1
As filed with the Securities and Exchange Commission January , 1998on April 24, 2001
Registration No. 333-
================================================================================333-______.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UnderUNDER
THE SECURITIES ACT OF 1933
----------------------
NASTECH PHARMACEUTICAL COMPANY INC.
(Exact Namename of Registrant as Specifiedspecified in Charter)
Delaware 11-2658569
(State of other jurisdiction of incorporation or organization) (I.R.S Employer Identification No. )
its charter)
DELAWARE 11-2658569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
45 Davids Drive
Hauppauge, NYADAMS AVENUE
HAUPPAUGE, NEW YORK 11788
(516)(631) 273-0101
ATTN: STEVEN C. QUAY, M.D., PH.D.
(Address, including zip code, and telephone number,
including area code, of Registrant's Principal Executive Offices and Principal Placeprincipal executive offices)
COPIES TO:
L. Kevin Sheridan, Jr., Esq.
Roberts Sheridan & Kotel
The New York Practice of
Business)
Dr. Vincent D. Romeo
Chief Executive Officer
NASTECH PHARMACEUTICAL COMPANY INC.
45 Davids Drive
Hauppauge,Dickstein Shapiro's Corporate & Finance Group
12 East 49th Street, 30th Floor
New York, NY 11788
(516) 273-0101
(Name, address, including zip code, and telephone number, including area code,
of Agent for service)
Copies to:
Bruce R. Thaw, Esq.
45 Banfi Plaza
Farmingdale, NY, 11735
(516) 752-1760
Approximate date of commencement of proposed sale to public:10017
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.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 formForm 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, please check the following box. [x]|X|
If this formForm 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. [ ]
2|_|
If this formForm is a post-effective amendment filed to pursuant to Rule 462(c) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of Registration Fee
-------------------------------|_|
CALCULATION OF REGISTRATION FEE
TitlesTitle of Each Class of Amount to Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be MaximumBe Registered Be Registered Offering Maximum Amount of
Registered Registered (1) Price Per Share (2) Aggregate Offering Price Registration Fee
Price
- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------- ------------------------ ------------------------ ----------------
Common Stock, $.006 par
value ................. 860,124 (1) $4.52 (3) 135,000 Shares $14.00 $1,890,000 $ 573.00
- --------------------------------------------------------------------------------------------------------------------------------$3,887,760 $972
Common Stock, $.006 par
value ................. 503,172 (2) $6.3375 (4) 135,000 Shares $14.00 $1,890,000 $ 573.00
- --------------------------------------------------------------------------------------------------------------------------------$3,188,853 $797
--------- ------- ---------- ------
Total Registration Fee ...................................................................................... $ 1,146.00
================================================================================================================================................. 1,363,296 $5.191 $7,076,613 $1,769
========= ======= ========== ======
(1) Represents shares currently beneficially owned by the selling stockholders.
(2) Represents shares issuable upon the exercise of warrants granted to the
selling stockholders, including warrants granted to Jesup & Lamont Securities
Corporation as a placement fee. Pursuant to Rule 416, there arethis registration
statement shall also being registered an
indeterminate number ofcover any additional shares of the Registrant's Common Stock
which maycommon stock that become
issuable pursuant toby reason the antidilutionantidilutive provisions of the Underwriter's Warrants.
(2) Estimatedwarrants.
(3) The proposed maximum offering price is estimated solely for the purposes of
calculating the registration fee pursuant to Rule 457(c) and 457(g)(3) of the
Securities Act of 1933. It is based upon a price of $14.00$4.52 per share, which was
the closing sale priceaverage of the high and low reported prices of the registrant's common stock
as reported on the Nasdaq National Market System on January 6, 1998.
(3) Common Stock issuableApril 20, 2001.
(4) The proposed maximum offering price is estimated solely for the purposes of
calculating the registration fee pursuant to Rule 457(g) of the Securities Act
of 1933. It is based upon exercisethe higher of Representative's Warrants.
(4) Common Stock issuable upon exercisethe price at which the warrants may be
exercised ($6.3375) and the price of Warrants contained within the Units underlying the Representative's Warrants.shares of common stock as
determined in accordance with Rule 457(c) ($4.52).
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 thethis 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)8(a),
may determine.
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PRELIMINARY PROSPECTUS DATED JANUARY , 1998
SUBJECT TO COMPLETION NASTECH
PHARMACEUTICAL COMPANY INC.
270,000 Shares of Common Stock
The 270,000 Shares of Common Stock (the "Common Shares") of Nastech
Pharmaceutical Company Inc. (the "Company") offered hereby are to be sold for
the accounts of the selling securityholders set forth herein (the "Selling
Securityholders"). The Common Shares are being offered on behalf of the
assignees of the Underwriter's Warrants which were issuedinformation in connection with the
Company's public offering completed on December 7, 1993. The Companythis prospectus is registering the Common Shares, at its expense, pursuant to certain demandnot complete and
piggy-back registration rights, and other contractual obligations incurred by
the Company in connection with the original issuance of such Common Shares. The
Company will not receive any of the proceeds from the sale of the Common Shares
by the Selling Securityholders, although it will receive warrant exercise fees
totaling $1,299,375 in connection with the issuance of the Common Shares. See
"Use of Proceeds." The Company estimates that its expenses in the aggregate will
be approximately $25,000 in connection with the offering (the "Offering") of the
Common Shares.
The Common Shares are quoted on the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") under the symbol NSTK. On January 6, 1998, the closing sale price of
the Common Shares was $14.00.
The Selling Securityholders directly, through agents designated from
time to time or through dealers or underwriters also to be designated, may sell
the Common Shares offered for sale pursuant to this Prospectus, from time to
time, on terms to be determined at the time of sale. To the extent required, the
purchase price, the public offering price, the names of any such agents, dealers
or underwriters and any applicable commissions or discount with respect to a
particular offer will be set forth in an accompanying Prospectus supplement. The
distribution of the Common Shares of the Selling Securityholders may be effected
in one or more transactions thatchanged. The
selling stockholders may take place innot sell these securities until the over-the-counter market,
including ordinary broker's transactions, privately negotiated transactions or
through sales to one or more dealers for resale of such securities as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees, commissions or discounts may be paid by
the Selling Securityholders in connection with such sales.
The Selling Securityholders and any broker-dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Common Shares may be deemed to be "Underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Act"), and any
commissions received by them and any profit on the resale of the Common Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Act. See "Selling Securityholders" for certain indemnification
arrangements.
THE PURCHASE OF THE COMMON SHARES OFFERED BY THIS PROSPECTUS
INVOLVES A SUBSTANTIAL DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY
CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS" ON PAGE 5 OF THIS
PROSPECTUS.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is January __, 1998
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ADDITIONAL INFORMATION
The Company hasregistration
statement filed with the Securities and Exchange Commission (the "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 APRIL 24, 2001
PROSPECTUS
[GRAPHIC OMITTED]
NASTECH PHARMACEUTICAL COMPANY INC.
1,363,296 Shares
Common Stock
This prospectus relates to the public offering of 1,363,296 shares of our
common stock which the selling stockholders named in this prospectus may resell
from time to time. We sold 860,124 shares of common stock to the selling
stockholders in a Registration Statementprivate offering and granted them warrants to purchase an
additional 503,172 shares, which includes 73,110 shares we granted to Jesup &
Lamont Securities Corporation as a placement fee. The shares of common stock
that the selling stockholders may resell using this prospectus constitute 17.7%
of our issued and outstanding common stock as of March 31, 2001.
Our common stock is quoted on Form S-3the Nasdaq National Market under the symbol
"NSTK." The closing bid price of our common stock on the Nasdaq National Market
on April 20, 2001, was $4.50 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 6.
Neither the Securities Actand Exchange Commission nor any state securities
commission has approved or disapproved of 1933, as amended, with respectthese securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Prospectus dated _________________, 2001
TABLE OF CONTENTS
Page
----
Prospectus Summary ................................................. 3
Risk Factors ....................................................... 6
Special Note Regarding Forward-Looking Statements .................. 11
Use of Proceeds .................................................... 12
Price Range of Common Shares being offered hereby.Stock ........................................ 12
Selling Stockholders ............................................... 13
Plan of Distribution ............................................... 15
Description of Capital Stock ....................................... 16
Where You Can Find More Information ................................ 20
Incorporation of Information by Reference .......................... 20
Legal Matters ...................................................... 21
Experts ............................................................ 21
PROSPECTUS SUMMARY
This Prospectus does not contain all thesummary highlights information set forthcontained or incorporated by reference
in such Registration Statement and the exhibits and schedules
relating thereto, certain portions of which have been omitted as permitted by
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Shares offered by this Prospectus,
reference is made to such Registration Statement and exhibits and schedules
thereto filed as part thereof, which may be examined without charge at the
offices of the Commission and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained at prescribed rates by mail from the
Public Reference Section of the Commission. Statements containedelsewhere in this Prospectus or in any documentprospectus. For a more complete understanding of this
offering, you should read the entire prospectus carefully, especially the "Risk
Factors" section, and our financial statements and notes to those statements
incorporated by reference in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete. In each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith, files periodic
reports, proxy statements and other information with the Commission. The
Registration Statement, reports, proxy statements and other information filed by
the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, 7 World Trade Center, New York, NY 10048; and Chicago
Regional Office, Citicorp Center 500 West Madison Street, Suite 1400, Chicago,
IL 60661-2511. Copies of such material may be obtained at prescribed rates by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and are also publicly available through the
Commissions web site (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-13789)
pursuant to the Exchange Act are incorporated by reference:
1. The Company's Transition Report on Form 10-K for the
transition period from July 1, 1996 to December 31, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 1997, June 30, 1997 and September 30, 1997;
3. The Company's Current Report on Form 8-K filed with the
Commission on February 11, 1997;
4. The description of Common Stock contained in the
Company's Form 8-A Registration Statement filed with the Commission on October
6, 1985 and any amendment or report filed for the purpose of updating those
descriptions.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing thereof. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or verbal request of any
such person, a copy of any or all of the documents which have been incorporated
by reference herein, other than exhibits to such documents (unless such exhibits
are specifically incorporated by
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reference into such documents). Requests for such documents should be directed
toprospectus, before making your investment
decision.
Nastech Pharmaceutical Company Inc., 45 Davids Drive, Hauppauge, New York
11788, Attention: Secretary, Telephone (516) 273-0101.
The Company furnishes its shareholders annual reports containing
financial statements audited by independent public accountants and will furnish
its shareholders such interim and other reports as it deems appropriate or as
required by regulation.
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is
qualified in its entirety by reference to the more detailed information and
financial statements (including the notes thereto) appearing elsewhere in this
Prospectus or incorporated herein by reference.
THE COMPANY
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus or incorporated herein by reference. This Prospectus contains
various "forward looking statements" within the meaning of Section 27a of the
Securities Act of 1933, as amended (the "Securities Act"), which represent the
Company's intentions, expectations or beliefs concerning future events. These
forward looking statements are qualified by important factors that could cause
actual results to differ materially from those in the forward looking
statements, including, without limitation, those discussed in "Risk Factors."
See "Risk Factors."
THE COMPANY
Nastech Pharmaceutical Company Inc. (the "Company") is engageda Formulation Science company and is
recognized as a leader in nasal drug delivery technology. Formulation Science is
a systematic approach to drug development using biophysics, physical chemistry
and pharmacology to maximize therapeutic efficacy and safety, which sometimes
involves a change in route of administration. The technology is essential in
designing an optimized, customizable dosage form and in delivering difficult
protein and large molecule drugs that can currently only be delivered by
injection.
Historically, our core technical competency involves the research, development
manufacturing and commercializationmanufacture of nasally administered formsprescription pharmaceuticals. We
investigate the commercial weaknesses of prescription and over-the-counter pharmaceuticals that arepharmaceutical products currently
deliveredavailable in oral, injectable or other dosage forms. Theforms, and we determine the
advantages an alternative drug delivery system would have for the same drug in
the market place. For example, while the oral route of drug delivery is the most
popular and least expensive method of delivery, gastrointestinal and liver
metabolism can reduce an oral drug's effectiveness. Generally, a nasal delivery
of certain pharmaceuticals enables more rapid systemicsystem will provide faster absorption lower required dosages, quickerinto the blood stream than an oral product
thereby resulting in faster onset of desired effect, and painless,
convenient patient self-administration, resulting in improved patient compliance
and pharmacoeconomics. The Company focuses its research activities primarily on
drugs with demonstratedaction. Other possible advantages of this
therapy may include lower drug doses, fewer side effects, greater safety and
efficacy, which, through current delivery
forms, have certain bioavailability orgreater convenience to the patient, better patient compliance limitations that may
be improved withof
prescribed drug therapy, and lower overall health care costs for the patient.
We have a novel delivery form. The Company's first commercially
available pharmaceutical is a prescription pain-reliever marketed as Stadol NS
bycommercial interest in two nasal drug products, both of which are
approved for sale in the U.S. Our licensee Bristol-Myers Squibb Company. In addition, on November 5, 1996,Company markets
Stadol(R) NS(TM) (Butorphanol Tartrate), and our licensee Schwarz Pharma Inc.
markets Nascobal(R) (Cyanocobalamin, USP). To our knowledge, Stadol(R) NS(TM) is
the Company
received marketing clearance from the FDA for Nascobal nasal gel usedonly nasally administered opioid pain relief medication marketed for the
treatment of moderate to severe pain and acute migraine pain. It provides
painless therapy and convenient, patient self-administration as compared to the
competitive injectable product. Similarly, Nascobal(R), our nasal vitamin B-12
product, provides patient benefits over the injectable therapy for chronic Vitamin B-12
deficiency anemia. Nascobal is now
commercially availableIn addition to these two drugs, we have several drugs in
various stages of drug research and development.
Our current business strategy seeks to broaden applications of our commitment to
Formulation Science, allowing drugs to be more safe and effective in patient
treatment, with particular emphasis on the applications for nasal or oral drug
delivery in the United Statesprescription and is being exclusively marketed by
Schwarz Pharma, Inc.
Although oral, injectable, patch and pulmonary delivery forms are
accepted for a variety of systemic pharmaceuticals, the Company believes that
nasal delivery may optimize the delivery of certain of these drugs. As an
example, certain drugs are delivered by injection due to significant liver or
gastrointestinal metabolism associated with oral administration, or due to the
inability of the stomach to absorb the drug properly and without irritation.
However, because of patient discomfort and the required assistance of a health
care professional, an injection is generally inconvenient and expensive for
frequent therapy, often resulting in patient non-compliance. The Company also
targets drugs, such as analgesics, sleep-aids and anti-nausea drugs, for which
quick onset of desired effect is important. For certain of these
pharmaceuticals, patients are seeking more rapid drug absorption than
experienced through currently available delivery forms such as oral or patch
administration. By addressing the limitations of current delivery forms for
certain pharmaceuticals, the Company believes that nasal delivery may expand
these markets through improved bioavailability, pharmacoeconomics and patient
acceptance, as demonstrated by the market growth of Stadol NS.
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The Company's objective is to become a leading drug delivery
specialist by leveraging the pharmacoeconomic and therapeutic advantages of
nasal delivery across multiple pharmaceuticals.over-the-counter markets. To accomplish this
objective, we plan to do the Company has developed a strategy that includes the following elements: (i)
focusfollowing:
o Focus initial efforts on significant injectable approved drugs; (ii) internally fund development through later
stages; (iii) leveragedrugs
o Leverage strategic alliances; (iv) protectalliances
o Protect and expand intellectual property;property rights
The Private Offering
On March 22, 2001, we raised approximately $4.2 million in gross proceeds
through a private sale of 860,124 newly issued shares of our common stock to the
investors listed in the "Selling Stockholders" section below. Jesup & Lamont
Securities Corporation, a registered broker-dealer, acted as placement agent for
the private offering. In connection with the private offering, we granted the
investors warrants to purchase 430,062 shares of our common stock. As
consideration for Jesup & Lamont's services as placement agent in connection
with the private offering, we granted Jesup & Lamont warrants to purchase 73,110
shares of common stock and (v) augment technology through licensingwe paid them an amount in cash equal to 6% of the
gross proceeds of the private offering, plus expenses. The investors and acquisition.Jesup &
Lamont may exercise their warrants at any time prior to March 22, 2006, at a
strike price of $6.3375 per share of common stock. Neither the investors, nor
Jesup & Lamont will be obligated to exercise the warrants and to purchase any
shares of common stock under these warrants.
We are registering the 860,124 shares which we previously issued to the selling
stockholders, plus the 503,172 shares underlying the warrants we granted to the
selling stockholders. From time to time during the period the registration
statement remains effective, the selling stockholders may offer for resale all
1,363,296 shares that this prospectus covers.
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The Company'snumber of shares subject to this prospectus represents 17.7% of our issued
and outstanding common stock as of March 31, 2001. We will prepare and file
amendments and supplements to the registration statement as may be necessary in
order to keep the registration statement effective until the second anniversary
of the date this registration statement is declared effective or, in the case of
warrant shares, the first anniversary of the date of issuance of such warrant
shares, but in any event not later than the fourth anniversary of the date such
registration statement is declared effective, or until these shares can be sold
under an appropriate exemption from registration. We have agreed to bear the
expenses of registering the shares, but not the expenses associated with selling
the shares, such as broker discounts and commissions.
--------------------------
Nastech Pharmaceutical Company Inc. is incorporated under the laws of the state
of Delaware. Our principal executive offices are located at 45 Davids Drive,Adams Avenue,
Hauppauge, New York 11788, and itsour telephone number is (516)(631) 273-0101. Our
principal research & development and administrative facility is located in the
same Hauppauge, New York facility. We maintain a website at www.nastech.com.
Information contained in our website does not constitute part of this
prospectus.
References in this prospectus, and the documents incorporated by reference in
this prospectus, to "Nastech," "we," "our," and "us" refer to Nastech
Pharmaceutical Company Inc., a Delaware corporation.
Nastech and some of the names of our products are tradenames or trademarks of
Nastech Pharmaceutical Company Inc. This prospectus and the information
incorporated by reference also contain trademarks and tradenames of other
companies.
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THE OFFERING
Securities Offered........................... 270,000 shares of Common Stock, $.006 par value
Common Shares Currently Outstanding.......... 6,101,157 shares (1)
Proceeds of the Offering..................... All of the proceeds from the sale of the Common
Shares offered hereby will be received by the Selling
Securityholders. The Company will not receive any of
the proceeds of this Offering. See "Use of Proceeds."
Selling Securityholders...................... The Common Shares offered hereby are to be sold for
the accounts of the Selling Securityholders as set forth
herein such Selling Securityholders being the
assignees of the Underwriter's Warrants which
were issued in connection with the Company's
public offering completed on December 7, 1993.
NASDAQ Symbol for the Common Shares.......... NSTK
Risk Factors................................. The securities of the Company offered hereby
are speculative and involve a high degree of
risk. See "Risk Factors" for information
investors should carefully consider before
purchasing the Common Stock offered hereby.
- ------------------------------
(1) Does not include (i) 700,000 shares of Common Stock reservedThat
Selling Stockholders May Offer ........ 1,363,296
Offering Price ........................ To be determined at the time selling
stockholders sell the shares
Common Stock Outstanding
Before the Offering............... 7,701,726 (1) (2)
After the Offering ............... 8,204,899 (3)
Use of Proceeds ....................... We will not receive any proceeds from
selling stockholders' sales of common
stock. However, we will receive the
proceeds upon the selling
stockholders' exercise of warrants
when, and if, they pay the exercise
price in cash. We expect to use
substantially all the net proceeds
for issuance
undergeneral corporate purposes,
including working capital, research
and development and expansion of
sales and marketing activities.
Nasdaq National Market symbol ......... NSTK
- ------------------
(1) Includes the Company's Stock Option Plans and (ii) 69,000860,124 shares of Common Stockcommon stock issued to the selling
stockholders in the private offering of our shares on March 22, 2001.
(2) Excludes:
o 2,012,245 shares of common stock subject to outstanding stock
options we previously granted under our stock option plans as of
December 31, 2000, including 600,000 options we granted on August 8,
2000 to Steven C. Quay, our new President, Chief Executive Officer
and Chairman of the Board.
o 338,757 shares of common stock available for future grants under our
stock option plans as of December 31, 2001.
o 34,500 shares of common stock issuable upon the exercise of outstandingthe warrants
expiringwe granted to Wheat, First Securities, Inc., as underwriters in
connection with an offering of our shares in 1997.
o 34,500 shares of common stock issuable upon exercise of the warrants
we granted to Volpe, Welty & Company, as underwriters in connection
with an offering of our shares in 1997.
o 1,200,000 shares of common stock issuable under our equity line of
credit agreement with Castlebar Enterprises Limited.
o 66,000 shares of common stock issuable upon exercise of the warrants
that we granted or may grant in the future to Castlebar in
connection with the equity line of credit.
o 33,000 shares of common stock issuable upon exercise of the warrants
that we granted or may grant in the future to Jesup & Lamont as a
placement fee in connection with the equity line of credit.
o 503,172 shares of common stock issuable upon exercise of warrants
that we granted to the selling stockholders in connection with the
private offering of our shares on January 23, 2002.
- 4 -March 22, 2001.
(3) Assumes that the selling stockholders exercise all 503,172 warrants we
granted to them in connection with the private offering of our shares on
March 22, 2001.
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RISK FACTORS
In addition toA purchase of our common stock is speculative and involves a high degree of
risk. You should carefully consider the risks described below together with all
of the other information containedincluded or incorporated by reference in this
Prospectus,prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones facing our company. If any of the
following risk factors shouldrisks actually occur, our business, financial condition or operating
results could be considered carefully in evaluatingharmed. In this case, the Companytrading price of our common stock
could decline, and its business before purchasing sharesyou could lose all or part of Common Stock offered hereby.
Historyyour investment.
Because of Losses; Uncertainty of Profitability. From inception in March
1983 to September 30, 1997, the Company has accumulated net losses of
approximately $9.1 million. Because the Company's proposed products will require
significant additional clinical testingSignificant R&D and investment prior to
commercialization, such losses may increaseOther Costs, We Have Never Been Profitable, We Do
Not Expect To Become Profitable in the near-term asForeseeable Future, and We May Never
Become Profitable
We incurred losses in each of the Company
expands its research, developmentlast three years. We incurred a net loss of
$876,000 for fiscal year 1998, a net loss of $8.4 million for fiscal year 1999,
and clinical trials ina net loss of $9.7 million for fiscal year 2000. As of December 31, 2000, we
had an effort to seek
regulatory approvalaccumulated deficit of such products.$30.0 million. The Company expects itsprocess of developing our
products requires significant research and development, expenses to increase in the foreseeable future,including basic
research, pre-clinical and clinical development, as a result it
does not expect to achieve sustained profitability unless products now under
development are licensed or commercialized successfully, of which there can be
no assurance. There can be no assurance that any of the Company's products will
meet applicable regulatory standards, obtain required regulatory approvals, be
capable of being produced in commercial quantities at reasonable costs or be
successfully marketed. Consequently, the Company may incur substantial operating
losses unless and until product sales, royalty payments or milestone payments
generate sufficient revenues to fund its continuing operations. The Company also
expects to have quarter-to-quarter fluctuations in revenues and expenses which
may result in fluctuations in operating results.
Dependence on Strategic Alliances. Most of the Company's current and
anticipated revenues are derived from collaborative agreements with
Bristol-Myers Squibb Company ("BMS") and Schwarz Pharma, Inc. ("Schwarz"). The
marketing responsibilities pursuant to these agreements have been undertaken by
the respective collaborative partners and are not within the control of the
Company. The BMS Agreement does not provide for minimum royalties and may be
terminated by BMS at any time upon 60 days notice. As a result, there is no
assurance that the Company will continue to receive royalty payments in the
future or on a consistent basis. In addition, Stadol NS, the subject of the BMS
Agreement has been recently classified by the United Stateswell as Food and Drug
Administration asregulatory approval. These activities, together with our sales,
marketing, general and administrative expenses, have resulted in operating
losses in the past, and we expect these losses to continue for the foreseeable
future. We may never achieve profitability. As a controlled substance, whichresult, the market price of our
common stock could negatively affect future
sales by BMSdecline.
Because Our Operating Results Are Subject To Significant Fluctuations and
royaltiesUncertainties, We May Not Be Able to Meet All of Our Future Expense Obligations,
and Our Failure to Meet Public Market Analysts or Investors' Expectations
Regarding Earnings May Cause Our Stock Price To Decline
Our operating results are subject to significant fluctuations and uncertainties
due to a number of factors including, among others:
o the Company. The Schwarz agreement provides for $2
million in minimum royalties on the saletiming and achievement of Nascobal in 1998.
The Company's strategy for research, development and commercialization of
some of its products has been to rely upon various strategic alliances with
licensees, distributorslicensing transactions, including
milestones and other third partiesperformance factors associated with these
contracts
o the time and costs involved in performing preclinical and
clinical testing, obtaining regulatory approval, and performing manufacturing
and marketing functions. There can be no assurance that the Company will be able
to negotiate acceptable collaborative arrangements or that such arrangements
will be successful. Further, the Company cannot predict to what extent new
collaborative agreements, if any, will affect revenue and profitability in
future periods.
Limited Marketing, Sales and Manufacturing Capabilities. The Company may
independently develop and market certain nasal drug products, such as certain
prescription products for which there are a relatively limited number of
clinicians specializing in the treatment of a condition that can be treated with
one of the Company's products. The Company has limited experience in marketing,
distributing or selling pharmaceutical products and will have to develop such
expertise or rely on licensees or on arrangements with others to provide for the
marketing, distribution and sales of its products. The Company has, by sales and
licensing agreements, established marketing, distribution and sales capabilities
with respect to Stadol NS and Nascobal. However, there can be no assurance that
the Company will be able to make satisfactory arrangements with licensees or
others to perform such activities with respect to other proposed products and
such inability would have a material adverse effect on the Company's business or
prospects.
Although the Company is producing and formulating small amounts of certain
drug formulations which are the subject of preclinical and clinical trials under
current good manufacturing practices ("GMP"), which are stringent manufacturing
standards prescribed by the FDA, the Company has not yet manufactured or
marketed any products in high-volume commercial quantities, and the current
facilities and equipment of the Company may not be adequate for high-volume
commercial scale production under GMP. The Company has, however, commenced the
manufacture of its Nascobal product in commercial quantities. To be successful,
Nascobal and the Company's other proposed products
- 5 -
8
must be manufactured in commercial quantities under GMP and at acceptable costs.
Therefore, the Company will need to further develop its own GMP manufacturing
facility or depend on contract manufacturers, licensees or others for the
commercial manufacture of its products. The Company has limited experience in
such high-volume commercial manufacturing and no assurance can be given that the
Company will be able to make the transition to commercial production
successfully or at an acceptable cost. In addition, no assurance can be given
that the Company will be able to make arrangements with third parties to
manufacture its products on acceptable terms.
Management of Growth. The Company has recently experienced significant
growth in total revenues related primarily to royalties received from sales of
Stadol NS and interest income. The Company's recent growth, anticipated growth
from sales of Nascobal and potential additional licensing transactions may
result in significant demands on the Company's management, operations and
resources, including working capital. To manage its growth effectively, the
Company will be required to continue to improve its operational, financial and
management information systems, procedures and controls, and to hire and train
new executives and other employees. There can be no assurance that the Company
will be able to manage its growth effectively, and the Company's failure to do
so could have a material adverse affect on the Company's business,patent research and development effortsof
our proprietary position
o continued scientific progress and financial performance.
Government Regulation. The United States Foodlevel of expenditures in our
research and Drug Administration
("FDA")development programs
o the cost of manufacturing scale-up and comparable agenciesproduction batches, including
vendor provider activities and costs
o the time and costs involved in foreign countries impose requirementsobtaining regulatory approvals
o changes in general economic conditions and drug delivery
technologies
o new products and product enhancements that we or our competitors
introduce
As a result of these factors and other uncertainties, our operating results have
fluctuated significantly over the last three years, from a net loss of $876,000
in 1998, to a net loss of a net loss of $8.4 million in 1999 and a net loss of
$9.7 million in 2000. Over the past four quarters, our operating results have
increased by as much as 83% and have decreased by as much as 68% from one
quarter to another. In order to illustrate these fluctuations, we had a larger
than expected loss per share in the second quarter of 2000 due to an unexpected
decline in royalty income from our licensee Bristol-Myers Squibb's decreased
sales of Stadol(R) NS(TM) and from unexpected compensation expenses we paid to
the estate of our recently deceased CEO. Although this larger than expected loss
per share in the second quarter did not affect our business or operations
because we had adequate cash reserves and in general do not rely solely on our
operating results to meet our expense obligations, it is possible that larger
than expected losses in the introductionfuture during any single quarter could affect our
ability to meet all of therapeutic pharmaceutical products into the marketplace. Priorour expense obligations or may require us to marketing, any therapeutic product developed by the Company must undergo
rigorous preclinicalprioritize,
modify or cease some of our development programs.
Our revenues and clinical testing, as welloperating results, particularly those reported on a quarterly
basis, may continue to fluctuate significantly. This makes it difficult to
forecast our operating results. Therefore, we believe that quarterly comparisons
of our operating results will not be meaningful, and you should not rely on them
as an extensive regulatory
approval process mandated byindication of our future performance. Also, our operating results in a
future quarter or quarters may fall below the FDA and foreign regulatory agencies. These
procedures requireexpectations of public market
analysts or investors. If this were to occur, the expenditureprice of substantial resources, may take several
yearsour stock could
decline.
6
If We Are Unable to Adequately Protect Our Proprietary Technology from Legal
Challenges, Infringement or longer and may vary substantially based upon the type, complexity and
novelty of the pharmaceutical product. Government regulation also affects the
manufacturing, marketing and pricing of pharmaceutical products.
Government regulation may delay or prevent the marketing of the Company's
products or proposed products for a considerable period of time, impose costly
procedures upon the Company's activities and confer a competitive advantage to
larger companies or companies more experiencedAlternative Technologies, This May Hurt Our
Competitive Position
We specialize in regulatory affairs that
compete with the Company. There can be no assurance that FDA or other regulatory
approval for any products developed by the Company will be granted on a timely
basis, or at all. Delay in obtaining or failure to obtain such regulatory
approvals will materially adversely affect the Company's business, liquidity and
capital resources.
Uncertainty Regarding Patents and Proprietary Information. The Company's
ability to compete effectively with other companies is materially dependent upon
the proprietary nature of its patents and technologies. The Company is the
exclusive licensee of six U.S. patents and presently owns four additional
patents in the United States and corresponding or related foreign patents. All
of such patents relate to the nasal delivery of specific therapeutic agentspharmaceutical products and rely on the
compositionsissuance of patents, both in the U.S. and internationally, for such delivery.
Theprotection
against nasal product competition. Although we believe that we exercise the
necessary due diligence in our patent filings, our proprietary position is not
established until the appropriate regulatory authorities actually issue a
patent, which may take up to two or three years after initial filing.
Moreover, even the established patent positions of pharmaceutical firmscompanies are
generally uncertain and involve complex legal and factual questions. The invalidationissues. Although we
believe our issued patents are valid, it is possible that others may
nevertheless challenge our issued patents, that our issued patents will not
withstand review in a court of keycompetent jurisdiction, and that a court will
hold our issued patents to be invalid. Furthermore, it is possible that others
will infringe or otherwise circumvent our issued patents and that we will be
unable to fund the cost of litigation against them.
In addition, we may not be able to protect our established and pending patent
positions from competitive drug delivery technologies, which may provide more
effective therapeutic benefit to patients and which may therefore make our
products, technology and/or proprietary rights ownedposition obsolete.
If we are unable to adequately protect our proprietary technology from legal
challenges, infringement or licensed byalternative technologies, we may not be able to
compete in the Company couldpharmaceutical delivery business.
If The Commercial Opportunity for Nasally Administered Products Is Limited, This
Could Impact Our Anticipated Future Revenue Growth
The physical and chemical properties of a drug affect our ability to develop a
method of delivering it intranasally. Although we continue to explore the
feasibility of nasally delivering drugs that are large, more complex molecules,
we have an adverse effect
on the Companymore expertise in nasal delivery of smaller, less complex molecules. The
universe of nasal products that qualify as small molecules and on its business prospects. Becauseare available for
commercialization may be limited. Accordingly, we may be subject to intense
competition in these potential products, which can affect our anticipated future
revenue growth. Although we need to accelerate our research of differences in patent
laws and laws concerning proprietary rights, the extent of protection provided
by United States patents or proprietary rights owned by or licensed to the
Company may differ fromlarger molecules,
it is possible that provided by their foreign counterparts. No
assurance can be given that patents issued to or licensed by the Companywe will not be challenged, invalidatedsuccessful in these areas. If we are not
successful in these areas, our future revenue may not grow at all or circumvented,as quickly
as anticipated.
We May Require Additional Financing in the Future, and If Additional Capital Is
Not Available, We May Have To Curtail or that any rights granted
thereunder will provide competitive advantagesCease Operations
Subject to the Company. Further,success of our development programs and potential licensing
transactions, we may require an additional infusion of capital to complete the
Company'sresearch and development activities we currently contemplate and to
commercialize our proposed products. We may need to raise additional capital to
fund more rapid expansion, to develop new products and to enhance existing
patents may expire priorservices to respond to competitive pressures, and to acquire complementary
businesses or technologies. Our future capital needs depend on many factors,
including:
o the scope, duration and expenditures associated with our current
research and development programs
o continued scientific progress in these programs
o the outcome of potential licensing transactions, if any
o competing technological developments
o our proprietary patent position, if any, in our products
o the regulatory approval and
commercial developmentprocess for our products
o other factors which may not be within our control
We may not be able to obtain additional financing at these times on terms
favorable to us, if at all. For example, a decline in the trading volume or
price of our common stock may reduce the maximum amount we may be able to draw
down under our equity line of credit agreement with Castlebar Enterprises
Limited. Our equity line of credit agreement limits our ability to raise money
from other sources by prohibiting us from selling our securities to third
parties at a proposed pharmaceutical product. The earliest
expiration date of a United States patent owned by or licenseddiscount to the Company is
1999. The patent relatedmarket price during the term of the equity line of
credit agreement. Therefore, if we need to Stadol NS expires in 2001.
The Company could incur substantial costs in defending any patent
infringement suits brought againstraise capital from other
7
sources, then we will have to seek Castlebar's permission. If Castlebar does not
allow us to obtain capital by selling our securities at a discount to market
price, we will have to seek financing through other means, which may not be
possible on terms favorable to us, if at all.
Without additional funding, we may have to delay, reduce or eliminate one or
more research or development programs and reduce overall overhead expenses. This
action may reduce the Companymarket price of our common stock.
If We Fail To Obtain Regulatory Approvals For Our Products, We Will Be Prevented
From Marketing Our Products and We Will Incur Substantial Losses
We embark on specific research or in asserting the Company's
patent rights, including those granted by third parties, in a suit against
another party. In addition, proceedings may be instituted by third partiesdevelopment projects that address unmet
medical needs. Numerous governmental authorities in the United States Patent and Trademark Office against
- 6 -
9other
countries subject these projects to significant regulation. For example, we must
file New Drug Applications with the CompanyFood and Drug Administration for most of
these projects. The process of completing clinical testing and obtaining FDA
approval for a new drug product requires substantial resources over a number of
years. If we do not receive the necessary regulatory approvals along the way, we
will not be able to progress clinically in connection with one or moreour projects and may be forced to
abandon projects after incurring substantial costs. For example, in 2000 the FDA
rejected the New Drug Application for our nasally administered scopolamine
product primarily because we failed to present adequate safety data. This action
resulted in an indefinite delay in our New Drug Application filing program and
uncertain costs of additional development . The magnitude of the Company's patentscosts
associated with these studies and such
proceedings could result in an adverse decision as to the validity or scoperefiling of the patents.
The Company also relies on trade secrets, know-how and continuing
technological advancementNew Drug Application have
contributed to maintain its competitive position. The Company has
utilized confidentiality agreements relatinga deferral of our program until a collaborative partner is found
to share the future development risk. Moreover, other factors, such information with third
parties. No assurances can be given that such obligations of confidentiality
will be honored or that the Company can effectively protect its rights to any
unpatented trade secrets.
Future Capital Needs. The Company's operations to date have consumed
substantial amounts of cash, primarily for research and development. The
Company's future capital requirements will depend upon numerous factors,
including: the progressas a
periodic reassessment of the Company's product development programs;ranking of projects within our portfolio, may
create further uncertainty of the time
required tocontinuing viability of any project in
process, including nasally administered scopolamine. Finally, we may encounter
significant delays or excessive costs in our efforts, even if we are eventually
successful in achieving regulatory approval. If we cannot obtain regulatory
approvals; the resources that the Company devotes
to the developmentapproval of self-funded products; the ability of the Company to obtain
additional collaborative partners; and the demand for itsour products, if and when
approved. Based upon current expectations for operating losses and capital
expenditures, the Company believes that its existing cash, cash equivalents and
short-term investments, together with the cash flows generated from planned
business operations, will be sufficient to meet its operating expenses and
capital expenditure requirements through at least 1998. However, there can be no
assurance that the Companywe will not require additional financing depending upon
future business strategies, resultsbe able to generate revenues and become
profitable.
Because We Have No Experience in Marketing or Selling Our Proposed Products,
These Products May Never Be Successful
Even if we are able to develop our products and obtain necessary regulatory
approvals, we have no experience in marketing or commercializing any of clinical trials, management decisionsour
proposed products. We are dependent on our ability to accelerate certain research and development programs and other factors. Adequate
funds, whether through financial markets or from other sources,find collaborative
marketing partners for commercial sale of our products. Even if we find a
potential marketing partner, we may not be available when neededable to negotiate a licensing
contract on favorable terms to justify our investment or on terms acceptableachieve adequate
revenues. In addition, a licensing transaction with a marketing partner does not
assure a product's success, which is dependent upon patients, physicians or
third-party payers accepting the product.
Our products may prove to the Company. Insufficient funds
may require the Company to delay, scale back or curtail product development
activities.
Uncertainty of Health Care Reimbursement. The Company's ability to
commercialize therapeutic nasal pharmaceuticals successfully may depend in part
on the extent to which reimbursement for the cost of such products will be available fromunsuccessful if various parties, including
government health administration authorities, private health coveragecare insurers and
other organizations. The Company believes that the U.S.
Congress and state legislatures may continue to consider health care reform
proposals which, if enacted, would significantly affectpayers, such as health care,
pharmaceuticalmaintenance organizations and
drug delivery companies, among others. Any such measures, if
adopted, could adversely affect the pricing of pharmaceutical products or the
amount ofself-insured employee plans that determine reimbursement from governmental agencies or third party payors, and
consequently could be adverse to the Company. Health care reform may adversely
affect the Company's business, particularly to the extent the Company develops
products for prescription drug applications. The Company is unable to predict,
however, when any proposed health care reforms will be implemented, if ever, or
the effect of any implemented reforms on the Company's business or prospects.
Further, significant uncertainty exists as to theconsumer, do not
accept our products. We cannot assure you that reimbursement status of newly
approved health care products, and there can be no assurance that adequate
third-party coverage will be available for the Company to maintain price levels
sufficient for realization of an appropriate return on its investment in product
development.
Dependence Upon Key Personnel and Attraction of Qualified Personnel. The
Company is highly dependent on the services of its Chief Executive Officer, Dr.
Vincent D. Romeo. There is no assurance that, if the Company should lose the
services of Dr. Romeo, a qualified replacement could be engaged. Although the
Company has entered into an employment agreement with Dr. Romeo, the loss of his
services could have a material adverse effect on the Company's business and
prospects. Due to the specialized nature of the Company's business, the Company
is also highly dependent upon its ability to attract and retain qualified
scientific, technical and key management personnel. There is intense competition
for qualified personnel in the areas of the Company's activities and there can
be no assurance that the Company will be able to locate, attract and retain
qualified personnel necessary for the development of its existing business and
its expansion into areas and activities requiring additional expertise, such as
clinical testing, government approvals, production and marketing. The loss of,
or failure to recruit scientific, technical and managerial personnel could have
a material adverse effect on the Company.
Product Liability Exposure; Limited Insurance Coverage. The testing,
marketing and sale of human health care products entail an inherent risk of
allegations of product liability, and there can be no assurance that substantial
product liability claims will not be asserted against the Company. The Company
currently has product liability insurance
- 7 -
10
coverage in connection with its Nascobal product and its ongoing clinical
trials. The Company intends to obtain additional product liability insurance if
and when other products are commercialized and marketed by the Company; however,
there can be no assurance that adequate insurance will be available
at acceptable costs, ifall or at all, that such insurancelevels sufficient to allow our marketing partners to achieve
profitable price levels for our products. If we fail to achieve adequate
reimbursement levels, patients may not purchase our products and sales of these
products will be sufficient to cover all
possible liabilities, or that a product liability claim would not have a
material adverse effect on the business or financial condition of the Company.
Failure to maintain adequate product liability insurance could, in the event a
product liability claim were asserted against the Company, have a material
adverse impact upon the Company and its business.reduced.
Because We Will Face Intense Competition. The Company is engaged in the pharmaceutical, drug
delivery systems industry which is characterized by extensive research efforts,
rapid technological progress and intense competition. Competitors of the Company
in the United States and abroadCompetition, This May Limit Our Ability To Achieve
Profitability
Our competitors are numerous and include, among others, major pharmaceutical
companies, biotechnology firms, universities and other research institutions.
At the present time, the Company does not know of another
pharmaceutical company engaging exclusively in the development of drugs to be
administered nasally for systemic absorption. However, other pharmaceutical
companies which are larger than the Company are known to be engaged
non-exclusively in researching some nasally administered pharmaceuticals, andOur competitors may be expected to enter this field if the nasal route becomes a preferred
method of delivery for the administration of certain classes of drugs.
Further, there can be no assurance that the Company's competitors will not succeed in developing technologies and products that are
more effective than the nasal technology being developed by the Companywe are developing or that would render the
Company'swill cause
our technology andor products to become obsolete or noncompetitive.
Many of theseour competitors have substantially greater financial and technical
resources and production and marketing capabilities than the Company. Many of these
competitorswe have. They also may
have greater experience than the Company in conducting preclinical testing and clinical trials of
pharmaceutical products and obtaining FDA and other regulatory approvals.
Accordingly, the Company'sTherefore, our competitors may succeed in obtaining FDA approval for products
more rapidlyfaster than the Company. As
the Company commenceswe could. Even if we commence commercial sales of itsour products, itwe
will also be competing with respect toagainst their manufacturing efficiency and marketing
capabilities, areas in which it haswe have limited or no experience.
8
Although we believe that our ownership of patents for our nasal delivery
products will limit direct competition with these products, we must also compete
with other promising technologies such as controlled release, target organ or
site release, pumps, polymers, microemulsion, monoclonal antibodies, inhalation,
ocular, liposomal, implants, transdermal passive and transdermal
electrotransport. Our competitors may develop other products using these or
other delivery alternatives that may be as or more effective than our products
and proposed products. We may not be able to compete effectively with other
commercially available products or drug delivery technologies.
If We Have a Problem With Our Manufacturing Facility, or If We or Our Suppliers
Fail to Comply with Applicable Regulations, We May Not Be Able To Market Our
Products or Conduct Clinical Trials
We manufacture all of our products for clinical and commercial use at our
principal manufacturing facility located in Hauppauge, New York. We must produce
all of these products in compliance with federal and state regulations. These
authorities also subject our facilities to inspection. In addition, some of our
key suppliers, such as Roussel Corporation, SGD Pharma, CP Packaging and
Pfeiffer of America, are also subject to regulatory compliance. If we have a
problem at our manufacturing facility, or if we or our suppliers fail to comply
with federal and state regulations or otherwise fail to perform our respective
obligations in a timely fashion, these problems or failures could cause a delay
in clinical trials or the supply of product to market. Any significant delay
could also jeopardize our performance contracts with collaborative partners and
result in material penalties to us.
Changes in the Health Care Industry That Are Beyond Our Control May Be
Detrimental To Our Business
The health care industry is changing rapidly as the public, government, medical
professionals and the pharmaceutical industry examine ways to broaden medical
coverage while controlling the increase in health care costs. Potential Volatilitychanges
could put pressure on the prices of Stock Price.prescription pharmaceutical products and
reduce our business or prospects. We cannot predict when, if any, proposed
health care reforms will be implemented, and these changes are beyond our
control.
If There Are Unforeseen or Unknown Liabilities in Connection With the Operation
of Our Newly Acquired Business, Atossa, These Liabilities Will Reduce Our
Working Capital, Liquidity and Profitability
On August 8, 2000, we acquired Atossa HealthCare Inc., a development stage
company based in Washington state which is developing a proprietary platform of
diagnostics and treatments related to breast cancer risk assessment and
therapeutics and other women's health care products. We effected the acquisition
via a merger of Atossa Acquisition Corporation Inc., a wholly owned subsidiary
of Nastech, with and into Atossa, after which Atossa became a wholly owned
subsidiary of Nastech. The total consideration we paid for Atossa -- 600,000
shares of our common stock with a market recently has
experienced significant price and volume fluctuations that were often unrelatedvalue of approximately $2.5 million --
was agreed upon between parties after extensive negotiations. The amount of
consideration paid to Atossa was based exclusively on these negotiations. The
consideration paid does not bear any relationship to the operating performancenet book value of
particular companies.Atossa and may not necessarily bear any relationship to any other recognized
measure of value.
We anticipate that the continued development of the acquired technology from
Atossa will cost approximately $16 million and will take approximately four and
one-half years before the technology is developed into a commercially viable
product, if ever. We intend to seek research collaborations to partially or
fully fund these development costs. Successful commercialization of the acquired
technology is subject to the same risks as are associated with our other
research activities.
Unforeseen and unknown liabilities may arise in connection with the ownership
and operation of Atossa. Although we believe that the acquisition structure and
due diligence we employed minimize the risk of pre-existing claims being
successfully asserted against Nastech, it is possible that others will assert
against us claims they originally had against Atossa and that these claims may
result in material liabilities to us. The occurrence of any liability of this
kind can reduce our working capital and liquidity and make us less profitable.
If We Fail to Integrate Our New Chief Executive Officer and the Newly Acquired
Business, or If We Lose Our Key Personnel, or If We Are Unable To Attract and
Retain Additional Personnel, Then We May Be Unable To Successfully Develop Our
Business
On August 8, 2000, we entered into an employment agreement with Steven C. Quay,
M.D., Ph.D. to replace Vincent D. Romeo, Ph.D., who died on May 1, 2000, as our
President, Chief Executive Officer and Chairman of the Board. We cannot assure
you that Dr. Quay and our management team will perform well together. Because we
depend upon the knowledge, experience and skills of our management and research
and development personnel, our inability to successfully integrate
9
Dr. Quay into the management team could impede our ability to execute our
business plans on schedule. Our inability to successfully integrate and develop
the operations and technologies of Atossa could also reduce our profitability
and inhibit future growth.
In addition, losing Dr. Quay, or any of our other key managers could also
seriously harm our business. Although we generally execute employment agreements
with key personnel, this is not a guarantee that we will be able to retain them
or that we will be able to replace any of them if we lose their services for any
reason. Competition for these managers is intense. In addition, the location of
our facilities may limit the pool of technical talent available to us. We have
employed many of our key managers for several years. If we have to replace any
of these individuals, we will not be able to replace the significant amount of
knowledge that they have about our operations. We do not maintain "key man"
insurance policies on any of our managers.
We Expect To Sell Shares of Our Common Stock in the Future, including Shares
Issued Under the Equity Line of Credit, and These Sales May Dilute the Interests
of Other Security Holders and Depress the Price of Our Common Stock
As of December 31, 2000, there were 6,803,485 shares of common stock issued and
outstanding, and there were outstanding options and warrants to purchase
approximately 2,131,000 shares of our common stock. There are also 1,299,000
shares of common stock which are issuable under the equity line of credit and
under the warrants previously granted and which may be granted in the future to
Castlebar and Jesup & Lamont. We may also issue additional shares in
acquisitions and may grant additional stock options to our employees, officers,
directors and consultants under our stock option plans. Lastly, subject to some
restrictions in the equity line of credit agreement, we may issue up to 300,000
shares of our common stock to investors at a discount to market price without
the consent of Castlebar.
The issuance or even the Common Stock, aspotential issuance of shares under the equity line of
credit, in connection with thatany other additional financing, and upon exercise of
securities of many similar companies, is likely to
be highly volatile. Factors such as the results of pre-clinical studieswarrants, options or rights will have a dilutive impact on other stockholders
and
clinical trials by the Company or its competitors, regulatory progress or the
lack thereof with respect to products in the Company's pipeline or those of the
Company's competitors, evidence of the safety, efficacy or market acceptance of
the products of the Company or its competitors, announcements of technological
innovations or new products by the Company or its competitors, changes in
governmental regulation, developments in patent or other proprietary rights of
the Company or its competitors, including litigation, fluctuations in the
Company's operating results and changes in general market conditions for drug
delivery or other pharmaceutical companies could have a significant impactnegative effect on the market price of our common stock. In
addition, if we draw down under the Common Stock.
Authorizationequity line of Preferred Stock; Anti-takeover Provisions. The Company's
Certificatecredit, we will issue shares
to Castlebar at a discount to the daily volume weighted average prices of Incorporation authorizesour
common stock during the issuance22 trading days after notification of up to 100,000a drawdown. This
will further dilute the interests of other stockholders.
If We Draw Down on the Equity Line of Credit When Share Prices Are Decreasing,
We Will Need To Issue More Shares, which Will Lead To Dilution and Potentially
Further Price Decrease
As we sell shares of "blank check"our common stock to Castlebar under the equity line of
credit, and then Castlebar sells the common stock to third parties, our common
stock price may decrease due to the additional shares in the market. If we
decide to draw down on the equity line of credit as the price of our common
stock decreases, we will need to issue more shares of our common stock for any
given dollar amount that Castlebar invests, subject to the minimum selling price
we specify. The more shares that we issue under the equity line of credit, the
more diluted our shares will be and the more our stock price may decrease. This
may encourage short sales, which could place further downward pressure on the
price of our common stock.
The Anti-Takeover Provisions of Our Stockholder Rights Plan May Entrench
Management, May Delay or Prevent Beneficial Takeover Bids by Third Parties, and
May Prevent or Frustrate any Shareholder Attempt to Replace or Remove the
Current Management Even If the Shareholders Consider It Beneficial To Do So
We have a stockholder rights plan designed to protect our stockholders from
coercive or unfair takeover tactics. Under the plan, we declared a dividend of
one preferred stock in amounts and with such designations, rights and
preferences as may be determined from time to time by the Boardpurchase right for each share of Directors.
Accordingly, the Board of Directors is empowered, without stockholder approval,
to issuecommon stock outstanding on
March 17, 2000. Each preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affectpurchase right entitles the voting power or other rightsholder to
purchase from Nastech 1/1000 of the
holdersa share of the Company's Common Stock.Series A Junior Participating
Preferred Stock for $50. In the event any acquiring entity or group accumulates
or initiates a tender offer to purchase 15% or more of issuance,our common stock, then
each holder of a preferred stock purchase right, other than the acquiring
entity, will have the right to receive, upon exercise of the preferred stock
could be utilized, under certain circumstances, aspurchase right, shares of Nastech common stock or shares in the acquiring entity
having a methodvalue equal to two times the exercise price of discouraging, delaying or preventing a change inthe preferred stock
purchase right.
The intent of the stockholder rights plan is to protect our stockholders'
interests by encouraging anyone seeking control of our company to negotiate with
our board of directors. However, our stockholder rights plan could make it more
difficult for a third party to acquire us without the Company.
In addition,consent of our board of
directors, even if doing so would be beneficial to our shareholders. These
provisions apply even if the Company is subject tooffer may be considered beneficial by some
stockholders. Furthermore,
10
the anti-takeover provisions of Section 203our stockholder rights plan may entrench
management and make it more difficult for shareholders to replace management
even if the shareholders consider it beneficial to do so.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus and in the documents
that are incorporated by reference in this prospectus, all of which are subject
to risks and uncertainties. Forward-looking statements include information
concerning our possible or assumed future results of operations. Also, when we
use words such as "believe," "expect," "anticipate" or similar expressions, we
are making forward-looking statements. You should not rely on the
forward-looking statements in this prospectus. Although we believe that the
expectations reflected in forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those
described in "Risk Factors" and elsewhere in this prospectus.
We believe that it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors described
in the preceding pages, as well as any cautionary language in this prospectus,
provide examples of risks, uncertainties and events that may cause our actual
results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in our common stock, you should be
aware that the occurrence of the Delaware General Corporation Law. In general,events described in these risk factors and
elsewhere in this prospectus could materially affect our business, lower our
operating results and worsen our financial condition.
----------------------------
You should rely only on the statute
prohibits a publicly held Delaware corporation from engaginginformation contained or incorporated by reference
in a "business
combination"this prospectus. We have not authorized anyone to provide you with different
information. We are not making an "interested stockholder" for a periodoffer of three years afterthese securities in any state where
the date of the transactionoffer is not permitted. The information contained in which the person became an interested
stockholder, unless the business combinationthis prospectus is
approved in a prescribed manner.
For purposes of Section 203, a "business combination" includes mergers, asset
sales and similar transactions between the
- 8 -
11
corporation and the interested stockholder, and other transactions resulting in
a financial benefit to the stockholder. An "interested stockholder" is a person
who, together with affiliates and associates, owns 15% or more of the
corporation's voting stock or who is an affiliate or associate of the
corporation and, together with his affiliates and associates, has owned 15% or
more of the corporation's voting stock within three years.
Shares Eligible for Future Sale. Upon completion of this offering, the
Company will have outstanding 6,371,157 shares of Common Stock, assuming (i) no
exercise of 700,000 options outstandingcurrent only as of the date on the front of this Prospectus, and
(ii) noprospectus.
11
USE OF PROCEEDS
We will not receive any proceeds from the selling stockholders' sales of common
stock. However, we will receive the proceeds upon the exercise of outstandingthe selling
stockholders' warrants to acquire 69,000when, and if, they exercise the warrants. If all 503,172
shares of Common
Stock expiring January 23, 2002. Onunderlying the date of this Prospectus, 5,386,298
shares of Common Stock, including the 270,000 shares offered hereby, will be
immediately available for sale without restriction in the public market and
approximately 980,000 shares are "restricted securities" as that term is defined
by Rule 144 under the Securities Act ("Rule 144"), and are now eligible to be
sold in compliance with Rule 144. Ordinarily, under Rule 144 a person holding
restricted stock for a period of one year may, every three months, sell in
brokerage transactions an amount equalwarrants granted to the greaterselling stockholders' which are
covered by this prospectus are issued through the exercise of 1%those warrants,
then based upon the exercise price of $6.3375 per share, we would realize net
proceeds of approximately $3,188,850.
We expect to use substantially all the net proceeds from the exercise of the
Company's
outstanding Common Stock, or, if the Common Stock is quotedwarrants referred to above for general corporate purposes, including working
capital, research and development and expansion of sales and marketing
activities. The amounts we actually expend for working capital and other
purposes may vary significantly and will depend on Nasdaq, the
average weekly volumea number of trading in the Common Stock reported for the preceding
four weeks. After the expiration of two years, stock held by persons not
affiliated with the Company will not be subject to the above limitations.
No prediction can be made as to the effect, if any, that market sales of
shares of Common Stock or the availability of such shares for sale will have on
the market prices prevailing from time to time. Nevertheless, the possibility
that substantial amounts of shares of Common Stock may be sold in the public
market may adversely affect prevailing market prices for the shares of Common
Stock and could impair the Company's ability to raise capital through the sale
of its equity securities.
Forward-Looking Statements. Some of the statements made in this Prospectus
or incorporated by reference are forward-looking in nature,factors
including, but not limited to, the Company's business strategy, product development strategy, plans
concerningactual net proceeds received, the commercializationamount of
products, certain financial informationour future revenues and other statements that are not historical facts, as well as statements regarding
management's expectationsfactors described under "Risk Factors."
Accordingly, our management will retain broad discretion in the allocation of
the net proceeds. A portion of the net proceeds may also be used to acquire or
invest in complementary businesses, technologies, product lines or products. We
have no current plans, agreements or commitments with respect to FDA approvalany of new products,
technologythese
transactions, and product development milestones,we are not currently engaged in any negotiations with respect
to any of these transactions. Pending these uses, the abilitynet proceeds of this
offering will be invested in short-term, interest-bearing, investment-grade
securities or guaranteed obligations of the CompanyU.S. government.
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the symbol
"NSTK." The following table describes the range of high and low bid prices per
share of our common stock as reported on the Nasdaq National Market for the last
two and one-quarter years. These quotations represent prices between dealers and
do not reflect retail markups, markdowns or commissions and may not necessarily
represent actual transactions.
Low High
--- ----
2001
First Quarter........................................... $3.88 $9.94
2000
First Quarter........................................... $2.53 $8.38
Second Quarter.......................................... $3.25 $5.88
Third Quarter........................................... $3.81 $7.50
Fourth Quarter.......................................... $5.44 $8.97
1999
First Quarter........................................... $3.00 $6.25
Second Quarter.......................................... 2.56 3.63
Third Quarter........................................... 2.75 4.44
Fourth Quarter.......................................... 1.56 3.63
We believe that there are currently approximately 5,000 record holders of our
common stock, including several brokerage firms holding shares in street name
for beneficial owners. On April 20, 2001, the closing bid price of our common
stock as quoted on the Nasdaq National Market was $4.50.
The selling stockholders will sell their shares on the Nasdaq National Market,
on the over-the-counter market or otherwise at prices related to leverage its product developmentthe then
current market price, or in negotiated private transactions, or in a combination
of these methods. The selling stockholders will act independently of us in
making decisions with respect to the form, timing, manner and negotiate favorable collaborative
agreements,size of each sale.
12
SELLING STOCKHOLDERS
On March 22, 2001, we issued an aggregate of 860,124 shares of our common stock
in a private offering to the commencementstockholders listed below. In connection with the
private offering, we granted the investors warrants to purchase an additional
430,062 shares of salesour common stock. Jesup & Lamont Securities Corporation, a
registered broker-dealer, acted as placement agent for the private offering. As
consideration for Jesup & Lamont's services as placement agent in connection
with the private offering, we granted Jesup & Lamont warrants to purchase 73,110
shares of common stock and the sufficiencywe paid them an amount in cash equal to 6% of the
Company's cash
flowgross proceeds of the private offering, plus expenses. The investors and Jesup &
Lamont may exercise their warrants at any time prior to March 22, 2006, at a
strike price of $6.3375 per share of common stock. However, neither the
investors, nor Jesup & Lamont will be obligated to exercise the warrants and to
purchase any shares of common stock under these warrants.
The selling stockholders may use this prospectus to resell the 860,124 shares
that we issued to them, plus the 503,172 shares underlying the warrants that we
granted to them.
The following table lists the selling stockholders and other information
regarding their beneficial ownership of the shares of common stock as of March
22, 2001. The second column lists the number of shares of common stock
beneficially owned by each selling stockholder on March 22, 2001, including the
shares of common stock underlying the warrants held by them. Because the selling
stockholders may sell all, a portion, or none of their shares, we cannot
estimate the number of shares that will be held by the selling stockholders
after the completion of this offering.
Maximum Number of Shares
Number of Shares Owned that May Be Sold in this
Name of Security Holder Prior to this Offering (1) Offering (2)
- ----------------------------------------------------------------------------------------------------------------------
Ashton Harvey........................................ 30,768 30,768
Guarantee & Trust Company, Trustee, FBO
Douglas Garrett .................................. 30,768 30,768
Mark & Elizabeth Wheeler............................. 15,384 15,384
Gary B. Davis........................................ 30,000 30,000
Univest Mgt. Inc., EPSP.............................. 15,000 15,000
James T. Betts, Trustee, Trust J u/a M.F. Britton.... 27,691.5 27,691.5
Shipman & Goodwin Profit Sharing Plan Trust,
FBO James T. Betts, Ira H. Goldman &
Richard Cohen, Trustees........................... 15,384 15,384
James T. Betts & Joan C. Betts, Trustees, u/a
Theodore & Helen Betts............................ 12,307.5 12,307.5
Athena Family Partners............................... 30,000 30,000
Lawrence Remmel...................................... 7,692 7,692
Gerald T. Stanewick.................................. 30,768 30,768
Ralph F. Peters et AL Trust u/w Ella Frew............ 76,923 76,923
Coralbasin & Co., as nominee for SAFECO Common
Stock Trust Growth Opportunities Fund (3)......... 652,500 652,500
Coralrock & Co., as nominee for SAFECO
Resource Series Trust Growth Opportunities
Portfolio (3)..................................... 315,000 315,000
Jesup & Lamont Securities Corporation (4)............ 89,610 (5) 73,110
13
(1) Includes shares of common stock issuable upon the exercise of all warrants
beneficially owned by the selling stockholders.
(2) Assumes that each selling stockholder will sell all of the shares of
common stock offered under this prospectus, but not any other shares of
common stock beneficially owned by the selling stockholder.
(3) Safeco Asset Management Company is the investment manager for the Company's future liquidityselling
stockholder and capital resource needs.consequently has voting power and investment discretion
over the securities held by these selling stockholders.
(4) Howard F. Curd, the chief executive officer of Jesup & Lamont, has the
sole authority to exercise any warrants granted to Jesup & Lamont and to
sell and vote the shares of common stock issued under the warrants.
(5) Includes 16,500 shares of common stock underlying warrants that we
previously granted to Jesup & Lamont in connection with our equity line of
credit. The occurrence16,500 shares underlying these warrants are not being
registered under this registration statement and may not be offered and
sold using this prospectus.
Except for their ownership of common stock, to the best of our knowledge, none
of the events described,selling stockholders, other than Jesup & Lamont, have held any position
or office with us, or had any other material relationship with us, within the
past three years. As noted above, Jesup & Lamont acted as placement agent in
connection with the private placement in March 2001, and received a fee for such
services. Jesup & Lamont also acted as placement agent in connection with our
equity line of credit agreement with Castlebar Enterprises Limited in July 2000.
In connection with the achievementequity line of credit, we granted 16,500 warrants to
Jesup & Lamont as a placement fee and agreed to register the shares underlying
the warrants. At the closing of each drawdown under the equity line of credit,
we will also grant Jesup & Lamont warrants to purchase an additional 1,000
shares of common stock for each $100,000 we draw down under the equity line of
credit, up to a maximum of 16,500 additional warrants, and we will pay a
brokerage fee to Jesup & Lamont equal to 4% of the intended results
are subjectnet purchase price for each
drawdown.
Other than the 89,610 warrants we granted to Jesup & Lamont as placement fees in
connection with the equity line of credit agreement and our March 2001 private
offering, Jesup & Lamont does not currently own any of our securities. Neither
Jesup & Lamont nor any of its affiliates or control persons has held any
positions or offices, or had other material relationships, with us or any of our
affiliates within the past three years other than as a result of the ownership
of our common stock. If, in the future, occurrenceJesup & Lamont's relationship with us
changes, we will amend or supplement this prospectus to update this disclosure.
14
PLAN OF DISTRIBUTION
The selling stockholders may offer for sale up to 1,363,296 shares of our common
stock using this prospectus. We do not know for certain events and scientific results,
somehow or allwhen the selling
stockholders will choose to sell their shares of which are not predictable or within the Company's control;
therefore, actual results may differ materially from those anticipated in any
forward-looking statements.
USE OF PROCEEDS
The Companycommon stock. We will not
receive any proceeds from the selling stockholders' sale of shares of common
stock.
To permit the selling stockholders to resell the shares of common stock issued
to them, we agreed to file a registration statement and all necessary amendments
and supplements with the SEC for the purpose of registering and maintaining the
registration of the proceedsshares. We will bear all costs relating to the registration
of the common stock offered using this prospectus. We will keep the registration
statement effective until the earliest of any of the following dates:
o the second anniversary of the date this registration statement is
declared effective or, in the case of warrant shares, the first
anniversary of the date of issuance of such warrant shares, but in
any event not later than the fourth anniversary of the date such
registration statement is declared effective;
o the date after which the shares of common stock can be sold under an
appropriate exemption from registration;
o the date after which the selling stockholders sell all of the shares
of common stock covered by this registration statement.
Selling stockholders will offer our common stock into the public market from
time to time using this prospectus, although there can be no assurance that they
will in fact sell any or all of the securities that this prospectus covers. The
sales may be made on the Nasdaq National Market, on the over-the-counter market
or otherwise at prices related to the then current market price, or in
negotiated private transactions, or in a combination of these methods. The
selling stockholders will act independently of us in making decisions with
respect to the form, timing, manner and size of each sale. The selling
stockholders have informed us that there are no existing arrangements between
them and any other stockholder, broker, dealer, underwriter or agent relating to
the sale or distribution of shares of common stock which they may sell through
this prospectus.
The shares of common stock may be sold in one or more of the following manners:
o block trades in which the broker or 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;
o purchases that a broker or dealer makes for its account under this
prospectus; or
o ordinary brokerage transactions and transactions in which the broker
solicits purchases.
The selling stockholders will pay all commissions and their own expenses, if
any, associated with the sale of the Common Shares offered hereby, allshares of whichcommon stock. The selling
stockholders will be received bysell shares without paying any underwriting discounts or
commissions, except for usual and customary selling commissions paid to brokers
or dealers. However, in effecting sales, brokers or dealers that the Selling
Securityholders. The expenses ofselling
stockholders engage may arrange for other brokers or dealers to participate.
Except as disclosed in a supplement to this offering are estimated to be approximately
$25,000, whichprospectus, no broker-dealer will be
paid by the Company.
SELLING SECURITYHOLDERS
The following table sets forth certain information with respect to
persons as to which the Company is registering the Common Shares for resale to
the public. Because the Selling Securityholders may offer all or some part of
the Common Shares pursuant to this Prospectus and because the offering is not
being underwritten onmore than a firm commitment basis, no estimate can be given as to
the amount of securities to be offered for sale by the Selling Securityholders
upon termination of this offering. See "Plan of Distribution." The Selling
Securityholders are all current officers of Barber & Bronson Incorporated, the
underwriter in the Company's 1993 public offering:
- 9 -
12
Common Stock
Common Stock Beneficial Ownership
Beneficial Ownership Maximum After Offering if
Selling Securityholder Prior to Offering Amount Maximum is Sold
---------------------- ----------------- to be Sold ---------------
----------
Amount Percent Amount Percent
------ ------- ------ -------
Steven N. Bronson 217,352 3.6% 217,352 0 0%
Bruce C. Barber 51,852 * 41,852 10,000 *
Eric Elliott 10,796 * 10,796 0 0%
--------------------
* Less than 1%
Pursuant to the terms of the Underwriter's Warrants issued by the
Company to the assignees of Barber & Bronson, Incorporated on December 14, 1993,
the Company has agreed, upon the request of the Selling Securityholders, to
register the Common Shares underlying the Underwriter's Warrants under the Act
on one occasion and to include such Common Shares in any appropriate
registration statement which is filed by the Company during that period. The
Company has agreed to pay all registration expensescustomary brokerage commission in connection with any requested registration, except thatof the
Selling Securityholders willselling stockholders' sales of shares of common stock. The selling stockholders
may pay any
fees and expenses of counsel for the Selling Securityholders and,brokers or dealers commissions, discounts or other concessions in
amounts to be negotiated immediately prior to the extentsale. The compensation to a
particular broker-dealer may be in excess of customary commissions. Any profits
that the Selling Securityholders retain an underwriter with respect to such
registration, underwriting discounts, commissions and fees relating thereto. The
Company has agreed to indemnify the Selling Securityholders against certain
liabilities in respect of this offering, including liabilities under the Act.
PLAN OF DISTRIBUTION
Any or allthese broker-dealers make on any resale of the Common Shares offered hereby may be sold, from
time to time, to purchasers directly by the Selling Securityholders. The Selling
Securityholdersshares of common stock as a
principal and any underwriters, dealers or agentscommissions that participate in the
distribution of Common Shares may be deemed to be underwriters under the Act,
and any profit on the sale of the Common Shares by them and any discounts,
commissions or concessions received by themthese broker-dealers receive may be deemed to
be underwriting discounts and commissions under the Act.Securities Act of 1933. The
Common Sharesselling stockholders may be sold,pay commissions to any broker-dealer participating in
these transactions as agent. The purchaser of the shares of common stock may
also pay commissions to any broker-dealer participating in these transactions if
the broker-dealer acts as agent for the purchaser.
Broker-dealers may agree with the selling stockholders to sell a specified
number of shares of common stock at a stipulated price per share and, to the
extent a broker-dealer is unable to do so acting as agent for the selling
stockholders, to purchase as principal any unsold shares of common stock at a
price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares of common stock as principal may
thereafter resell the shares of common stock from time to time in one or more transactions, at a fixed offering price,
which may be changed,involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above, in the over-the-counter market, in
15
negotiated transactions or otherwise at varyingmarket prices determinedprevailing at the time of
sale or at negotiated prices. The distribution of securities by the Selling Securityholders may be
effected in one or more transactions that may take place on the over-the-counter
market, including ordinary broker's transactionsprices, and private transactions. Usual
and customary or specifically negotiated brokerage fees, discounts and
commissions may be paid by the Selling Securityholders in connection with such
sales of securities.
The Company will notthe resales may pay to or
receive anyfrom the purchasers of the proceeds fromshares of common stock commissions computed
as described above. Brokers or dealers who acquire shares of common stock as
principal and any other participating brokers or dealers may be deemed to be
underwriters in connection with resales of the shares of common stock.
The selling stockholders and any broker-dealers or agents that participate with
the selling stockholders in the sale byof shares may be "underwriters" within the
Selling Securityholdersmeaning of the Common Shares offered hereby. AllSecurities Act of 1933. Any commissions received by
broker-dealers or agents on the filing feessales and any profit on the expensesresale of this Registration Statement willshares
purchased by broker-dealers or agents may be borne in
full bydeemed to be underwriting
commissions or discounts under the Company, other than any fees or expensesSecurities Act of counsel1933.
The selling stockholders are also subject to the Selling
Securityholdersapplicable state and to the extent that the Selling Securityholders retain an
underwriter with respect to such registration, underwriting fees, discounts and
commissions relating to this offering.
Under applicablefederal
securities laws, rules and regulations, including Rule 10b-5 and Regulation M
under the Exchange Act any
personof 1934, and the rules and regulations of the Nasdaq
National Market. Under these rules, the selling stockholders may not:
o engage in market making activities at the same time as they are
engaged in a distribution of the Common Shares may not simultaneouslyshares of common stock for a period
beginning when this person becomes a distribution participant and
ending upon this person's completion of participation in a
distribution;
o engage in any stabilization activity in connection with our
securities;
o impose penalty bids or effect passive market making activitiesbids; and
o bid for or purchase any of our common stock or attempt to induce any
person to purchase any of our common stock other than as permitted
under the Exchange Act.
In addition, if any of the selling stockholders is an "affiliated purchaser" as
defined in Regulation M, they must coordinate their sales under this prospectus
with each other and with us for purposes of Regulation M as Securities Exchange
Act Release 34-38067 (December 20, 1996) requires. None of the selling
stockholders, nor any of their controlling persons, has been an officer,
director or otherwise an affiliate of our company during the last three years.
These restrictions, and the other rules and regulations applicable to selling
stockholders, may affect the marketability of the shares of common stock.
Under the terms of the private offering in March 2001, we agreed to indemnify
the selling stockholders against any liabilities they may incur as a result of
any untrue statement of a material fact or omission to state a material fact in
the registration statement, of which this prospectus is a part, or arising out
of any failure by us to fulfill any undertaking or covenant included in the
registration statement or to perform our obligations under the private offering
agreements or under law. This indemnification includes liabilities that the
selling stockholders may incur under the Securities Act of 1933.
DESCRIPTION OF CAPITAL STOCK
The following summary describes the material provisions of our capital stock and
is subject to, and qualified in its entirety by, our Certificate of
Incorporation including any amendments, and our By-laws, all of which are
incorporated by reference as exhibits to the registration statement of which
this prospectus is a part and by provisions of applicable law.
We are authorized to issue up to 25,000,000 shares of common stock, par value
$0.006, and 100,000 shares of preferred stock, par value $0.01. As of March 31,
2001, 7,701,726 shares of common stock were issued and outstanding, and no
shares of preferred stock were outstanding. We believe that there are
approximately 5,000 record holders of our common stock, including several
brokerage firms holding shares in street name for beneficial owners.
Common Stock
All of our issued and outstanding shares of common stock are validly issued,
fully paid and non-assessable. All shares of our common stock to be outstanding
after this offering, when paid for and issued, will be validly issued, fully
paid and non-assessable. On March 2, 2000, in connection with the adoption of a
shareholder rights plan, our board of directors created and designated 10,000
shares of Series A Junior Participating Preferred Stock. The rights of holders
of our common stock are subject to the rights of the holders of our Series A
Junior Participating Preferred Stock and will be subject to the rights of any
preferred stock that we may create and issue in the future. The rights of
preferred stockholders may adversely affect the rights of the common
stockholders.
16
Voting Rights. Holders of our common stock are entitled to one vote per share on
all matters requiring a vote of the stockholders. Common stockholders have no
right to cumulative voting in the election of directors. Accordingly, a simple
majority of votes can elect each of our directors.
Liquidation Rights. In the event of liquidation of our company, all holders of
our common stock will participate on an equal basis in the net assets available
for distribution after payment of our liabilities and payment of any liquidation
preferences in favor of outstanding shares of preferred stock, if there are any.
Dividend Rights. Holders of our common stock are entitled to receive dividends
in cash or property on an equal basis, if and when the board of directors
declares dividends on the common stock, subject to any preference in favor of
outstanding shares of preferred stock, if there are any. It is our present
intention to retain our earnings, if any, for use in our business. Dividends
are, therefore, unlikely in the foreseeable future.
Preemptive Rights and Redemption. The holders of our common stock have no
preemptive rights to maintain their respective percentage ownership interest in
our other securities. Our common stock is not redeemable or subject to further
calls or assessments, although we have in the past effected a 1:100 reverse
split of our common stock followed immediately by a 100:1 forward split to
enable us to redeem odd-lot shares which were creating excessive administrative
costs for us. As of December 31, 1999, we redeemed and then retired 110,736
odd-lot shares. We also acquired 77,000 shares of our common stock in 1999, and
are holding these shares as treasury stock.
Preferred Stock
We are authorized to issue up to 100,000 shares of preferred stock, without
stockholder approval.
Under the authority granted to and vested in our board of directors, in March
2000, the board of directors created a series of preferred stock and fixed the
relative rights, preferences and limitations of the stock. The series was
designated as Series A Junior Participating Preferred Stock and consisted of
10,000 shares. The dividend and distribution rights of the holders of the Series
A Junior Participating Preferred Stock are superior to the dividend and
distribution rights of the holders of our common stock, but are junior to all
series of any other class of our preferred stock with respect to the Commonpayment of
dividends and the distribution of assets. The Series A Junior Participating
Preferred Stock is not redeemable.
Each share of Series A Junior Participating Preferred Stock entitles the holder
to 1,000 votes on all matters submitted to a vote of our stockholders, and vote
together as one class with the holders of our common stock. However, the holders
of the Series A Junior Participating Preferred Stock are entitled to vote
together as a single class on any amendment to our Certificate of Incorporation
which would materially alter or change the powers, preferences or special rights
of the Series A Junior Participating Preferred Stock.
Upon our liquidation, dissolution or winding up, the holders of Series A Junior
Participating Preferred Stock are entitled to receive $1,000, plus the amount of
any accrued and unpaid dividends, for each share of Series A Junior
Participating Preferred Stock held, subject to adjustment. Additionally, upon
any consolidation or merger of our company in which the shares of our common
stock are exchanged for other stock, securities, cash or any other property,
then each share of Series A Junior Participating Preferred Stock shall be
similarly exchanged, at the same time, into an amount per share equal to 1,000
times the aggregate amount of stock, securities, cash or any other property in
which the common stock was exchanged. The relative rights, preferences and
limitations of the Series A Junior Participating Preferred Stock are more fully
described in the Designations of Rights, Terms and Preferences of Series A
Junior Participating Preferred Stock.
Our board of directors has the express authority, without any stockholder vote
or action, to create additional series of preferred stock and to fix the rights,
preferences, privileges and restrictions of the preferred stock, including
dividend rights, conversion rights, voting rights, terms of redemption,
redemption prices, and liquidation preferences, and to set the number of shares
constituting any series of preferred stock.
It is impossible for us to state the actual effect on common stockholders if the
board of directors designates a new series of preferred stock. The effects of
the designation will not be determinable until the rights accompanying the
series have been designated. The issuance of preferred stock could adversely
affect the voting power, liquidation rights or other rights that owners of
common stock or other series' of preferred stock hold. We have no present plans
to issue any additional shares of preferred stock.
17
Stockholder Rights Plan
In February 2000, we implemented a stockholder rights plan designed to protect
our stockholders from coercive or unfair takeover tactics by causing shares of
our preferred stock with voting or conversion rights to be issued to holders who
might side with our board of directors in opposing a takeover bid. In addition,
our issuance of the shares of preferred stock with voting or conversion rights
could dilute the stock ownership of those holders. Under the stockholder rights
plan, we declared a dividend of one preferred stock purchase right for each
share of common stock held of record on March 17, 2000. The preferred stock
purchase rights are exercisable only when a person or group of affiliated
persons accumulate or initiate a tender offer to purchase 15% or more of our
common stock. Upon exercise, each preferred stock purchase right will entitle
its holder, other than the acquirer and its affiliates, to purchase 1/1000 of a
share of our Series A Junior Participating Preferred Stock at a price of $50 per
one one-thousandth of a preferred share. The holder of each right will receive
upon exercise, common shares having a value equal to two times the exercise
price of the right. For example, at an exercise price of $50 per right, each
right that the acquiror does not own would be entitled to purchase $100 worth of
common stock for $50. Assuming a value of $25 per common share at the time, the
holder of each right would be entitled to purchase four common shares for $50.
Options and Warrants
Under our stock option plans, we are authorized to grant options to purchase a
maximum of 2,500,000 shares of common stock to our employees, officers, and
directors, and to other persons who provide us with services. As of December 31,
2000, a total of 2,012,245 options were outstanding, and 338,757 options were
available for future grants under our stock option plans. Our board of directors
determine the terms of our options at the time of grant.
In connection with our 1997 public offering, we issued to the representatives of
the underwriters, warrants to purchase a total of 69,000 shares of common stock
at an exercise price of $16.80 per share, exercisable at any time through
January 23, 2002.
Following our acquisition of Atossa HealthCare Inc. on August 8, 2000, we hired
Dr. Steven C. Quay as our new President, Chief Executive Officer and Chairman of
the Board and granted him options to purchase a total of 600,000 shares of
common stock. The exercise price of the options varies from $4.09 per share to
$15.00 per share, with a weighted average exercise price of $8.60. All of these
options regardless of the exercise price will vest at the rate of 33.33% per
full year of service, and will not vest pro-rata during the interim periods.
In connection with a private offering of our shares in March 2001, we granted a
total of 430,062 warrants to the investors and 73,110 warrants to Jesup & Lamont
as placement agent, each with an exercise price of $6.3375 per share,
exercisable at any time through March 22, 2006. These warrants contain
antidilution protections which will adjust the applicable exercise price and/or
the number of shares issuable upon exercise of the warrants upon the occurrence
of specified events such as stock dividends, stock splits, mergers and sales of
all or substantially all of our assets.
The following table presents all the options and warrants that were outstanding
as of March 31, 2001, including the warrants granted to the selling
stockholders:
Number of Shares forWeighted Average
Purchasable Exercise Price (1)
--------------------------------- -----------------------------
1,412,245 (2) $4.89
69,000 (3) $16.80
49,500 (4) $5.53
600,000 (5) $8.60
430,062 (6) $6.34
73,110 (7) $6.34
---------- -----
2,633,917 $6.34
========= =====
- --------------
(1) Exercise prices are rounded to the nearest cent.
18
(2) Shares issuable upon exercise of options granted under the stock option
plans. Does not include any options granted under the plans after December
31, 2000.
(3) Total shares issuable upon exercise of warrants granted to Wheat, First
Securities, Inc. and Volpe, Welty & Company, as underwriters in connection
with an offering of our shares in 1997.
(4) Shares issuable upon exercise of the warrants granted to Jesup & Lamont as
a periodplacement fee, and to Castlebar in connection with closing the equity
line of two business dayscredit agreement. Does not include the additional warrants that
may be issued to Castlebar and Jesup & Lamont upon each drawdown under the
equity line of credit.
(5) Shares issuable upon exercise of options granted on August 8, 2000, to Dr.
Steven C. Quay.
(6) Total shares issuable upon exercise of warrants granted to investors in
connection with the private offering of our shares in March 2001.
(7) Shares issuable upon exercise of warrants granted to Jesup & Lamont as a
placement fee in connection with the private offering of our shares in
March 2001.
Holders of options and warrants do not have any of the rights or privileges of
our stockholders, including voting rights, prior to exercise of the commencementoptions and
warrants. We have reserved sufficient shares of such distribution.authorized common stock to cover
the issuance of common stock subject to the options and warrants.
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 of the Delaware General Corporation Law, which
prevents an "interested stockholder" from engaging in a "business combination"
with a publicly held Delaware corporation for three years following the date the
person became an interested stockholder, unless:
(1) before the person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved
the business combination;
(2) upon consummation of the transaction that resulted in the interested
stockholder's becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced; or
(3) following the transaction in which the person became an interested
stockholder, the board of directors of the corporation approves the
transaction and holders authorize the transaction at a meeting of
stockholders by the affirmative vote of the holders of 66 2/3% of
the outstanding voting stock of the corporation that the interested
stockholder does not own.
The Delaware General Corporation Law defines an "interested stockholder" as a
person owning 15% or more of a corporation's outstanding voting stock. A
"business combination" includes mergers, stock or asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
The provisions of Section 203 of the Delaware General Corporation Law could have
the effect of delaying, deferring or preventing a change in control.
Indemnification and Limitation of Liability
Our Certificate of Incorporation limits the liability of directors to the
maximum extent that Delaware law as currently or hereafter in effect permits.
Delaware law provides that directors of a corporation will not be personally
liable for monetary damages for breach of their fiduciary duty as a director,
except for liability:
(1) for breach of their duty of loyalty to the corporation or its
stockholders;
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(3) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or
(4) for any transaction from which the director derives an improper
personal benefit.
Our Certificate of Incorporation provides for the mandatory indemnification of,
and advancement of expenses to, our directors, officers, employees and agents to
the maximum extent that Section 145 of the Delaware General Corporation Law, as
amended from time to time, permits.
19
Transfer Agent
The transfer agent and registrar for our common stock is the American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we have
filed with the SEC. Parts of the registration statement have been omitted from
this prospectus as the rules and regulations of the SEC permit, and this
prospectus does not contain all of the information contained or incorporated by
reference in the registration statement. In particular, statements in this
prospectus concerning the terms of certain agreements and other documents are
necessarily summaries of those documents, and in each case we refer you to the
copy of the applicable document to the extent we have filed it as an exhibit to
the registration statement. For further information on us and the information in
this prospectus, we refer you to the registration statement and its exhibits.
You may obtain copies of the registration statement and its exhibits by paying a
prescribed fee, or you may examine them without charge, at the Public Reference
Room that the SEC maintains at its office at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the Regional Offices of the SEC at Seven
World Trade Center, New York, New York 10048 and Citicorp Center, 300 West
Madison Street, Chicago, Illinois 60661. You may obtain information on the
operation of the public reference facilities by calling the SEC at
1-800-SEC-0330. In addition, you may obtain copies of the registration statement
and without limitingits exhibits at the foregoing,SEC's website located at http://www.sec.gov.
We are a reporting company and file our annual, quarterly and current reports,
proxy material and other information with the Selling SecurityholdersSecurities and Exchange
Commission. You may read and copy any materials that we file with the SEC at the
SEC's public reference facilities listed above, as well as on the SEC's website.
INCORPORATION OF INFORMATION BY REFERENCE
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 that we filed separately with the SEC. Any document or
information incorporated by reference is considered to be part of this
prospectus from the date that we file that other document. Any document or
information that we file later with the SEC will be
subject toautomatically update and, where
applicable, provisionssupersede any information contained or incorporated by reference in
this prospectus. We specifically incorporate by reference into this prospectus
the following documents or information filed with the SEC:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000;
2. Our Current Report on Form 8-K dated March 22, 2001; and
3. Any document or information that we file with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934 after the date
of this prospectus and before the rules and
regulations thereunder, including without limitation Rules 10b-6 and 10b-7,
which provisions may limitdate that the timing of purchases and salesoffering of the
Common
Sharesshares of common stock offered through this prospectus is
terminated.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the Selling Securityholders.
- 10 -following address (however, we will not include exhibits to those
documents unless they are specifically incorporated by reference into this
prospectus):
Nastech Pharmaceutical Company Inc.
Attn: Steven C. Quay, M.D., Ph.D.
President & Chief Executive Officer
45 Adams Avenue
Hauppauge, New York 11788
(631) 273-0101
In making a decision to buy our common stock, you should rely only on the
information incorporated by reference or contained in the prospectus. We have
not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it.
20
13
In order to comply with certain states' securities laws, if
applicable,You should assume that the Common Shares will be soldinformation appearing in such jurisdictionthis prospectus is accurate
only through
registered or licensed brokers or dealers. In certain states the Common Shares
may not be sold unless the securities have been registered or qualified for sale
in such state, or unless an exemption from registration or qualification is
available and is obtained.
The Common Shares originally issued by the Company to the Selling
Securityholders bear legends as to their restricted transferability. Upon the
effectiveness of the Registration Statementdate on the front cover of which this Prospectus is a part,prospectus. Our business,
financial condition, results of operations and the transfer by the Selling Securityholders of any of the Common Shares
pursuant thereto, new certificates representing such Common Shares will be
issued to the transferee, free of any such legends unless otherwise required by
law.
In addition to sales pursuant to the Registration Statement of which
this Prospectus is a part, the Common Shares offered herebyprospectus may be sold pursuant
to Rules 144, 144A or 904 under the Securities Act provided the requirements of
such rules, including, without limitation, the holding period and the manner of
sale requirements are met.have changed since
that date.
LEGAL MATTERS
The validity of the issuance of Common Sharescommon stock offered hereby will be passed upon for the Company by
the Law Offices of Bruce R. Thaw, 45 Banfi Plaza,
Farmingdale, NY 11735. Bruce R. Thaw is a Director of the Company and owns
78,000 shares of the Company's Common Stock.Dickstein, Shapiro, Morin & Oshinsky LLP.
EXPERTS
The consolidated financial statements of Nastech Pharmaceutical Company Inc. and
subsidiary as of June 30, 1995December 31, 2000 and 1996,1999, and for each of the two years in the
three-year period ended June 30, 1996 of Nastech Pharmaceutical
Company Inc. have beenDecember 31, 2000, are incorporated by reference in this
Prospectusprospectus and
elsewhere in the Registration Statementregistration statement in reliance upon the report of Robbins,
Greene, Horowitz, Lester & Co.,KPMG
LLP, independent certified public accountants, to the extent and for the periods set forth in their report incorporated by reference andherein,
upon the authority of said firm as experts in auditingaccounting and accounting.
The financial statements for the six month transition period ending
December 31, 1996 of Nastech Pharmaceutical Company Inc. have been incorporated
by reference in this Prospectus and elsewhere in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, to the extent and for the period set forth in their report
incorporated by reference and upon the authority of said firm as experts in
auditing and accounting.
On January 2, 1997, the appointment of Robbins, Greene, Horowitz,
Lester & Co., LLP as independent auditors for the Company was terminated by the
Company and KPMG Peat Marwick LLP was engaged as independent auditors. The
decision to change independent auditors was approved by the Audit Committee and
Board of Directors of the Company. During the fiscal years ended June 30, 1995
and 1996, and the subsequent interim period through January 2, 1997, there were
no disagreements between the Company and Robbins, Greene, Horowitz, Lester &
Co., LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which disagreements if not
resolved to the satisfaction of Robbins, Greene, Horowitz, Lester & Co., LLP
would have caused them to make reference to the subject matter of the
disagreement in connection with their report. The audit reports of Robbins,
Greene, Horowitz, Lester & Co., LLP on the Company's financial statements as of
and for the years ended June 30, 1995 and 1996 did not contain an adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles.
- 11 -auditing.
21
14
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS1,363,296 Shares
[GRAPHIC OMITTED]
Common Stock
PROSPECTUS
AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
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. THE DELIVERY OF
THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------------
TABLE OF CONTENTS
Page
Additional Information.................................
Incorporation of Certain
Documents By Reference................................
Prospectus Summary.....................................
Risk Factors...........................................
Use of Proceeds........................................
Selling Securityholders................................
Plan of Distribution...................................
Legal Matters..........................................
Experts................................................
--------------------
NASTECH PHARMACEUTICAL
COMPANY INC.
270,000 Shares
----------------
PROSPECTUS
----------------
January , 1998_____________, 2001
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONDISTRIBUTION.
The following table sets forthfees and expenses we incurred in connection with the expenses relative to this
offering all of which are to be bornepayable by
the Registrant. Expensesus and, other than registration, filing and listing fees, are estimated.
Registration Fee $ 1,186.00
Accounting Fees and Expenses $ 10,000.00
Legal Fees and Expenses $ 10,000.00
Printing Fees $ 2,000.00
Miscellaneous $ 1,814.00
-----------
Total Expenses $ 25,000.00
estimated as
follows:
Securities and Exchange Commission Registration Fee.................. $1,769
Nasdaq Fee for Listing of Additional Shares.......................... $14,000
Legal Fees and Expenses.............................................. $20,000
Accounting Fees...................................................... $5,000
Miscellaneous Fees and Expenses...................................... $10,000
--------
Total................................................................ $50,769
========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Delaware General Corporation Law, as amended, provides for the
indemnification of the Company's officers, directors and corporate employees and
agents under certain circumstances as follows:
DEL. CODE ANN. TITLE 8
Sec. 145. Indemnification of officers, directors, employees
and agents; insurance
a) A corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by
or in the right of the corporation) by reason of the fact that he
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 attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he 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 his 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 he 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 his conduct was unlawful.
b) A corporation may 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 he 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 him in connection with the defense or
settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be
II-1
16
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.
c) To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action suit or proceeding referred to
in subsections (a) and (b) of this section, or in defense of any
claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
d) Any indemnification under subsection (a) and (b) of
this section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and
(b) of this section. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceedings,
or (2) if such a quorum is not obtainable, or, even, if obtainable
a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
e) Expenses incurred by an officer or director in
defending a civil or criminal action, suit or proceeding may be
paid by the corporation 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 he is not entitled to be indemnified
by the corporation as authorized in this section. Such expenses
incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems
appropriate.
f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of this
section shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office.
g) A corporation shall have power to purchase and
maintain insurance on behalf of any person who 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 any liability
asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under
this section.
h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent
II-2
17
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving
corporation as he would have with respect to such
constituent corporation if its separate existence had
continued.
i) For purposes of this section, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the
corporation" shall include any service as a director,
officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he
reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in
this section.
j) The indemnification and advancement of
expenses provided by, or granted pursuant to, this section
shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be
director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of
such a person.
TheDIRECTORS.
Our Certificate of Incorporation of the Company provides that the indemnification provisions of
Sections 102(b)(7) and 145 of the Delaware General Corporation Law shall be
utilized to the fullest extent possible. Further, the Certificate of
Incorporation contains provisions to eliminate the liability of the Company'sour directors to
the CompanyNastech or its stockholders to the fullest extent permitted by Section 102(b)(7)
of the Delaware General Corporation Law, as amended from time to time.
Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
any threatened, pending or completed actions, suits or proceedings in which such
person is made a party by reason of such person being or having been a director,
officer, employee or agent of the corporation. The Delaware General Corporation
Law provides that Section 145 is not exclusive of other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation
to provide in its certificate of incorporation that a director of the
corporation shall not be personally liable 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
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Our Certificate of Incorporation provides for such
limitation of liability.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, is permitted tofor our directors, officers or controlling
persons, of the Registrant, pursuant to the above mentioned statutes or otherwise, the Registrant understandswe understand
that the Securities and Exchange Commission is of the opinion that such
indemnification may contravene federal public policy, as expressed in said Act,
and therefore, may be unenforceable. Accordingly, in the event that a claim for
such indemnification is asserted by any director, officerof our directors, officers or
a controlling person of the Company,persons, and the Commission is still of the same opinion, the Registrantwe (except
insofar as such claim seeks reimbursement by the Registrantfrom us of expenses paid or incurred
by a director, officer of controlling person in successful defense of any
action, suit or proceeding) will, unless the matter has theretofore been
adjudicated by precedent deemed by our counsel for the Registrant to be controlling, submit to a
court of appropriate jurisdiction the question whether or not indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The Underwriter's Warrants provideAt present, there is no pending litigation or proceeding involving any of our
directors, officers or employees as to which indemnification is sought, nor are
we aware of any threatened litigation or proceeding that may result in claims
for reciprocal indemnification and such provisions are incorporated by reference
herein.indemnification.
I-1
ITEM 16. EXHIBITSEXHIBITS.
The following exhibits are filed with this Registration Statement:
Exhibit
Number Description
- ------ -----------
4.1 Form of Stock and Warrant Purchase Agreement dated March 22, 2001, between
Registrant and each selling stockholder
4.2 Form of Warrant to Purchase Common Stock dated March 22, 2001, granted to
each selling stockholder
4.3 Rights Agreement dated February 22, 2000 between Registrant and American
Stock Transfer & Trust Registrant as Rights Agent. (Filed as Exhibit 1 to
Registrant's Current Report on Form 8-K (Commission File No. 0-13789)
dated August 8, 2000, and incorporated herein by reference). The Rights
Agreement includes the Designation of Rights, Terms and Preferences of
Series A Junior Preferred Stock as Exhibit A, the form of Rights
Certificate as Exhibit B, and the Summary of Rights as Exhibit C thereto.
5.1 Opinion and consent of Counsel as to the legality
of securities being registered.Dickstein, Shapiro, Morin & Oshinsky LLP
23.1 Consent of Bruce R. Thaw, Counsel to the CompanyKPMG LLP
23.2 Consent of Dickstein, Shapiro, Morin & Oshinsky LLP (included in Exhibit
5.1).
23.2 Consent of Robbins, Greene, Horowitz, Lester & Co. LLP,
Certified Public Accountants.
II-3
18
23.3 Consent of KPMG Peat Marwick LLP, Certified
Public Accountants.
24.1
24 Power of Attorney - See Signature Page(included on the signature page hereof)
ITEM 17. UNDERTAKINGSUNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) Toto file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statementregistration statement to include any
additional or changed material
information with respect to the plan of distribution.distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
(2) That,that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statementregistration 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; and
(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
this 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.
(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.
(4)(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 any charge provision, by-law contract,
arrangements statute,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.
(5) That, for the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
II-4II-2
19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrantregistrant 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, atin the City of Hauppauge, State of New York on the 5ththis 23rd day of
January, 1998.April, 2001.
NASTECH PHARMACEUTICAL COMPANY INC.
By:/s/ Dr. Vincent D. Romeo
---------------------------
DR. VINCENT D. ROMEO, /s/ Steven C. Quay
--------------------------------
Steven C. Quay, M.D., Ph.D.
President, Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENT,PRESENTS, that each of the undersignedperson whose signature
appears below constitutes and appoints Dr. Vincent D. Romeo and Devin
N. Wenig, and each of them (with full power of each of them to act alone)Steven C. Quay, M.D., Ph.D., as his true
and lawful attorneys-in-factattorney-in-fact and agents,agent, with full power of substitution, and resubstitution for him and on his behalf,
and in his name, place and stead, in any and all capacities, to execute and sign any andor all
amendments or post-effective amendments to this registration statement, or subsequent
registration statements related to the shares registered herebyRegistration Statement, and to
file the same, with all exhibits thereto, which amendments may make such changes
in this Registration Statement as such agent deems appropriate, and allto file any
new registration statement (and any post-effective amendment thereto) which
registers additional securities of the same class and for the same offering as
this Registration Statement in accordance with Rule 462(b) under the Securities
Act (each, a "462(b) Registration Statement"), and the Registrant and each such
person hereby appoints each such Agent as attorney-in-fact to execute in the
name and on behalf of the Registrant and each such person, individually and in
each capacity stated below, any such amendments to this registration statement
and any such 462(b) Registration Statements, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof and the
Registrant hereby confers like authority on its behalf.Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities andindicated on the dates indicated:April 23, 2001.
Signature Title
Date
--------- -----
----
/s/Dr. Vincent D. Romeo Steven C. Quay President, Chief Executive Officer January 5, 1998
----------------------------- (Principal Executive Officer)
DR. VINCENT D. ROMEO
/s/ Robert H. Rosen President January 5, 1998
-----------------------------
ROBERT H. ROSEN
/s/ Devin N. Wenigand Chairman of the Board
January 5, 1998
-----------------------------
DEVIN N. WENIG- --------------------------------- Officer (Principal Executive Officer)
Steven C. Quay, M.D., Ph.D.
/s/ Andrew P. Zinzi Chief Financial Officer
January 5, 1998
------------------------------ --------------------------------- (Principal Financial and Accounting Officer)
ANDREW P. ZINZIAndrew Zinzi
/s/ Joel GirskyDevin N. Wenig Director
Secretary/Treasurer January 5, 1998
-----------------------------
JOEL GIRSKY- ---------------------------------
Devin N. Wenig
/s/ Bruce R. Thaw Director
- ---------------------------------
Bruce R. Thaw
/s/ Grant W. Denison Director
- ---------------------------------
Grant W. Denison
/s/ Ian R. Ferrier Director
January 5, 1998
-----------------------------
IAN- ---------------------------------
Dr. Ian R. FERRIER
/s/ Alvin Katz Director January 5, 1998
-----------------------------
ALVIN KATZ
/s/ John V. Pollock. Director January 5, 1998
-----------------------------
JOHN V. POLLOCK
/s/ Grant W. Denison Director January 5, 1998
-----------------------------
GRANT W. DENISONFerrier
II-3
/s/ Joel Girsky Director
- ---------------------------------
Joel Girsky
/s/ Alvin Katz Director
- ---------------------------------
Alvin Katz
/s/ John V. Pollock Director
- ---------------------------------
John V. Pollock
II-4
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.1 Form of Stock and Warrant Purchase Agreement dated March 22, 2001, between
Registrant and each selling stockholder
4.2 Form of Warrant to Purchase Common Stock dated March 22, 2001, granted to
each selling stockholder
4.3 Rights Agreement dated February 22, 2000 between Registrant and American
Stock Transfer & Trust Registrant as Rights Agent. (Filed as Exhibit 1 to
Registrant's Current Report on Form 8-K (Commission File No. 0-13789)
dated August 8, 2000, and incorporated herein by reference). The Rights
Agreement includes the Designation of Rights, Terms and Preferences of
Series A Junior Preferred Stock as Exhibit A, the form of Rights
Certificate as Exhibit B, and the Summary of Rights as Exhibit C thereto.
5.1 Opinion and consent of Dickstein, Shapiro, Morin & Oshinsky LLP
23.1 Consent of KPMG LLP
23.2 Consent of Dickstein, Shapiro, Morin & Oshinsky LLP (included in Exhibit
5.1)
24 Power of Attorney (included on the signature page hereof)
II-5
20
INDEX TO EXHIBITS
Exhibit Page No.
5 Opinion of Counsel as to the legality of
securities being registered
23A Consent of KPMG Peat Marwick LLP,
Certified Public Accountants.
23B Consent of Robbins, Greene, Horowitz, Lester & Co., LLP,
Certified Public Accountants