AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 2002
REGISTRATION STATEMENT NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CELL PATHWAYS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 23-2969600
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
702 ELECTRONIC DRIVE
HORSHAM, PENNSYLVANIA 19044
(215) 706-3800
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
MARTHA E. MANNING, ESQUIRE
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CELL PATHWAYS, INC.
702 ELECTRONIC DRIVE
HORSHAM, PENNSYLVANIA 19044
(215) 706-3800
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
COPIES TO:
STEPHEN A. JANNETTA, ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103-2921
(215) 963-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered in connection with
dividend or interest investment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SHARES TO BE REGISTERED REGISTERED(1) SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
Common Stock,
par value $.01 per share(3)........ 2,987,636 shares $4.01 $11,980,421 $1,103
(1) Pursuant to Rule 416 under the Securities Act, this registration statement
also covers such additional shares as may hereafter be offered or issued to
prevent dilution resulting from stock splits, stock dividends, recapitalizations
or certain other capital adjustments.
(2) Estimated solely for the purpose of calculating the registration fee;
computed in accordance with Rule 457(c) under the Securities Act on the basis of
the average of the high and low sales prices for a share of Common Stock on
April 5, 2002 as reported on the Nasdaq National Market.
(3) Includes rights to purchase shares of our Series A Junior Participating
Stock pursuant to our Preferred Stock Purchase Rights Plan. No separate
consideration is paid for these rights and, as a result, the registration fee
for these rights is included in the fee for the common stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
The information in this prospectus is not complete and may be changed or
supplemented. The selling stockholders cannot sell any of the securities
described in this prospectus until the registration statement that we have filed
to cover the securities has become effective under the rules of the Securities
and Exchange Commission. This prospectus is not an offer to sell the securities,
nor is it a solicitation of an offer to buy the securities, in any state where
an offer or sale of the securities is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 10, 2002
PROSPECTUS
2,987,636 SHARES
CELL PATHWAYS, INC.
COMMON STOCK
The shares of our common stock offered by this prospectus are being
offered by the selling stockholders named in the section entitled "Selling
Stockholders." We will not receive any of the proceeds from the sale of the
shares by the selling stockholders.
Our common stock is traded on the Nasdaq National Market under the
symbol "CLPA." On April 9, 2002, the last reported sale price for our common
stock on the Nasdaq National Market was $4.00 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR A
DESCRIPTION OF RISKS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE COMMON
STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES DESCRIBED IN THIS
PROSPECTUS OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ____________, 2002.
References in this prospectus to "we," "us," "our," the "Company," and
"Cell Pathways" refer to Cell Pathways, Inc. and its subsidiaries.
WHERE TO FIND ADDITIONAL INFORMATION
Before you decide whether to invest in the common stock, you should
read this prospectus and the information we otherwise file with the Securities
and Exchange Commission (SEC).
We are required by federal securities laws to file certain information
with the SEC. You can access this material on the SEC's Internet website, at
http://www.sec.gov. You can also read and copy this material at the SEC's public
reference room, located at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at (800) 732-0330 for information on how the public
reference room operates. In addition, the common stock is included for listing
in the Nasdaq National Market, and you can obtain our reports, proxy statements
and other information about us at the offices of The Nasdaq Stock Market,
located at 1735 K Street, N.W., Washington, D.C. 20006.
We will also send you copies of the material we file with the SEC, free
of charge, upon your request. Please call or write our Investor Relations
department at:
702 Electronic Drive
Horsham, Pennsylvania 19044
Telephone No.: (215) 706-3800
The SEC allows us to "incorporate by reference" into this prospectus
certain important information about us. This means that the information in this
prospectus is not complete, and you should read the information incorporated by
reference for more detail. We incorporate by reference in two ways. First, we
list certain documents that we have already filed with the SEC. The information
in these documents is considered part of this prospectus. Second, we may in the
future file additional documents with the SEC. When filed, the information in
these documents will update and supersede the current information in, and
incorporated by reference in, this prospectus.
We incorporate by reference the documents listed below, and any other
documents we file with the SEC under Section 13(a), 13(c), 14 or 15 of the
Securities Exchange Act of 1934 until the offering described in this prospectus
is completed:
(a) Our Annual Report on Form 10-K for the fiscal year
ended December 31, 2001;
(b) The description of our common stock contained in our
Registration Statement on Form 8-A registering the
common stock under Section 12 of the Securities
Exchange Act of 1934; and
(c) The description of our preferred stock purchase
rights contained in our Registration Statement on
Form 8-A registering the preferred stock purchase
rights under Section 12 of the Securities Exchange
Act of 1934.
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This prospectus is part of our registration statement. We have filed
the registration statement with the SEC under the Securities Act to register the
common stock that the selling stockholders are offering by this prospectus. Not
all of the information in the registration statement appears in this prospectus.
For more detail, you can read the entire registration statement, and all of the
exhibits filed with it, at the SEC's offices or website as described above.
You should rely on the information that is in this prospectus, or
incorporated by reference. You should not, however, assume that the information
that appears directly in this prospectus is accurate or complete as of any date
other than the date on the front cover.
FORWARD-LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are those are those which express plan, anticipation, intent,
contingency or future development and/or otherwise are not statements of
historical fact. These statements are subject to risks and uncertainties, known
and unknown, which could cause actual results and developments to differ
materially from those expressed or implied in such statements. Such risks and
uncertainties relate to, among other factors: the absence of approved products;
history of operating losses and the need for further financing; dependence on
the development, regulatory approval and market acceptance of one or more of our
product candidates for one or more significant disease indications; early stage
of development; the costs, delays and uncertainties inherent in scientific
research, basic pharmaceutical research, drug development, clinical trials and
the regulatory approval process, with respect to both our current product
candidates and our future product candidates, if any; the risk that we do not
conduct the clinical studies we may have planned to conduct or do not pursue
development plans we may have planned to pursue; uncertainty that additional
studies, if any, may not be positive; limitations on, or absence of, the
predictive value of data obtained in laboratory tests, animal models and human
clinical trials when planning additional steps in product development;
uncertainty of obtaining regulatory approval of any compound for any disease
indication whether due to adequacy of the development program, changing
regulatory requirements or otherwise; the risk that the U.S. Food and Drug
Administration ("FDA") will stop or further delay the Phase III lung cancer
study or any other study as a result of safety or otherwise; the risk that
clinical studies do not result in the safety and efficacy necessary to obtain
regulatory approvals; the risks of conducting clinical trials, including the
risk of conducting clinical trials of our drugs in combination with other drug
therapies; the commercial risk and risk of liability in marketing and selling
Gelclair(TM) Concentrated Oral Gel, including the risk that prescribers do not
prescribe the product and sales do not materialize, the risks associated with
product launch, manufacturing and marketing risks, and the risk that our sales
of Gelclair(TM) are less than our minimum purchase obligations; the commercial
risk and risk of liability in providing marketing services promoting
Nilandron(R) (nilutamide) manufactured by Aventis Pharmaceuticals, Inc.
("Aventis"), including the risk that Aventis' sales of Nilandron(R) do not
exceed the threshold entitling us to a percentage of gross margin; the risk that
we may enter into, or may fail to enter into, licensing, partnership or
collaborative arrangements or strategic alliances which accord to other
companies rights with respect to one or more of our compounds, technologies or
programs or in which we acquire new rights and obligations; the volatility of
the market price of our Common Stock; our ability to sell securities registered
under the shelf registration statement; acceptance of any product candidates by
physicians and providers of
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healthcare reimbursement; the actions of competitors; the pace of technological
changes in the biopharmaceutical industry; dependence upon third parties; the
validity, scope and enforceability of patents; the risk of pending or future
class action securities litigation; potential product liability claims; and
availability and adequacy of insurance.
These and other risks are detailed in our reports filed from time to
time under the Securities Act and/or the Securities Exchange Act, including the
sections entitled "Business," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Other Events" in
our Annual Report on Form 10-K for the year ended December 31, 2001 and in such
registration statements on Form S-3 as may be filed from time to time. You are
encouraged to read these filings as they are made. They are available over the
Internet from the SEC in its EDGAR database.
Given the uncertainties affecting pharmaceutical companies in the
development stage, current and prospective investors are cautioned not to place
undue reliance on any such forward-looking statements, any of which may turn out
to be wrong due to inaccurate assumptions, unknown risks, uncertainties or other
factors. No forward-looking statement can be guaranteed; actual future results
may vary materially. Both forward-looking statements and statements of historic
fact must be understood in the context of the risks referred to above which
characterize our development-stage business. We undertake no obligation to
update or revise the statements made herein or the risk factors that may relate
thereto.
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RISK FACTORS
The following risk factors relate to our business and qualify the
statements made in this report about our business. These factors, among others,
could cause actual results to differ materially from those contained in
forward-looking statements made in this report and/or presented elsewhere by
management from time to time. The subheadings below identify the risks discussed
but cannot do so completely. Each subsection may relate to more than one aspect
of our business. Accordingly, each risk factor should be considered carefully in
evaluating our business and any investment in us. These risk factors should be
read in conjunction with the related descriptions of our business contained in
our periodic reports filed with the SEC, which are incorporated by reference in
this prospectus.
Prospective investors should carefully consider the following risk
factors and the other information included in this report, including the
documents incorporated by reference in this report, before deciding to invest in
the common stock.
WE HAVE A HISTORY OF NET LOSSES AND MAY NEVER BECOME PROFITABLE.
We are a development stage pharmaceutical company. Our business has
experienced significant operating losses since its inception in 1990. We have
not received any revenue from the sale of our own products (none has been
approved for marketing), have received only immaterial revenues from rendering
marketing services to promote Nilandron(R) (nilutamide), made and sold by
Aventis Pharmaceuticals, Inc. ("Aventis"), and intend to start selling
Gelclair(TM) Concentrated Oral Gel, manufactured by Sinclair Pharmaceuticals
Ltd. ("Sinclair"), in the second quarter of 2002. As of December 31, 2001, we
had an accumulated deficit of $123,284,737. We expect to incur additional
operating losses for at least the next several years and expect cumulative
losses to increase substantially as research and development efforts and
preclinical and clinical testing expand. If we succeed in obtaining marketing
approval for any of our product candidates, we will incur significant
manufacturing and marketing costs. Among other things, our ability to achieve
profitability is dependent on our ability, alone or with others, to:
- obtain additional financing;
- successfully complete the development of our product
candidates;
- obtain the required regulatory approvals;
- successfully manufacture and market, or have others
successfully manufacture and market, our own product
candidates;
- successfully market any products we may in-license from third
parties; and
- gain market acceptance for our product candidates.
We may never achieve profitability.
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WE ARE AT AN EARLY STAGE OF DEVELOPMENT AND HAVE NO PRODUCTS APPROVED FOR SALE;
ONLY TWO OF OUR PRODUCT CANDIDATES HAVE BEEN SUBJECT TO CLINICAL STUDIES; THE
FDA HAS ISSUED A "NOT APPROVABLE" LETTER WITH RESPECT TO OUR NEW DRUG
APPLICATION, OR NDA, FOR USE OF THE FIRST PRODUCT CANDIDATE, APTOSYN(R)
(EXISULIND), IN FAMILIAL ADENOMATOUS POLYPOSIS, OR FAP; AND OUR LONG-TERM
VIABILITY WILL BE IMPAIRED IF WE ARE UNABLE TO OBTAIN REGULATORY APPROVAL FOR,
OR SUCCESSFULLY MARKET, OUR PRODUCT CANDIDATES.
We have only two product candidates that have been subject to clinical
trials: Aptosyn(R) (exisulind) and CP461. Our business is significantly
dependent upon the successful development and approval of these product
candidates for one or more cancerous or precancerous disease conditions.
The first disease condition for which we have been clinically testing
Aptosyn(R) (exisulind) is FAP, an inherited disease characterized by the
development of hundreds to thousands of polyps in the colon and the progression
to colon cancer if left untreated. In August 1999, we submitted a NDA to the FDA
for Aptosyn(R) (exisulind) in the treatment of FAP. On September 25, 2000, the
FDA issued a "not approvable" letter finding that the information presented as
to the safety and efficacy of Aptosyn(R) (exisulind) for the treatment of FAP
was not adequate for approval for that indication. The future of the FAP program
is uncertain.
A separate NDA must be filed with respect to each disease indication
for which marketing approval of a drug is sought. Each such NDA, in turn,
requires the successful completion of lengthy clinical trials demonstrating the
safety and efficacy of the drug for that particular indication. We may not
successfully complete the clinical trials necessary for a further NDA filing for
Aptosyn(R) (exisulind) or for an NDA filing for CP461. Even if we do file one or
more NDAs, we may not receive regulatory approval of any of them. If we are not
able to obtain FDA approval for any indication with substantial market
potential, our ability to ever become profitable would be impaired.
We are conducting early-stage clinical trials of CP461. These clinical
trials may fail to yield data that are favorable or useful for purposes of
further developing this product candidate and ultimately seeking regulatory
approval for marketing it. We have not developed any other compound to the
extent necessary to commence clinical trials.
We are investigating Aptosyn(R) (exisulind) and CP461 in combination
with other approved chemotherapeutic agents. While we have scientific rationale
for the combinations under investigation, there can be no assurance that the
combinations will be more effective than the single approved chemotherapeutic
agent for the disease indication being investigated. The combination of these
agents may not result in increased efficacy and may even interfere with the
efficacy of the chemotherapeutic agent being combined with our products. There
is also risk that the combinations may result in unexpected toxicity, or
increase side effects associated with the individual drugs to an unacceptable
level.
Preclinical and clinical studies of our product candidates may not
display the safety and efficacy necessary to obtain regulatory approvals. Drug
development is a highly uncertain process. Pharmaceutical and biotechnology
companies have suffered significant setbacks in advanced clinical trials, even
after experiencing promising results in earlier trials. Data obtained
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from tests are susceptible to varying interpretations which may delay, limit or
prevent regulatory approval. Assessing clinical trial results of combination
therapy studies may be more difficult and may add additional complexity to
interpretation of those results. Regulatory authorities may refuse or delay
approval as a result of many other factors, including changes in regulatory
policy during the period of product development. Product candidates that appear
to be promising at earlier stages of development may not reach the market or be
marketed successfully for a number of reasons, including the following:
- researchers may find during later preclinical testing or
clinical trials that the product candidate is ineffective or
has harmful side effects;
- variability in the number and types of patients available for
clinical studies;
- new information about the mechanisms by which a drug candidate
works may adversely affect its development;
- one or more competing products may be approved for the same or
a similar disease condition, raising the hurdles to approval
of the product candidate;
- the product candidate may fail to receive necessary regulatory
approval or clearance;
- the product candidate may be too difficult to manufacture on a
large scale;
- the product candidate may be too expensive to manufacture or
market;
- the product candidate may not achieve broad market acceptance;
- others may hold proprietary rights that will prevent the
product candidate from being marketed; or
- others may market equivalent or superior products.
Our ability to market Aptosyn(R) (exisulind) in a disease indication is
dependent on our ability to provide the FDA with sufficient data to support
approval of an NDA for that disease indication. We cannot assure that we will
ever be able to provide such information. With respect to CP461, and any other
compound that we may decide to develop, development may not be complete and
marketing of such product candidates may not occur for at least several years,
if at all. We have limited experience in managing clinical trials, and delays or
terminations of clinical trials we undertake in the future could impair our
development of product candidates. In our Phase III lung cancer study of
Aptosyn(R) (exisulind) in combination with Taxotere(R) (docetaxel) the FDA held
up enrollment of new patients for about two months pending interim safety
analysis of those already enrolled and treated. Delays or terminations of any
clinical trials could result from a number of factors, including adverse events,
stringent enrollment criteria, slow rate of enrollment, size of the patient
population, having to compete with other clinical trials for eligible patients,
geographical considerations and others.
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The area of cancer prevention is not thoroughly understood. With
limited exceptions, the FDA has not approved any drug for the prevention of
precancerous lesions or cancer. The FDA sometimes revises its views as to the
prerequisites for drug approvals in these areas, and such revisions could
adversely affect our programs. The FDA may require that a drug candidate
intended to treat precancerous lesions or prevent cancer be shown to be
effective not only in reducing precancerous lesions or other precancerous
symptoms, but also in preventing actual cancer, which may require clinical
trials following large numbers of patients over long periods of time.
We and our collaborators may not succeed in our research and product
development efforts and we may not be successful in marketing any approved
products. Moreover, after commercial introduction of a new product, discovery of
problems through adverse event reporting could result in restrictions on the
product, including recall or withdrawal from the market and, in certain cases,
civil or criminal penalties resulting from actions by regulatory authorities or
damages from product liability judgments. Products introduced into the market
are subject to the risk that physicians may choose not to use the products and
providers of health care reimbursement may choose not to reimburse for the use
of the products. If we are unable to complete clinical trials, obtain regulatory
approval or successfully market our products, our long-term viability will be
threatened.
OUR BUSINESS WILL BE HARMED IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND
OUR OPERATIONS. ISSUING NEW SHARES TO RAISE CAPITAL WILL DILUTE CURRENT
STOCKHOLDERS' OWNERSHIP.
We believe that our available cash will be sufficient to fund
operations into the second quarter of 2003. We will need to raise substantial
additional funds to continue our business activities. Among other things, we
anticipate that we will devote expenditures to the following:
- continuing current clinical studies, and initiating additional
clinical studies, relating to Aptosyn(R) (exisulind) in
connection with our attempt to obtain future FDA approval of
Aptosyn(R) (exisulind) in one or more disease indications;
- continuing current clinical studies, and initiating additional
clinical studies, relating to CP461 in connection with our
attempt to obtain future FDA approval of CP461 in one or more
disease indications;
- preclinical studies relating to Aptosyn(R) (exisulind), CP461
and additional compounds for cancerous and precancerous
disease conditions;
- regulatory approval processes;
- drug development and formulation;
- production of product candidates for clinical trials;
- basic research; and
- establishment and support of sales, marketing and distribution
capabilities.
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The amount of capital we may need depends on many factors, including:
- the progress of our research and development programs;
- the progress of preclinical testing;
- the progress of clinical testing of Aptosyn(R) (exisulind),
CP461 and other compounds;
- whether the FDA approves any NDA for Aptosyn(R) (exisulind),
CP461 or any other SAAND with regard to any indication;
- the time and costs involved in obtaining regulatory approvals;
- the costs relating to patents and other intellectual property;
- our ability to establish collaborative arrangements;
- the effect of any changes or development in our existing
collaborative relationships;
- the effect of competing technological and market developments;
- our ability to successfully commercialize an approved product
candidate; and
- our ability to successfully market the products of others,
including Nilandron(R) (nilutamide) and Gelclair(TM)
Concentrated Oral Gel.
We do not know whether additional financing will be available on
acceptable terms when needed. We may seek to raise funds through public or
private equity offerings or debt financings or through corporate collaborations
and licensing arrangements.
If we raise additional capital by issuing equity securities, our
stockholders' percentage ownership will be reduced, and our stockholders may
experience substantial dilution. At the time we are trying to raise capital,
market conditions may be adverse. Any equity securities, or equity or debt
securities convertible into common stock, issued may also provide rights,
privileges or preferences superior to the common stock. If we raise additional
funds by issuing debt securities, we may be subject to significant restrictions
on our operations. Also, any debt securities may be convertible into common
stock and cause additional dilution through such conversion. If we raise
additional funds through collaborations and licensing arrangements, we may be
required to relinquish some rights to our technologies or product candidates, or
grant licenses on terms that are not favorable to us.
If adequate funds are not available on acceptable terms, our ability to
fund our operations, develop products or technologies or otherwise respond to
competitive pressures could be significantly delayed or limited and we may have
to reduce or cease our operations. If additional
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funds become available, there can be no assurance that we can accurately predict
the time and costs required to complete development programs or that we will not
substantially exceed our budgets or that revenue forecasts, if made, will not
prove inaccurate.
THE EXERCISE OF OUTSTANDING WARRANTS AND STOCK OPTIONS COULD CAUSE SUBSTANTIAL
DILUTION.
As of December 31, 2001, our outstanding equity securities included:
- warrants, outstanding or issuable, to purchase 4,503,249
shares of our common stock for an exercise price of $12.00 per
share; and
- options, exercisable at various exercise prices between $0.32
and $49.88, to purchase 3,822,900 shares of our common stock.
- Investors in our common stock could experience substantial
dilution of their investment if these warrants and options are
exercised.
FUTURE SALES OF SHARES MAY DEPRESS THE PRICE OF OUR COMMON STOCK.
If stockholders sell a substantial number of shares of our common stock
in the public market, or if we issue and sell new shares, or if investors
perceive that these sales might occur, the market price of our common stock
could decrease. Such a decrease could make it difficult for us to raise capital
by selling our stock in the future. To the extent additional shares of capital
stock are issued, investors purchasing our common stock or securities
convertible into common stock may incur additional dilution.
OUR BUSINESS MAY BE HARMED BY PENDING OR FUTURE LITIGATION.
Following our announcement on February 1, 1999 that we anticipated a
delay in filing a NDA for Aptosyn(R) (exisulind) for FAP, our stock price
dropped. Shortly thereafter, five stockholder class actions were filed against
us on behalf of purchasers of our stock during the period October 7, 1998 to
February 2, 1999. This litigation was settled in 2001 with payment by our
insurance company of $3.75 million. Following our announcement on September 22,
2000 that the FDA had advised us that our NDA for FAP was not approvable, our
stock price dropped again. In March, April and May of 2001, eleven stockholder
class actions were filed against us on behalf of purchasers of our stock during
the period October 27, 1999 to September 22, 2000. In February 2002, agreement
in principle was reached to settle this litigation with the issuance of 1.7
million shares of our common stock and the payment of $2 million. In connection
with this settlement, our insurance company has agreed to pay us $2 million.
Settlement of the second litigation requires approval of the court, and there is
no assurance that such approval will be received. Similar litigation may be
instituted against us in the future at any time that there is a substantial drop
in the market price of our stock, regardless of the reason for the drop. The
second litigation described above (if the settlement is not approved by the
court or otherwise does not become final) and any future litigation could result
in substantial expense and diversion of our attention from our business and
could result in substantial damage awards which could have a material adverse
impact on our business. There can be no assurance that we will be successful in
its defense of any such litigation, regardless of how unmeritorious such
litigation
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may be, nor can there be any assurance that insurance will be either available,
applicable or sufficient to cover the costs of judgment, settlement or conduct
of the litigation.
IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, OR TO AVOID INFRINGING
THE RIGHTS OF OTHERS, OUR ABILITY TO COMPETE EFFECTIVELY WILL BE IMPAIRED.
Our intellectual property consists of patents, licenses, trade secrets
and trademarks. Our success depends in part on our ability to:
- obtain and maintain patents and other intellectual property;
- establish and maintain trademarks;
- maintain our trade secrets;
- operate without infringing the proprietary rights of others;
and
- otherwise maintain adequate protection of our intellectual
property for our technologies and products in the U.S. and
other countries.
We have several patents and pending U.S. patent applications relating
to the therapeutic uses of Aptosyn(R) (exisulind). However, the composition of
matter patent for exisulind, which is desirable because it gives patent
protection for a drug's chemical compound, is not available because exisulind
was described in scientific and patent literature over 20 years ago. Therefore,
if clinical uses of exisulind are discovered beyond those covered by our patent
claims, we may not be able to enforce our patent rights against companies
marketing the compound with respect to these other clinical uses. In general,
patent protection currently lasts only approximately 17-20 years, depending on
the filing date of the patent application, the issuance date of the patent and,
sometimes, the time required for FDA approval. However, it can take many more
years than offered by patent protection to transform a drug discovery through
testing and development into a commercially viable product. Moreover, patent
applications filed by us or on our behalf may not result in patents being issued
to us. Even if a patent is issued, the patent may not afford protection against
competitors with similar technology. Others may independently develop similar
technologies or duplicate our technology. It is possible that before any of our
potential product candidates can be commercialized, the related patents may
expire, or remain in existence for only a short period following
commercialization, thus reducing the advantage of the patent.
Our commercial success depends in part on avoiding infringing patents
and proprietary rights of third parties and developing and maintaining a
proprietary position with regard to our own technologies and product candidates.
The patent positions of pharmaceutical companies, including our patent position,
involve complex legal and factual questions. Whether a company will be able to
enforce its patent cannot always be predicted with certainty. Even if we obtain
patents, we may lose part or all of them as a result of challenges by
competitors. We cannot be sure that relevant patents have not been issued, or
that relevant publications or actions by others have not occurred, that could
block our ability to obtain patents or to operate as we would like. Others may
develop similar technologies or duplicate technologies that we have developed or
claim that we are infringing their patents. As a result of these factors, we may
need to obtain
11
patent licenses from others. However, we may be unable to obtain patent licenses
on acceptable terms. Moreover, our rights under any patent licenses depend on
maintaining our obligations to the licensor under the applicable license
agreement, and we may be unable to do so.
Extensive litigation regarding patents and other intellectual property
rights characterizes our industry. We may become involved in litigation or
interference proceedings declared by the U.S. Patent and Trademark Office, or
oppositions or other intellectual property proceedings outside of the U.S. If
any of our competitors have filed patent applications or obtained patents that
claim inventions that we also claim, we may have to participate in an
interference proceeding to determine priority of invention and, therefore, who
has the right to a patent for these inventions or discoveries in the U.S. If a
litigation or interference proceeding is initiated, we may have to spend
significant amounts of time and money to defend our intellectual property rights
or to defend infringement claims of others. Litigation or interference
proceedings could divert our management time and effort. Even unsuccessful
claims against us could result in significant legal fees and other expenses,
diversion of management time and disruption in our business. Any of these events
could harm our ability to compete and adversely affect our business.
An adverse ruling arising out of any intellectual property dispute
could invalidate or diminish our intellectual property position. An adverse
ruling could also subject us to significant liability for damages, prevent us
from using processes or products, or require us to license disputed rights from
third parties. Costs associated with licensing arrangements entered into to
resolve litigation or an interference may be substantial and could include
ongoing royalties. We may not be able to obtain any necessary licenses on
satisfactory terms.
In addition, we rely on trade secrets to protect technology. We attempt
to protect our proprietary technology by requiring our employees to execute
confidentiality and assignment of invention agreements. We also require our
consultants and certain contractors to execute confidentiality agreements.
However, these agreements could be breached and, in the event they are breached,
our remedies may be inadequate. In addition, our trade secrets may otherwise
become known or independently discovered by our competitors. Our business
requires the use of consultants and research collaborators in connection with
the development of our product candidates. These arrangements involve the
exposure of our trade secrets to the scrutiny of others, which increases the
risk that we may lose our trade secrets. If we lose any of our trade secrets,
our business and ability to compete could be harmed.
WE MAY NOT BE ABLE TO KEEP PACE WITH TECHNOLOGICAL CHANGES IN THE
BIOPHARMACEUTICAL INDUSTRY, WHICH MAY PREVENT US FROM COMMERCIALIZING OUR
PRODUCT CANDIDATES.
Our business is characterized by extensive research efforts and rapid
technological progress. New developments in molecular biology, medicinal
chemistry and other fields of biology and chemistry are expected to continue at
a rapid pace in both industry and academia. Research and discoveries by others
may render some or all of our programs or product candidates non-competitive or
obsolete. Our business strategy is based, in part, upon the application of our
technology platform to discover and develop pharmaceutical products to prevent
cancer or treat cancer through the use of selective apoptosis, which means
causing cell death in precancerous and cancerous cells. This strategy is subject
to the risks inherent in the
12
development of new products using new and emerging technologies and approaches.
Unforeseen problems may develop with our technologies or applications.
Further research may alter our research findings or lead to new research
insights which adversely impact our research efforts. We may not be able to
successfully address technological challenges that we encounter in our research
and development programs and may not ultimately develop commercially feasible
products.
WE FACE INTENSE COMPETITION WHICH COULD HARM OUR BUSINESS AND OPERATING RESULTS.
Our industry is very competitive. It is characterized by extensive
research and development efforts and rapid technological progress. Discoveries
and commercial developments by our competitors may render some or all of our
product candidates obsolete. Many of our potential competitors have longer
operating histories, greater name recognition, and substantially greater
financial, technical and marketing resources than we have. These competitors may
succeed in discovering and developing pharmaceutical products more rapidly than
we do or pharmaceutical products that are safer, more effective or less costly
than any that we may develop. Competing products may obtain regulatory approval
sooner and may be marketed more successfully than our product candidates.
There are many entities, both public and private, including well-known,
large pharmaceutical companies, chemical companies, biotechnology companies,
government agencies and research institutions, engaged in developing
pharmaceuticals for applications similar to those targeted by us. We also
compete with these organizations in recruiting and retaining qualified
scientific and management personnel.
In the fields of cancer therapy and the prevention of precancerous and
cancerous lesions, other products and procedures are in use or in development
that may compete directly with the products that we are seeking to develop and
market for cancer treatment or cancer prevention. Surgery, radiation,
chemotherapeutic agents and compounds that interfere with hormone activities
have been in use for years in the treatment of cancer. Nolvadex(R) (tamoxifen)
has been granted approval for reducing the incidence of breast cancer in women
at high risk for breast cancer. Celebrex(R) (celecoxib) has been granted
approval for use in the reduction in the number of adenomatous (or precancerous)
colorectal polyps in FAP patients as an addition to usual care (e.g., endoscopic
surveillance, surgery, etc.). A number of other pharmaceutical and nutritional
agents are being examined for their potential usefulness in the treatment of
precancerous lesions and cancer. The manufacturers of many of these products
have far greater resources and experience than we do.
Aggressive industry competition must also be expected to affect our
efforts to market Nilandron(R) (nilutamide) and Gelclair(TM) Concentrated Oral
Gel and to limit our revenues from these marketing efforts.
13
OUR BUSINESS WOULD BE ADVERSELY AFFECTED IF THIRD PARTIES UPON WHOM WE PLACE
SUBSTANTIAL RELIANCE FAIL TO PERFORM THEIR OBLIGATIONS PROPERLY.
We depend on third-party contractors to perform many activities on our
behalf, including the following:
- basic laboratory research studies;
- animal toxicology studies;
- animal efficacy studies;
- human clinical trials;
- bulk drug and finished product manufacture for our product
candidates;
- drug manufacture for the products we market for others,
Nilandron(R) (nilutamide) and Gelclair(TM) Concentrated Oral
Gel;
- drug assay and characterization;
- product formulation and finishing;
- strategic consulting;
- commercialization planning; and
- product distribution.
Subject to limited exceptions in foreign markets, we do not have any
relationships with other pharmaceutical companies for the commercialization of
our own products under development. We cannot assure that we will be able to
negotiate cooperative arrangements relating to commercialization or any other
aspect of our development and marketing of products in the future should we
choose to do so. To the extent that we do not make arrangements with third
parties, we must rely on our own limited resources. Any arrangements that we
enter into may not be maintained, may not be performed properly by the third
parties or may not prove to be successful. The failure of any third party to
comply with applicable government regulations could substantially harm our
development and marketing efforts and delay or prevent regulatory approval of
our product candidates. If these third parties fail to perform their obligations
properly and in compliance with applicable regulations, we may be compelled to
delay our development efforts, and our business could be harmed.
WE MUST OBTAIN REGULATORY APPROVAL TO MARKET OUR PRODUCT CANDIDATES IN THE U.S.
AND FOREIGN JURISDICTIONS.
We must obtain regulatory approval before marketing or selling our
product candidates. In the U.S., we must obtain approval from the FDA for each
product candidate that we intend to
14
commercialize. The drug development process is typically lengthy and expensive,
and FDA approval is highly uncertain. Clinical studies which show favorable
results may not be adequate for regulatory approval. We or our third-party
manufacturers must pass a pre-approval inspection of manufacturing facilities by
the FDA before the product can obtain marketing approval. Products distributed
outside the U.S. are also subject to foreign government regulation.
On September 25, 2000, the FDA issued a "not approvable" letter with
respect to the NDA that we submitted in August 1999 for Aptosyn(R) (exisulind)
for the FAP indication. The NDA for FAP may never be approved, and the future of
the FAP program is uncertain.
None of our other product candidates has received regulatory approval
to be commercially marketed and sold. If we fail to obtain regulatory approval,
we will be unable to market and sell any of our product candidates. Because of
the risks and uncertainties in biopharmaceutical development, our product
candidates could take a significantly longer time to gain regulatory approval
than we expect or may never gain approval. If regulatory approval is delayed,
our business would be harmed.
The process of obtaining FDA and other required regulatory approvals,
including foreign approvals, often takes many years and can vary substantially
based upon the type, complexity and novelty of the product candidates involved.
This approval process is extremely expensive and uncertain. We cannot guarantee
that any of our product candidates will be approved for marketing by the FDA.
Even if regulatory approval of a product candidate is granted, we cannot be
certain that we will be able to obtain the labeling claims necessary or
desirable for the promotion of that product candidate.
EVEN IF OUR PRODUCT CANDIDATES RECEIVE REGULATORY APPROVAL, WE MAY STILL FACE
DEVELOPMENT AND REGULATORY DIFFICULTIES RELATING TO THE DRUG PRODUCTS IN THE
FUTURE.
If we receive regulatory approval of any of our product candidates, the
FDA or a comparable foreign regulatory agency may grant such approval only for a
limited indication. In addition, a marketed product, its manufacturer and the
manufacturer's facilities are subject to continual review and periodic
inspections by regulatory agencies. The discovery of previously unknown problems
with a product, manufacturer or facility may result in restrictions on the
product or manufacturer, including withdrawal of the product from the market.
The failure to comply with applicable regulatory requirements can, among other
things, result in:
- warning letters;
- fines and other civil penalties;
- suspended regulatory approvals;
- refusal to approve pending applications or supplements to
approved applications;
- refusal to permit exports from the U.S.;
- product recalls;
15
- seizure of products;
- injunctions;
- operating restrictions;
- total or partial suspension of production; and
- criminal prosecutions.
Even if we obtain regulatory approval, we may be required to undertake
post-approval trials. In addition, side effects identified or better understood
after a drug is on the market or the occurrence of manufacturing problems could
result in withdrawal of approval, or require reformulation of the drug,
additional preclinical testing or clinical trials, changes in labeling of the
product, and/or additional marketing applications.
If we receive FDA approval, we will be subject to ongoing FDA
obligations and continued regulatory review. In particular, we or third-party
manufacturers that we use will be required to adhere to requirements pertaining
to the FDA's current Good Manufacturing Practices requirement, commonly known as
GMP. Under current Good Manufacturing Practices, we are required to manufacture
our products and maintain our records in a prescribed manner with respect to
manufacturing, testing and quality control activities. We will also be subject
to ongoing FDA requirements for submission of safety and other post-market
information. Similar regulatory requirements are in place in foreign countries
for similar products approved in those countries. Our failure, or our
third-party manufacturer's failure, to comply with the FDA and other applicable
regulators could cause our business to be significantly harmed.
REIMBURSEMENT FOR ANY OF OUR FUTURE PRODUCTS MAY NOT BE AVAILABLE, WHICH MAY
HARM OUR RESULTS OF OPERATIONS.
Our ability to commercialize our products successfully will depend, in
part, on the extent to which reimbursement for the cost of our products and
related treatments will be available from government health administration
authorities, such as Medicare and Medicaid in the U.S., private health insurers
and other organizations. Significant uncertainty exists as to the reimbursement
status of newly approved health care products, particularly for indications for
which there is no current effective treatment or for which medical care
typically is not sought. Adequate third-party coverage may not be available to
enable us to maintain price levels sufficient to realize an appropriate return
on our investment in product research and development. If adequate coverage and
reimbursement levels are not provided by government and third-party payors for
use of our products, our products may fail to achieve market acceptance and our
results of operations will be harmed.
Our future revenues, profitability and access to capital will also be
affected by the continuing efforts of governmental and private third-party
payors to contain or reduce the costs of health care through various means.
There have been a number of federal, state and foreign proposals to control the
cost of drugs through legislation or regulation. We are unsure of the
16
form that any legislation on the subject may have or what actions federal,
state, foreign, and private payors may take in response to any enacted
legislation. Therefore, we cannot predict the effect of any implemented reform
on our business.
IF WE ARE UNABLE TO MANUFACTURE OR CONTRACT WITH THIRD PARTIES TO MANUFACTURE
PRODUCT CANDIDATES IN SUFFICIENT QUANTITIES AND AT AN ACCEPTABLE COST, WE MAY BE
UNABLE TO COMPLETE CLINICAL TRIALS AND COMMERCIALIZE THESE PRODUCT CANDIDATES.
Our completion of any preclinical trials for our product candidates
involving large quantities of chemical compounds, or any future clinical trials
and commercialization of product candidates, will require access to, or
development of, facilities to manufacture a sufficient supply of our product
candidates. We do not have the facilities or experience to manufacture the
quantities of product candidates necessary for any such trials or commercial
purposes on our own and do not intend to develop or acquire facilities for the
manufacture of such quantities of product candidates in the foreseeable future.
We have entered into agreements with third-party manufacturers for the
manufacture of Aptosyn(R) (exisulind) and intend to rely on third-party contract
manufacturers for our other product candidates. However, except with respect to
Aptosyn(R) (exisulind) and CP461, we have not tested the manufacturing processes
for our product candidates in quantities needed for clinical trials or
commercial sales.
Our manufacturing strategy presents the following risks:
- we may not be able to locate acceptable manufacturers or enter
into favorable long-term agreements with them;
- we may not be able to interest multiple sources of supply and
may be dependent on sole source or limited sources, in which
case we may not be able to negotiate favorable agreements or
may suffer business dislocation if sole or limited sources
should fail to perform;
- third parties may fail to successfully manufacture our product
candidates or to manufacture them in a cost effective and/or
timely manner;
- delays in scale-up to commercial quantities could delay
clinical studies, regulatory submissions and commercialization
of product candidates;
- we may not have intellectual property rights, or may have to
share intellectual property rights, to many improvements in
the manufacturing processes or new manufacturing processes for
our product candidates;
- our product candidates require a long lead time to manufacture
and the manufacturing process is complex; and
- manufacturers of our product candidates are subject to current
Good Manufacturing Practices, and similar foreign standards,
and we do not have control over compliance with these
regulations by third-party manufacturers.
17
Any of these factors could delay clinical trials or commercialization
of our product candidates, entail higher costs and result in our being unable to
effectively sell any products.
IF WE ARE UNABLE TO OBTAIN RAW AND INTERMEDIATE MATERIALS NEEDED TO MANUFACTURE
OUR PRODUCTS IN SUFFICIENT AMOUNTS OR ON ACCEPTABLE TERMS, OUR BUSINESS WOULD
SUFFER.
We, or the manufacturers with whom we contract, may not be able to
maintain adequate relationships with current or future suppliers of raw or
intermediate materials for use in manufacturing our products. If our current
manufacturing sources and suppliers are unable or unwilling to make these
materials available to us in required quantities or on acceptable terms, we
would likely incur significant costs and delays to qualify alternative
manufacturing sources and suppliers. If we are unable to identify and contract
with alternative contract manufacturers when needed, our business could be
harmed.
IF WE ARE UNABLE TO BUILD SALES, MARKETING AND DISTRIBUTION CAPABILITIES OR
ENTER INTO AGREEMENTS WITH THIRD PARTIES TO PERFORM THESE FUNCTIONS, WE WILL NOT
BE ABLE TO COMMERCIALIZE ANY OF OUR PRODUCT CANDIDATES.
We currently have limited sales and marketing capabilities. In order to
commercialize any of our product candidates, we must either internally develop
extensive sales, marketing and distribution capabilities or make arrangements
with third parties to perform these services.
To market any of our drug products directly, we will have to
successfully develop a marketing and sales force with technical expertise and
supporting distribution capabilities or our business prospects would be
impaired. To promote any of our drug products through third parties, we would
have to locate suitable third parties for these functions and enter into
agreements with them on acceptable terms. If we enter into co-promotion or other
licensing arrangements, any product revenues would likely be lower than if we
directly marketed and sold our products, and any revenues we may receive would
depend upon the efforts of third parties, which efforts may not be successful.
If these third parties do not succeed in carrying out their contractual duties,
our business would suffer.
WE MAY SUSTAIN LOSSES IN MARKETING AND/OR SELLING PRODUCTS MANUFACTURED BY
OTHERS.
In September 2000, we began marketing and promoting the product
Nilandron(R) (nilutamide), a hormonal therapy for advanced prostate cancer which
is manufactured and sold to the market by Aventis. In the second quarter of
2002, we plan to commence marketing and selling Gelclair(TM) Concentrated Oral
Gel which is manufactured by Sinclair and sold to us as exclusive distributor in
North America. In the future we may enter into agreements to market additional
products manufactured by others. The risks of these activities include:
- physicians may not prescribe the products we market or sell;
- patients may not use the products we market or sell;
- price competition and/or product competition may constrain or
reduce revenues;
18
- Sales and marketing expense may exceed margins received on
products sold and fees received on products marketed;
- we may fail to successfully market, and Aventis may fail to
successfully sell, Nilandron(R) (nilutamide) in quantities in
excess of the thresholds necessary to entitle us to receive a
percentage of the gross margin with respect to such excess
sales;
- we may fail to successfully market and sell Gelclair(TM)
Concentrated Oral Gel in quantities equal to or in excess of
our minimum purchase requirements of Gelclair(TM) Concentrated
Oral Gel from Sinclair;
- customers may fail to pay for product;
- we may be exposed to product liabilities not effectively
covered by indemnification or insurance;
- suppliers and manufacturers may fail to manufacture or to
manufacture in accordance with specifications, or may fail to
deliver product, or may otherwise default;
- FDA or foreign regulatory authorities may inspect
manufacturing facilities making these products and find that
the facilities do no comply with Good Manufacturing Practice
requirements and may as a result stop the facilities from
manufacturing products until such facilities can be brought
into compliance; and
- we may breach any of our obligations and forfeit our right to
continue to market and distribute these products.
Any of these factors could expose us to commercial losses and/or
liabilities which, depending on the magnitude and circumstances, could have a
material adverse effect on us.
WE MAY BREACH THE AGREEMENTS UNDER WHICH WE LICENSE COMMERCIALIZATION OR
DEVELOPMENT RIGHTS TO PRODUCTS OR TECHNOLOGIES AND MAY THEREBY LOSE LICENSE
RIGHTS THAT ARE IMPORTANT.
We license rights to products and technology that are relevant to our
business. These include rights to the products we market, Nilandron(R)
(nilutamide) and Gelclair(TM) Concentrated Oral Gel, as well as intellectual
property rights which may arise during the course of our development programs.
We are subject to various obligations with respect to marketing efforts, care of
products, insurance, publicity, intellectual property and other matters relating
to commercialization or to development. If we fail to comply with any of these
requirements, or otherwise breach a license agreement or contract, the licensor
or other contracting party may have the right to terminate the license or
contract in whole or in part or to terminate the exclusive nature of the
arrangement. In such event we would not only lose all or part of the benefit of
the arrangement but also may be exposed to potential liabilities for breach in
the form of damages or obligation to license technology.
19
WE DEPEND ON KEY PERSONNEL; IF WE ARE NOT ABLE TO RETAIN THESE EMPLOYEES OR
RECRUIT ADDITIONAL QUALIFIED PERSONNEL, OUR BUSINESS WOULD BE HARMED.
Because of the specialized scientific nature of our business, we are
highly dependent upon qualified scientific, technical and managerial personnel.
We also rely on consultants and advisors to assist us in formulating our
research and development strategy. There is intense competition for qualified
personnel in the pharmaceutical field. We may not be able to attract and retain
the qualified personnel or consultants necessary for the development of our
business. The loss of the services of existing personnel, as well as the failure
to recruit additional key scientific, technical and managerial personnel in a
timely manner, would harm our research and development programs and our
business. The law provides only limited protection against competition by key
employees who leave our employ. We do not maintain key man life insurance on any
of our employees.
IF WE ENGAGE IN ANY ACQUISITION OR BUSINESS COMBINATION, WE WILL INCUR A VARIETY
OF RISKS THAT COULD ADVERSELY AFFECT OUR BUSINESS OPERATIONS OR OUR
STOCKHOLDERS.
From time to time we have considered, and we will continue to consider
in the future, if and when any appropriate opportunities become available,
strategic business initiatives intended to further the development of our
business. These initiatives may include acquiring businesses, technologies or
products or entering into a business combination with another company. If we do
pursue such a strategy, we could, among other things:
- issue equity securities that would dilute our stockholders'
percentage ownership;
- incur substantial debt, which may place constraints on our
operations;
- spend substantial operational, financial and management
resources in integrating new businesses, technologies and
products;
- assume substantial actual or contingent liabilities; or
- merge with, or otherwise enter into a business combination
with, another company, in which our stockholders would receive
cash or shares of the other company, or a combination of both,
on terms that our stockholders might not deem desirable.
We are not in a position to predict what, if any, collaborations,
alliances or transactions may result or how, when or if they will have a
material effect on us or the development of our business.
WE MAY BE SUED FOR PRODUCT LIABILITY.
Because we are involved in the drug discovery and development process,
our business exposes us to potential product liability risks as our product
candidates are clinically tested and when and if our drug candidates are
commercialized. We may not be able to avoid product liability claims. This
applies not only to our own products but also to products that we may
20
market for others, including Nilandron(R) (nilutamide), which we market for
Aventis, and Gelclair(TM) Concentrated Oral Gel manufactured by Sinclair.
Product liability insurance for the pharmaceutical industry is generally
expensive, if it is available at all. If we are unable to obtain sufficient
insurance coverage on reasonable terms or to otherwise protect against potential
product liability claims, we may be unable to commercialize our product
candidates. We currently have product and clinical trial liability insurance in
the amount of $10 million, but there can be no assurance that we will be able to
maintain such insurance or that such insurance is adequate. If a plaintiff
brings a successful product liability claim against us in excess of our
insurance coverage, if any, our business could be harmed.
WE MAY BE SUBJECT TO SUBSTANTIAL LIABILITIES IN CONNECTION WITH THE HANDLING AND
DISPOSAL OF HAZARDOUS MATERIALS.
Our research and development involves the controlled use of hazardous
materials, chemicals and various radioactive compounds. We cannot completely
eliminate the risk of accidental contamination or injury from these materials.
In the event of contamination or injury, for which we do not have liability
insurance coverage, we could be held liable for resulting damages, which could
exceed our resources. In addition, if we develop manufacturing capacity, we may
incur substantial costs in complying with environmental regulations.
Furthermore, we do not have mass tort insurance coverage or environmental
insurance coverage, so that liabilities resulting from claims involving our
handling or disposal of hazardous materials could severely damage our business.
OUR COMMON STOCK PRICE WILL LIKELY CONTINUE TO BE HIGHLY VOLATILE.
Our stock price, like the market price of the stock of other
development-stage pharmaceutical companies, has been highly volatile. Companies
may be sued when their stock price drops. Our stock price dropped substantially
after we made an announcement on February 1, 1999 that we anticipated a delay in
filing the NDA for Aptosyn(R) (exisulind) for FAP. Our stock price also dropped
substantially on September 25, 2000 after we announced that the FDA had informed
us that the FDA was issuing a "not approvable" letter in connection with the
pending NDA for FAP. Separate stockholder class actions were filed against us
after each of these declines in our stock price. Our stock price has also
fluctuated substantially in response to statements which have appeared in the
media. Other factors that may have a significant impact on our stock price
include:
- announcements of technical innovations or new commercial
products by us or our competitors;
- regulatory events relating to our product candidates;
- public concern as to the safety or other implications of
pharmaceutical products;
- patent or proprietary rights developments;
- results of preclinical studies or clinical trials;
21
- conditions affecting the pharmaceutical industry; and/or
- stock market conditions.
WE DO NOT INTEND TO PAY CASH DIVIDENDS.
We have never paid any cash dividends and do not anticipate paying cash
dividends in the foreseeable future.
OUR CERTIFICATE OF INCORPORATION, BYLAWS AND STOCKHOLDER RIGHTS PLAN, AND
CERTAIN PROVISIONS OF DELAWARE LAW, COULD DISCOURAGE A THIRD PARTY FROM MAKING A
TAKEOVER OFFER THAT COULD BE BENEFICIAL TO OUR STOCKHOLDERS.
Various provisions of our certificate of incorporation and bylaws and
Delaware law could delay or prevent a third party from acquiring shares of our
common stock or replacing members of our board of directors. Our certificate of
incorporation provides for the division of our board of directors into three
classes and for the ability of the board of directors to issue preferred stock
without stockholder approval. Under this authority, the board of directors
adopted, in December 1998, a stockholder rights plan, which could have the
effect of delaying or preventing us from consummating a transaction that would
result in a change of control, even if a change of control were in the best
interests of our stockholders. In addition, Delaware law restricts the ability
of stockholders to take action to acquire control of us through specified
business combination transactions.
These provisions may discourage a future acquisition of our company
even if our stockholders would receive an attractive value for their shares or
if a significant number of our stockholders believed such a proposed transaction
to be in their best interest. As a result, stockholders who desire to
participate in such a transaction may not have the opportunity to do so.
ABOUT CELL PATHWAYS
Cell Pathways, Inc. was incorporated in Delaware in July 1998 as a
subsidiary of, and as of November 3, 1998, successor to, a Delaware corporation
of the same name.
We are a development stage pharmaceutical company focused on the
research and development of products to treat cancer and to prevent cancer, the
commercialization of such products, and the marketing and selling of
oncology-related products made by others. Our technology may prove to have
applicability beyond the treatment and prevention of cancer. We will be
considered to be in the development stage until we receive approval for, and
generate significant revenues from, the marketing and selling of one or more of
our pharmaceutical drug candidates, or until we generate significant revenues
from our marketing and/or selling of products manufactured by third parties.
Our technology is based upon the discovery of a novel mechanism which
we believe, based on our research, can be targeted to induce selective
apoptosis, or programmed cell death,
22
in precancerous and cancerous cells without affecting apoptosis in normal cells.
We have created a new class of selective apoptotic anti-neoplastic drugs
("SAANDs") and have synthesized many new chemical compounds in this new class.
Our product development program focused initially on compounds likely
to be helpful in treating precancerous lesions such as colonic polyps and
cervical dysplasia. Attention next turned to the prevention of the recurrence of
prostate cancer and breast cancer. Clinical trials subsequently expanded into
the direct treatment of prostate and lung cancer. More recently, we have made
arrangements for clinical trials of our first generation compound in combination
with leading cancer chemotherapeutic agents of major pharmaceutical companies in
trials in lung, prostate and breast cancers, and have commenced clinical
development of our second compound as a single agent in cancer indications.
Clinical trials of our first generation compound, Aptosyn(R)
(exisulind) (previously known as FGN-1(TM) (exisulind) and Prevatac(TM)
(exisulind)), commenced in 1994. By 1997, clinical development of Aptosyn(R)
(exisulind) had expanded to include several cancer and precancer indications. In
August 1999, we submitted to the U. S. Food and Drug Administration ("FDA") a
New Drug Application ("NDA") seeking marketing approval for Aptosyn(R)
(exisulind) for the precancerous orphan drug indication of familial adenomatous
polyposis ("FAP"). In September 2000, the FDA issued a "not approvable" letter
with respect to the NDA for FAP. The future of the FAP program is uncertain. The
continuing development of Aptosyn(R) (exisulind) largely for cancer indications
- - either as a single agent or in combination with leading cancer
chemotherapeutic agents of major pharmaceutical companies - is discussed under
"Products in Development" in our Annual Report on Form 10-K for the year ended
December 31, 2001.
We began the clinical trial program of our second compound, CP461, in
1999. By the end of 2001, CP461 was in pilot Phase IIa trials to investigate its
safety and efficacy in three cancer indications. Description of the clinical
trial program of CP461, including description of interim results of certain
pilot studies, is also discussed under "Products in Development" in our Report
on Form 10-K for 2001. Aptosyn(R) (exisulind) and CP461 are the only CPI
product candidates which we expect to be studying in clinical trials during
2002. No pharmaceutical product may be marketed in the United States without FDA
approval. There can be no assurance that the FDA will approve any of our product
candidates for marketing for any indication or, as to when, if ever, any such
approval would occur.
In anticipation of eventually marketing our products with our own sales
force, we entered into an agreement to market an approved cancer therapy,
Nilandron(R) (nilutamide), in 2000 and commenced promoting that product in the
third quarter of 2000. Nilandron(R) (nilutamide) was developed and is sold by
Aventis Pharmaceuticals, Inc. as a hormone therapy for advanced prostate cancer.
In the first quarter of 2002 we entered into an agreement with Sinclair
Pharmaceuticals Ltd. of the United Kingdom to be the exclusive distributor in
North America of their product, Gelclair(TM) Concentrated Oral Gel, an oral gel
approved for treating oral mucositis which affects many cancer patients
receiving chemotherapy and radiation therapy. We plan to commence the marketing
and distribution of this product in the second quarter of 2002.
The foregoing is an abbreviated description of our business. Please
read our Annual Report on Form 10-K for the year ended December 31, 2001 which
discusses our business and its risks and uncertainties in greater detail.
23
Also, please read the Risk Factors set forth above in this prospectus.
In March 2002, we sold 2,390,107 shares of common stock and warrants to
purchase 597,529 shares of common stock, for gross proceeds of approximately
$8.8 million, to the selling stockholders whose shares are being registered
herein. This increased our common stock outstanding, after the issuance of such
shares, to approximately 33,560,273 million shares as of March 31, 2002.
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders. We will not
receive any proceeds from the sale of these shares of common stock by the
selling stockholders.
SELLING STOCKHOLDERS
Pursuant to purchase agreements, dated as of March 26, 2002, we sold
2,390,107 shares of our common stock at a purchase price of $3.70 per share in
private placement transactions. In addition, we issued to the purchasers of
these shares warrants to purchase an aggregate of 597,529 shares of our common
stock. The warrants are exercisable at any time in whole or in part until March
26, 2006 at an exercise price of $4.74 per share. The exercise price and the
number of warrant shares of the warrant holders are subject to adjustment upon
the following events:
- The subdivision, split or combination of shares of our common
stock; and
- The issuance of dividends in the form of common stock.
The shares issued upon exercise of the warrants are sometimes referred
to as the warrant shares. After the exercise of the warrants, the selling
stockholders may also offer or sell the warrant shares from time to time in the
manner contemplated under the "Plan of Distribution." Under the terms of the
purchase agreements for the shares of common stock and the warrants, we are
obligated to use our best efforts to maintain an effective registration
statement for the period from the effectiveness of the registration statement of
which this prospectus forms a part until such date when either all of the shares
and the warrant shares have been sold pursuant to the registration statement, or
by reason of Rule 144(k) under the Securities Act or any other rule of similar
effect, the shares and warrant shares are no longer required to be registered
for the resale thereof by the holders in ordinary market transactions without
imposition of any volume restrictions.
The following table sets forth certain information known to us
regarding the beneficial ownership of the common stock of each selling
stockholder as of April 1, 2002 and as adjusted to give effect to the sale of
the shares offered hereby. As of April 1, 2002, there were 33,560,273 shares of
the common stock outstanding. The following table states the maximum number of
shares each selling stockholder may offer under this prospectus assuming that
each selling stockholder chooses to sell all shares purchased in the private
placement in March 2002. The shares are being registered to permit public
secondary trading of the shares, and the selling stockholders may offer the
shares for resale from time to time. See "Plan of Distribution." We
24
cannot assure you that the selling stockholders will sell any or all of the
shares.
PRE-OFFERING POST-OFFERING
------------------------------------------ -----------------------------
TOTAL NUMBER TOTAL NUMBER
OF SHARES OF OF SHARES OF
COMMON STOCK COMMON COMMON STOCK
BENEFICIALLY PERCENTAGE SHARES BENEFICIALLY PERCENTAGE
SELLING STOCKHOLDER OWNED OF CLASS OFFERED OWNED(1) OF CLASS (1)
------------------- ----- -------- ------- -------- ------------
Paul Revere Capital Partners Ltd. 202,703(2) * 202,703(2) 0 --
Quantico Partners, LP 425,000(3) 1.3% 425,000(3) 0 --
Cranshire Capital L.P. 168,919(4) * 168,919(4) 0 --
Gryphon Master Fund, LP 425,000(3) 1.3% 425,000(3) 0 --
Smithfield Fiduciary LLC 236,487(5) * 236,487(5) 0 --
Riverview Group, LLC 337,838(6) 1.0% 337,838(6) 0 --
The Tail Wind Fund Ltd. 270,270(7) * 270,270(7) 0 --
Alpha Capital AG 168,919(4) * 168,919(4) 0 --
Stonestreet LP 202,500(8) * 202,500(8) 0 --
TCMP3 Partners L.P. 50,000(9) * 50,000(9) 0 --
AIG DKR Soundshore Holdings Ltd. 167,625(10) * 167,625(10) 0 --
AIG DKR Soundshore Private Investors 125,000(11) * 125,000(11) 0 --
Holding Fund Ltd.
AIG DKR Soundshore Opportunity Holding 110,625(12) * 110,625(12) 0 --
Fund Ltd.
AIG DKR Soundshore Strategic Holding 96,750(13) * 96,750(13) 0 --
Fund Ltd.
- ------------------
* Indicates less than one percent.
(1) These figures assume that all shares of common stock received by the
selling stockholders in the March 2002 private placement have been sold.
(2) Includes 40,541 shares that may be purchased upon the exercise of warrants.
(3) Includes 85,000 shares that may be purchased upon the exercise of warrants.
(4) Includes 33,784 shares that may be purchased upon the exercise of warrants.
(5) Includes 47,298 shares that may be purchased upon the exercise of warrants.
(6) Includes 67,568 shares that may be purchased upon the exercise of warrants.
(7) Includes 54,054 shares that may be purchased upon the exercise of warrants.
(8) Includes 40,500 shares that may be purchased upon the exercise of warrants.
(9) Includes 10,000 shares that may be purchased upon the exercise of warrants.
(10) Includes 33,525 shares that may be purchased upon the exercise of warrants.
(11) Includes 25,000 shares that may be purchased upon the exercise of warrants.
(12) Includes 22,125 shares that may be purchased upon the exercise of warrants.
(13) Includes 19,350 shares that may be purchased upon the exercise of warrants.
PLAN OF DISTRIBUTION
The shares being offered by the selling stockholders, or their
respective pledgees, donees, transferees or other successors in interest, will
be sold in one or more transactions (which may involve block transactions) on
the Nasdaq National Market, or on such other market on which
25
the common stock may from time to time be trading, in privately negotiated
transactions, through the writing of options on the shares, short sales or any
combination thereof. The sale price to the public may be the market price
prevailing at the time of sale, a price related to such prevailing market price
or such other price as the selling stockholders determine from time to time. The
shares may also be sold pursuant to Rule 144 of the Securities Act. The selling
stockholders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholders, or their respective pledgees, donees,
transferees or other successors in interest, may also sell the shares directly
to market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Brokers acting as agents for the selling
stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the shares will
do so for their own account and at their own risk. It is possible that the
selling stockholders will attempt to sell shares of common stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. There can be no assurance that all or any of the
shares offered hereby will be issued to, or sold by, the selling stockholders.
The selling stockholders and any brokers, dealers or agents, upon effecting the
sale of any of the shares offered hereby, may be deemed "underwriters" as that
term is defined under the Securities Act or the Securities Exchange Act, or the
rules and regulations thereunder.
The selling stockholders, alternatively, may sell all or any part of
the shares offered hereby through an underwriter. The selling stockholders have
not entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into. If the selling
stockholders enter into such an agreement or agreements, the relevant details
will be set forth in a supplement or revisions to this prospectus.
Upon our being notified by the selling stockholders that any material
arrangement has been entered into with a broker or dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplemented prospectus will
be filed, if required, pursuant to Rule 424(c) under the Securities Act,
disclosing:
- the name of each such broker-dealer,
- the number of shares involved,
- the price at which such shares were sold,
- the commissions paid or discounts or concessions allowed to
such
- broker-dealer(s), where applicable,
- that such broker-dealer(s) did not conduct any investigation
to verify the
- information set out or incorporated by reference in this
prospectus, as
- supplemented, and
26
- other facts material to the transaction.
The selling stockholders and any other persons participating in the
sale or distribution of the shares will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the shares by the selling
stockholders or any other such person. The foregoing may affect the
marketability of the shares.
We have agreed to indemnify the selling stockholders, or their
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments the selling stockholders
or their respective pledgees, donees, transferees or other successors in
interest, may be required to make in respect thereof.
We are bearing all costs relating to the registration of the shares
(other than fees and expenses, if any, of counsel or other advisers to the
selling stockholders). Any commissions, discounts or other fees payable to
broker-dealers in connection with any sale of the shares will be borne by the
selling stockholders.
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus
will be passed upon for us by Morgan, Lewis & Bockius LLP, Philadelphia,
Pennsylvania.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
27
NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK OFFERED HEREBY IN
ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN OUR AFFAIRS
SINCE THE DATE OF THIS PROSPECTUS.
TABLE OF CONTENTS
PROSPECTUS
Page
----
WHERE TO FIND ADDITIONAL INFORMATION........................................ 2
FORWARD-LOOKING STATEMENTS.................................................. 3
RISK FACTORS................................................................ 5
ABOUT CELL PATHWAYS........................................................ 22
USE OF PROCEEDS............................................................ 24
SELLING STOCKHOLDERS....................................................... 24
PLAN OF DISTRIBUTION....................................................... 25
LEGAL MATTERS.............................................................. 27
EXPERTS.................................................................... 27
28
================================================================================
2,987,636 SHARES
CELL PATHWAYS, INC.
COMMON STOCK
------------
PROSPECTUS
APRIL 10, 2002
------------
================================================================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses of the sale and
distribution of the securities being registered, all of which are being borne by
us.
Securities and Exchange Commission registration fee $ 1,103
Nasdaq listing fee 22,500
Legal fees and expenses 35,000
Printing and engraving expenses --
Accounting fees and expenses 3,500
Miscellaneous --
-------
Total $62,103*
=======
* All expenses, except the Securities and Exchange Commission
registration fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
Section 145 empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer or
agent of the corporation or another enterprise if serving at the request of the
corporation. Depending on the character of the proceeding, a corporation may
indemnify against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified 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. In the
case of an action by or in the right of the corporation, no indemnification may
be made with respect to 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 that despite the adjudication of liability, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper. Section 145 further provides that to the extent a director,
officer, employee or agent of a corporation has been successful in the defense
of any action, suit or proceeding referred to above or in the 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. Section 43 of Article XI of the Company's Bylaws provides,
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, for the indemnification of each 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, by
reason of the fact that he or she is or was a director or executive officer of
the corporation, or is or was serving at the request of the corporation, as a
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director, executive officer or trustee of, or in a similar capacity with,
another corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan) against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person or on such person's behalf in connection with such
action, suit or proceeding and any appeal therefrom.
ITEM 16. EXHIBITS.
Item Description
---- -----------
5 Opinion of Morgan, Lewis & Bockius LLP.
10.1 Form of Warrant, dated as of March 26, 2002, issued
to Paul Revere Capital Partners Ltd., Quantico
Partners, LP, Cranshire Capital L.P., Gryphon Master
Fund, LP, Smithfield Fiduciary LLC, Riverview Group,
LLC, The Tail Wind Fund Ltd., Alpha Capital AG,
Stonestreet LP, TCMP3 Partners L.P., AIG DKR
Soundshore Holdings Ltd., AIG DKR Soundshore Private
Investors Holding Fund Ltd., AIG DKR Soundshore
Opportunity Holding Fund Ltd. and AIG DKR Soundshore
Strategic Holding Fund Ltd., pursuant to Purchase
Agreements dated as of March 26, 2002.
10.2 Form of Purchase Agreements, dated as of March 26,
2002, entered into between Cell Pathways, Inc. and
Paul Revere Capital Partners Ltd., Quantico Partners,
LP, Cranshire Capital L.P., Gryphon Master Fund, LP,
Smithfield Fiduciary LLC, Riverview Group, LLC, The
Tail Wind Fund Ltd., Alpha Capital AG, Stonestreet
LP, TCMP3 Partners L.P., AIG DKR Soundshore Holdings
Ltd., AIG DKR Soundshore Private Investors Holding
Fund Ltd., AIG DKR Soundshore Opportunity Holding
Fund Ltd. and AIG DKR Soundshore Strategic Holding
Fund Ltd..
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Morgan, Lewis & Bockius LLP (included in
Exhibit 5).
24 Powers of Attorney (included on signature pages
included in this registration statement).
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
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(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (i) and (ii) of this paragraph do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to trustees, officers or controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission
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such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES AND POWERS OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
the undersigned Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Horsham, Commonwealth of Pennsylvania,
on the 10th day of April, 2002.
CELL PATHWAYS, INC.
By: /s/ Robert J. Towarnicki
------------------------------
Robert J. Towarnicki
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Robert J. Towarnicki and Martha E.
Manning, and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments to this registration statement (including post-effective
amendments to the registration statement and any such related registration
statements), and to file the same, with all exhibits thereto, and any other
documents in connection therewith, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
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 with the above Registrant and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert J. Towarnicki President, Chief Executive Officer and April 10, 2002
- ------------------------- Chairman of the Board of Directors (Principal
Robert J. Towarnicki Executive Officer)
/s/ Brian J. Hayden Chief Financial Officer, Vice President -- April 10, 2002
- -------------------- Finance (Principal Financial and Accounting
Brian J. Hayden Officer)
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Signature Title Date
/s/ William A. Boeger Director April 10, 2002
William A. Boeger
/s/ D. Bruce Burlington Director April 10, 2002
D. Bruce Burlington
/s/ Paul J. Duggan Director April 10, 2002
Paul J. Duggan
/s/ Thomas M. Gibson Director April 10, 2002
Thomas M. Gibson
/s/ Judith A. Hemberger Director April 10, 2002
Judith A. Hemberger
/s/ Rifat Pamukcu Director, Executive Vice President - Chief April 10, 2002
Rifat Pamukcu Scientific Officer
/s/ Louis M. Weiner Director April 10, 2002
Louis M. Weiner
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