Through the application of cashless exercise provisions of the
Adjustable Warrants, 1,070,336 shares of common stock were issued to the selling
stockholders following the first vesting date.
On April 17, 2001, we entered into an agreement for a separate financing
transaction with the same purchasers as a part of which we agreed to amend the
Adjustable Warrants so that the aggregate number of shares of common stock
issued upon exercise of the Adjustable Warrants in respect of the second vesting
date was 900,000 shares of common stock, after the application of cashless
exercise provisions.
Pursuant to registration rights agreements we entered into with Montrose
Investments Ltd. and Strong River Investments, Inc., we have filed a
registration statement, of which this prospectus forms a part, in order to
permit the selling stockholders to resell to the public the shares of common
stock they acquired upon the exercise of the Adjustable Warrants pursuant to the
April 17, 2001 agreement.
Montrose Investments Ltd. and Strong River Investments, Inc. have agreed
that they will vote any and all shares of our common stock that they own as
recommended by our board of directors in any meeting of our stockholders.
USE OF PROCEEDS
The proceeds from the sale of the common stock will belong to the
selling stockholders. We will not receive any proceeds from such sales.
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SELLING STOCKHOLDERS
The following table sets forth information regarding beneficial
ownership of our common stock by the selling stockholders as of May 3, 2001.
The selling stockholders may sell up to 900,000 shares of our common
stock pursuant to this prospectus. HBK Management L.L.C. has voting and
investment power over the securities beneficially owned by Montrose Investments
Ltd. Enright Holding Corp., of which Mr. Avi Vigder is managing director, has
voting and investment power over the securities beneficially owned by Strong
River Investments, Inc. The selling stockholders have not had any material
relationship with us or any of our affiliates or predecessors within the past
three years other than as a result of the ownership of common stock or as a
result of the negotiation and the execution of any equity investment agreements.
Number of
Shares of Shares of Common Stock
Common Stock Number of Beneficially Owned
Beneficially Shares of Following the Offering(3)
Owned % of Common Stock ------------------------------
Name Before Offering Class Offered Hereby Number % of Class
---- --------------- ----- -------------- --------- ----------
Montrose Investments Ltd. 960,432(1) 4.999% 450,000 652,585(4) 3.45%
Strong River Investments, Inc. 950,740(2) 4.999% 450,000 836,785(5) 4.43%
* Less than 1%.
(1) Includes 179,736 shares held by Montrose Investments Ltd. as of May 3,
2001, 450,000 shares issuable in respect of the adjustable warrants and
330,696 shares issuable upon conversion of preferred stock within 60
days of May 3, 2001. By their terms, the preferred stock and adjustable
warrants may not be converted or exercised, as applicable, to the extent
that the holder would beneficially own more than 4.999% of our common
stock immediately after the conversion or exercise.
(2) Includes 363,936 shares held by Strong River Investments, Inc. as of May
3, 2001, 450,000 shares issuable in respect of the adjustable warrants
and 136,804 shares issuable upon conversion of preferred stock within 60
days of May 3, 2001. By their terms, the preferred stock and adjustable
warrants may not be converted or exercised, as applicable, to the extent
that the holder would beneficially own more than 4.999% of our common
stock immediately after the conversion or exercise.
(3) Assumes the sale by the selling stockholders of all of the shares of
common stock available for resale under this Prospectus.
(4) Includes 179,736 shares held by Montrose Investments Ltd. as of May 3,
2001 and 472,849 shares issuable upon conversion of preferred stock
within 60 days of May 3, 2001, estimated based on the conversion price
of the preferred stock calculated as of May 3, 2001.
(5) Includes 363,936 shares held by Strong River Investments, Inc. as of May
3, 2001 and 472,849 shares issuable upon conversion of preferred stock
within 60 days of May 3, 2001, estimated based on the conversion price
of the preferred stock calculated as of May 3, 2001.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of the shares of
common stock offered hereby on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
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- short sales;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may, from time to time, offer and sell the pledged shares. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares other than ordinary course
brokerage arrangements, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares by the selling
stockholders.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders, or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser, in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We have agreed to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling
stockholders. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
Upon notification to us by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing the following:
- the name of each such selling stockholder and of the
participating broker-dealer(s);
- the number 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, we will file a supplement to this prospectus when a selling
stockholder notifies us that a donee or pledgee intends to sell more than 500
shares of our common stock.
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We have advised the selling stockholders that the anti-manipulation
provisions of Regulation M promulgated under the Securities Exchange Act of 1934
may apply to their sales of our shares offered by this prospectus.
VALIDITY OF COMMON STOCK
Latham & Watkins, Costa Mesa, California, will pass on the validity of
the issuance of the shares of common stock offered by this prospectus.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report. Reference is made to said report which states
that the Company is in the development stage, as described in Note 1 to the
consolidated financial statements.
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our bylaws provide for indemnification of our directors and officers to
the fullest extent permitted by law. Insofar as indemnification for liabilities
under the Securities Act may be permitted to directors, officers or controlling
persons of the Company pursuant to the Company's Certificate of Incorporation,
as amended, bylaws and the Delaware General Corporation Law, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.,
20549, and in the SEC's public reference rooms in New York, and Chicago. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
the selling stockholders sell all the shares:
Our annual report on Form 10-K for the fiscal year ended December 31,
2000, as amended by Form 10-K/A filed April 25, 2001;
Our quarterly report on Form 10-Q for the quarter ended March 31, 2001,
filed on May 14, 2001;
Our current reports on Form 8-K filed February 16, 2001 and March 14,
2001;
Our definitive proxy statement filed pursuant to Section 14 of the
Exchange Act in connection with our 2001 Annual Meeting of Stockholders; and
The description of our common stock contained in the Registration of
Securities of Certain Successor Issuers filed pursuant to Section 12(g) of the
Exchange Act on Form 8-B on June 27, 1997, including any amendment or reports
filed for the purpose of updating such description.
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You can request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
NeoTherapeutics, Inc.
Attn: Investor Relations
157 Technology Drive
Irvine, California 92618
(949) 788-6700
You should rely only on the information contained in this prospectus or
any supplement and in the documents incorporated by reference. We have not
authorized anyone else to provide you with different information. The selling
stockholders will not make an offer of these shares in any state where the offer
is not permitted. You should not assume that the information in this prospectus
or any supplement or in the documents incorporated by reference is accurate on
any date other than the date on the front of those documents.
This prospectus is part of a registration statement we filed with the
SEC (Registration No. ___-_____). That registration statement and the exhibits
filed along with the registration statement contain more information about the
shares sold by the selling stockholders. Because information about contracts
referred to in this prospectus is not always complete, you should read the full
contracts which are filed as exhibits to the registration statement. You may
read and copy the full registration statement and its exhibits at the SEC's
public reference rooms or their web site.
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================================================================================
900,000 SHARES OF COMMON STOCK
NEOTHERAPEUTICS, INC.
PROSPECTUS
MAY __, 2001
================================================================================
17
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following sets forth the estimated costs and expenses, all of which
shall be borne by the Registrant, in connection with the offering of the
securities pursuant to this Registration Statement:
Registration Fee $ 1,091.25
Accounting Fees and Expenses $ 5,000.00
Legal Fees and Expenses $15,000.00
Miscellaneous $ 5,000.00
----------
Total $26,091.25
==========
Item 15. Indemnification of Directors and Officers.
The bylaws of the Registrant provide for indemnification of the
Registrant's directors and officers to the fullest extent permitted by law.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the Registrant's Certificate of Incorporation, bylaws and the
Delaware General Corporation Law (the "DGCL"), the Registrant has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in such Act and is therefore unenforceable.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may include a provision which eliminates or limits the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
relating to prohibited dividends or distributions or the repurchase or
redemption of stock or (iv) for any transaction from which the director derives
an improper personal benefit. The Registrant's Certificate of Incorporation
includes such a provision. As a result of this provision, the Registrant and its
stockholders may be unable to obtain monetary damages from a director for breach
of his or her duty of care.
Item 16. Exhibits.
Exhibits: Description
--------- -----------
4.1 Letter Agreement. (Filed as Exhibit 10.20 to the Registrant's Annual
Report on form 10-K as amended, as filed with the Commission on April
17, 2001, and incorporated herein by reference.)
4.2 Adjustable Warrant issued by Registrant to Montrose Investments,
Ltd., dated as of September 29, 2000. (Filed as Exhibit 4.15 to Form
8-K as filed with the Commission on November 13, 2000, and
incorporated herein by reference.)
4.3 Adjustable Warrant issued by Registrant to Strong River Investments,
Inc., dated as of September 29, 2000. (Filed as Exhibit 4.16 to Form
8-K as filed with the Commission on November 13, 2000, and
incorporated herein by reference.)
5.1 Opinion of Latham & Watkins.
23.1 Consent of Latham & Watkins (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included on this signature page to this
Registration Statement).
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Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of the
securities at that time to be deemed the initial bona fide offering.
(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 of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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 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 Irvine, State of California, on May 15, 2001.
NEOTHERAPEUTICS, INC.
By: /s/ Samuel Gulko
-----------------------------------
Samuel Gulko
Senior Vice President, Finance,
Chief Financial Officer, Secretary
and Treasurer
POWER OF ATTORNEY
We, the undersigned directors and officers of NeoTherapeutics, Inc., do
hereby constitute and appoint Alvin J. Glasky, Ph.D. and Samuel Gulko, or either
of them, our true and lawful attorneys-in-fact and agents, each with full power
to sign for us or any of us in our names and in any and all capacities, any and
all amendments (including post-effective amendments) to this Registration
Statement, or any related registration statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
to file the same, with all exhibits thereto and other documents required in
connection therewith, and each of them with full power to do any and all acts
and things in our names and in any and all capacities, which such
attorneys-in-fact and agents, or either of them, may deem necessary or advisable
to enable NeoTherapeutics, Inc. to comply with the Securities Act of 1933, as
amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement; and we
hereby do ratify and confirm all that the such attorneys-in-fact and agents, or
either of them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Alvin J. Glasky Chief Executive Officer, Director May 15, 2001
---------------------------------- (principal executive officer)
Alvin J. Glasky, Ph.D.
/s/ Samuel Gulko Senior Vice President, Finance, May 15, 2001
---------------------------------- Chief Financial Officer,
Samuel Gulko Secretary, Treasurer and Director
(principal financial and
accounting officer)
/s/ Mark J. Glasky Director May 15, 2001
----------------------------------
Mark J. Glasky
/s/ Eric L. Nelson Director May 15, 2001
----------------------------------
Eric L. Nelson, Ph.D.
S-1
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/s/ Carol O'Cleiracain Director May 15, 2001
----------------------------------
Carol O'Cleiracain, Ph.D.
/s/ Joseph Rubinfeld Director May 15, 2001
----------------------------------
Joseph Rubinfeld, Ph.D.
/s/ Paul H. Silverman Director May 15, 2001
----------------------------------
Paul H. Silverman, Ph.D., D.Sc.
S-2
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EXHIBIT INDEX
Exhibits: Description
--------- -----------
4.1 Letter Agreement. (Filed as Exhibit 10.20 to the Registrant's Annual
Report on form 10-K as amended, as filed with the Commission on April
17, 2001, and incorporated herein by reference.)
4.2 Adjustable Warrant issued by Registrant to Montrose Investments,
Ltd., dated as of September 29, 2000. (Filed as Exhibit 4.15 to Form
8-K as filed with the Commission on November 13, 2000, and
incorporated herein by reference.)
4.3 Adjustable Warrant issued by Registrant to Strong River Investments,
Inc., dated as of September 29, 2000. (Filed as Exhibit 4.16 to Form
8-K as filed with the Commission on November 13, 2000, and
incorporated herein by reference.)
5.1 Opinion of Latham & Watkins.
23.1 Consent of Latham & Watkins (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included on this signature page to this
Registration Statement).