<Page>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER ___, 2001
REGISTRATION NO. _____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
TRIANGLE PHARMACEUTICALS, INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware 56-1930728
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
----------
4 University Place,
4611 University Drive,
Durham, North Carolina, 27707
(919) 493-5980
(Address, Including Zip Code, And Telephone Number, Including Area Code, Of
Registrant's Principal Executive Offices)
----------
David W. Barry, M.D.
Chairman and Chief Executive Officer
TRIANGLE PHARMACEUTICALS, INC.
4 University Place,
4611 University Drive,
Durham, North Carolina 27707
(919) 493-5980
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
----------
COPY TO:
Rachel Mandell, Esq.
Senior Corporate Counsel
TRIANGLE PHARMACEUTICALS, INC.
4 University Place
4611 University Drive
Durham, North Carolina 27707
(919) 493-5980
----------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
<Page>
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
-------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF REGISTRATION
REGISTERED REGISTERED PER SHARE (1) PRICE FEE
===============================================================================================================================
Common Stock, $0.001 par 28,301,887 $3.75 $106,132,076 $26,533
value per share
-------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The price of $3.75, the average of the high and low prices of
Triangle's common stock on the Nasdaq Stock Market's National Market on
October 12, 2001, is set forth solely for the purpose of computing the
registration fee in accordance with Rule 457(c) under the Securities
Act of 1933, as amended.
(2) This Registration Statement shall also cover any additional shares of
common stock which become issuable in connection with the shares of
common stock registered for sale hereby as a result of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an
increase in the number of the Registrant's outstanding shares of 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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<Page>
SUBJECT TO COMPLETION, DATED OCTOBER ___, 2001
The information in this prospectus is not complete and may be changed.
The selling stockholders may not sell the common stock covered by this
prospectus until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell the
common stock and it is not soliciting an offer to buy the common stock in any
state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
28,301,887 SHARES
TRIANGLE PHARMACEUTICALS, INC.
COMMON STOCK
---------------
This prospectus relates to the resale of 28,301,887 shares of common
stock held by the selling stockholders identified in this prospectus.
The selling stockholders may offer their shares through public or
private transactions, on or off the Nasdaq National Market, at prevailing market
prices, or at privately negotiated prices. We will not receive any part of the
proceeds from these sales.
Our common stock is traded on the Nasdaq National Market under the
symbol "VIRS." On October 17, 2001, the last reported sale price for the common
stock was $3.85 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 TO READ ABOUT SOME IMPORTANT RISKS YOU SHOULD
CONSIDER BEFORE BUYING ANY SHARES OF OUR COMMON STOCK.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------
The date of this prospectus is October ___, 2001
<Page>
TABLE OF CONTENTS
Page
----
I. OUR BUSINESS..........................................................3
II. RISK FACTORS..........................................................3
III. FORWARD-LOOKING STATEMENTS...........................................21
IV. USE OF PROCEEDS......................................................21
V. SELLING STOCKHOLDERS.................................................22
VI. PLAN OF DISTRIBUTION.................................................23
VII. LEGAL MATTERS........................................................25
VIII. EXPERTS..............................................................25
IX. WHERE YOU CAN FIND MORE INFORMATION..................................25
X. INFORMATION INCORPORATED BY REFERENCE................................25
You should rely only on the information in this prospectus or
information we have referred to in this prospectus. We have not authorized
anyone to provide you with information that is different. This prospectus may
only be used where it is legal to sell these securities. This prospectus is not
an offer to sell, or a solicitation of an offer to buy, in any state where the
offer or sale is prohibited. The information in this prospectus is accurate on
the date of this prospectus and may become obsolete later. Neither the delivery
of this prospectus, nor any sale made under this prospectus will, under any
circumstances, imply that the information in this prospectus is correct as of
any date after the date of this prospectus.
<Page>
I. OUR BUSINESS
We develop new drug candidates primarily in the antiviral area, with a
particular focus on therapies for HIV, including AIDS, and the hepatitis B
virus. We have an existing portfolio of five licensed drug candidates in
clinical trials and several drug candidates that are in a pre-clinical stage or
for which we have an option to acquire a license. Members of our senior
management team, prior to joining Triangle, played instrumental roles in
developing and commercializing several leading antiviral therapies. Our goal is
to capitalize on our management team's expertise, as well as on advances in
virology and immunology, to identify, develop and commercialize new drug
candidates that can be used alone or in combination to treat serious diseases.
Triangle was incorporated in Delaware in July 1995. Our principal
executive offices are located at 4 University Place, 4611 University Drive,
Durham, North Carolina 27707, and our telephone number is (919) 493-5980.
II. RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE MAKING AN INVESTMENT DECISION. THE
OCCURRENCE OF ANY OF THE EVENTS OR CIRCUMSTANCES DESCRIBED IN THIS SECTION COULD
IMPAIR OUR BUSINESS OR FINANCIAL CONDITION, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
ALL OF OUR DRUG CANDIDATES ARE IN DEVELOPMENT AND WE MAY NEVER SUCCESSFULLY
COMMERCIALIZE THEM.
Some of our drug candidates are at an early stage of development and
all of our drug candidates will require expensive and lengthy testing and
regulatory clearances. The regulatory authorities have not approved any of our
drug candidates. We do not expect any of our drug candidates to be commercially
available until at least the year 2003. There are many reasons that we may fail
in our efforts to develop our drug candidates, including that:
o our drug candidates may be ineffective, toxic or may not
receive regulatory clearances,
o our drug candidates may be too expensive to manufacture or
market or may not achieve broad market acceptance,
o third parties may hold proprietary rights that preclude us
from developing or marketing our drug candidates, or
o third parties may market equivalent or superior products.
The success of our business depends on our ability to successfully
develop and market our drug candidates.
3
<Page>
WE HAVE INCURRED LOSSES SINCE INCEPTION AND MAY NEVER ACHIEVE PROFITABILITY.
We formed Triangle in July 1995 and have incurred losses since our
inception. At June 30, 2001, our accumulated deficit was $375.0 million. Our
historical costs relate primarily to the acquisition and development of our drug
candidates and selling, general and administrative costs. We have not generated
any revenue from the sale of our drug candidates to date, and do not expect to
do so until at least the year 2003. In addition, we expect annual losses to
continue over the next several years as a result of our drug development and
commercialization efforts. To become profitable, we must successfully develop
and obtain regulatory approval for our drug candidates and effectively
manufacture, market and sell any products we develop. We may never generate
significant revenue or achieve profitable operations.
IF WE NEED ADDITIONAL FUNDS AND ARE UNABLE TO RAISE THEM, WE WILL HAVE TO
CURTAIL OR CEASE OPERATIONS.
Our drug development programs and our efforts to commercialize our drug
candidates require substantial working capital, including expenses for:
o preclinical testing,
o chemical synthetic scale-up,
o manufacture of drug substance for clinical trials,
o toxicology studies,
o clinical trials of drug candidates,
o sales and marketing,
o payments to our licensors, and
o potential commercial launch of our drug candidates.
Our future working capital needs will depend on many factors,
including:
o the progress, magnitude and success of our drug development
programs,
o the scope and results of preclinical testing and clinical trials,
o the cost, timing and outcome of regulatory filings and reviews,
o the costs under current and future license and option agreements
for our drug candidates, including the costs of obtaining and
enforcing patent protection for our drug candidates,
o the costs of acquiring any additional drug candidates,
o the out-licensing of existing drug candidates,
o the rate of technological advances by us and other companies,
o the commercial potential of our drug candidates,
o the magnitude of our administrative and legal expenses,
o the costs of establishing sales and marketing functions, and
o the costs of establishing third party arrangements for
manufacturing.
4
<Page>
We have incurred negative cash flow from operations since we
incorporated Triangle and do not expect to generate positive cash flow from our
operations for at least the next several years. We believe that our existing
cash, cash equivalents and investments, considering our recent steps to reduce
cash usage, will be adequate through the second quarter of 2003. We will need
additional future financings to fund our operations. We cannot assure you that
available sources of funds will be sufficient to meet our future needs. In
addition, we cannot assure you that we will receive the contingent development
milestone payments under our strategic alliance with Abbott Laboratories, the
Abbott Alliance. We may not be able to obtain adequate financing to fund our
operations, and any additional financing we obtain may be on terms that are not
favorable to us. In addition, any future financings could substantially dilute
our stockholders. If adequate funds are not available, we will be required to
delay, reduce or eliminate one or more of our drug development programs, to
enter into new collaborative arrangements or to modify the Abbott Alliance on
terms that may not be favorable to us. These collaborative arrangements or
modifications could result in the transfer of valuable rights to third parties.
In addition, we may acquire technologies and drug candidates that would increase
our working capital requirements.
To facilitate our ability to raise additional equity capital, in
November 2000, we entered into a firm underwritten equity facility, the
Facility, with Ramius Securities, LLC, and Ramius Capital Group, LLC, under
which we may be able to issue and sell up to $100.0 million of our common stock
over a three-year period. We filed a registration statement with the Securities
and Exchange Commission for the sale of up to $24.0 million of our common stock
under this Facility. There are conditions and limitations on Ramius Securities'
obligation to sell shares under the underwriting agreement and Ramius Capital's
obligation to purchase shares under the purchase agreement. In particular,
Ramius Securities' and Ramius Capital's obligations are subject to share price
and trading volume limitations which could reduce the number of shares of common
stock they are obligated to sell or purchase, as the case may be, regardless of
the number of shares of common stock we request to be sold. In some
circumstances, such as an average trading price of less than $4.00 per share,
they will have no obligation to sell or purchase our common stock, even if we
request them to do so. Our share price has recently traded below $4.00 a share.
In addition, we may elect not to sell shares of common stock if we believe that
market conditions are unfavorable.
BECAUSE WE MAY NOT SUCCESSFULLY COMPLETE CLINICAL TRIALS REQUIRED FOR
COMMERCIALIZATION OF OUR DRUG CANDIDATES, OUR BUSINESS MAY NEVER ACHIEVE
PROFITABILITY.
To obtain regulatory approvals needed for the sale of our drug
candidates, we must demonstrate through preclinical testing and clinical trials
that each drug candidate is safe and effective. The clinical trial process is
complex and uncertain and the regulatory environment varies widely from country
to country. Positive results from preclinical testing and early clinical trials
do not ensure positive results in pivotal clinical trials. Many companies in our
industry have suffered significant setbacks in pivotal clinical trials, even
after promising results in earlier trials. Any of our drug candidates may
produce undesirable side effects in humans. These side effects could cause us or
regulatory authorities to interrupt, delay or halt clinical trials of a drug
candidate, as occurred with mozenavir dimesylate, or could result in regulatory
authorities refusing to approve the drug candidate for any and all targeted
indications. In 2000, the South African Medicines Control Council terminated one
of our phase III clinical studies, study FTC-302, for our drug candidate
Coviracil and the Food and Drug Administration, the FDA, issued a
5
<Page>
clinical hold on the study. We were conducting study FTC-302 under a U.S.
Investigational New Drug Application at sites in South Africa. The FDA has
indicated it is unlikely that study FTC-302 will be adequate to provide pivotal
data in support of a New Drug Application. Discussions with the FDA are
continuing; however, our planned submission of an U.S. New Drug Application for
Coviracil will likely be delayed until data from our ongoing FTC-301 study is
available for inclusion in the filing. We, the FDA, or foreign regulatory
authorities may suspend or terminate clinical trials at any time if we or they
believe the trial participants face unacceptable health risks.
CLINICAL TRIALS MAY TAKE LONGER TO COMPLETE AND COST MORE THAN WE EXPECT, WHICH
WOULD ADVERSELY AFFECT OUR ABILITY TO COMMERCIALIZE DRUG CANDIDATES AND ACHIEVE
PROFITABILITY.
Clinical trials are lengthy and expensive. They require adequate
supplies of drug substance and sufficient patient enrollment. Patient enrollment
is a function of many factors, including:
o the size of the patient population,
o the nature of the protocol,
o the proximity of patients to clinical sites, and
o the eligibility criteria for the clinical trial.
Delays in patient enrollment can result in increased costs and longer
development times. Even if we successfully complete clinical trials, we may not
be able to file any required regulatory submissions in a timely manner and we
may not receive regulatory approval for the drug candidate. In addition, if the
FDA or foreign regulatory authorities require additional clinical trials we
could face increased costs and significant development delays.
Changes in regulatory policy or new regulations could also result in
delays or rejections of our applications for approval of our drug candidates.
The FDA has notified us that three of our drug candidates for the treatment of
HIV, Coviracil, Coactinon and amdoxovir, qualify for designation as "fast track"
products under provisions of the Food and Drug Administration Modernization Act
of 1997. The fast track provisions are designed to expedite the review of new
drugs intended to treat serious or life-threatening conditions and essentially
codified the criteria previously established by the FDA for accelerated
approval. These drug candidates may not, however, continue to qualify for
expedited review and our other drug candidates may fail to qualify for fast
track development or expedited review. Even though some of our drug candidates
have qualified for expedited review, the FDA may not approve them at all or any
sooner than other drug candidates that do not qualify for expedited review.
IF WE OR OUR LICENSORS ARE NOT ABLE TO OBTAIN AND MAINTAIN ADEQUATE PATENT
PROTECTION FOR OUR DRUG CANDIDATES, WE MAY BE UNABLE TO COMMERCIALIZE OUR DRUG
CANDIDATES OR TO PREVENT OTHER COMPANIES FROM USING OUR TECHNOLOGY IN
COMPETITIVE PRODUCTS.
Our success will depend on our ability and the ability of our licensors
to obtain and maintain patents and proprietary rights for our drug candidates
and to avoid infringing the proprietary rights of others, both in the United
States and in foreign countries. We have no
6
<Page>
patents solely in our own name and we have a small number of patent applications
of our own pending. We have one U.S. patent which is jointly owned with another
institution. We have licensed, or have an option to license, patents, patent
applications and other proprietary rights from third parties for each of our
drug candidates. If we breach our licenses we may lose rights to important
technology and drug candidates.
Our patent position on some of our drug candidates, like that of many
pharmaceutical companies, is uncertain and involves complex legal and factual
questions for which important legal principles are unresolved. We may not
develop or obtain rights to products or processes that are patentable. Even if
we do obtain patents, they may not adequately protect the technology we own or
have licensed. In addition, others may challenge, seek to invalidate, infringe
or circumvent any patents we own or license. If they do so successfully, rights
we receive under those patents may not provide competitive advantages to us.
Further, the manufacture, use or sale of our products or processes may infringe
the patent rights of others.
Several pharmaceutical and biotechnology companies, universities and
research institutions have filed patent applications or received patents that
cover our technologies or technologies similar to ours. Others have filed patent
applications and received patents that conflict with patents or patent
applications we own or have licensed, either by claiming the same methods or
compounds or by claiming methods or compounds that could dominate those owned by
or licensed to us. In addition, we may not be aware of all patents or patent
applications that may impact our ability to make, use or sell any of our drug
candidates. For example, United States patent applications are confidential
while pending in the Patent and Trademark Office, and patent applications filed
in foreign countries are often first published six months or more after filing.
Any conflicts resulting from third party patent applications and patents could
significantly reduce the coverage of our patents and limit our ability to obtain
meaningful patent protection. If other companies obtain patents with conflicting
claims, we may be required to obtain licenses to these patents or to develop or
obtain alternative technology. We may not be able to obtain any license on
acceptable terms or at all. Any failure to obtain licenses could delay or
prevent us from pursuing the development or commercialization of our drug
candidates, which would adversely affect our ability to achieve profitability.
There are significant risks regarding the patent rights of two of our
licensed drug candidates. We may not be able to commercialize Coviracil or
amdoxovir due to patent rights held by third parties other than our licensors.
Third parties have filed numerous patent applications and have received numerous
issued patents in the United States and many foreign countries that relate to
these drug candidates and their use alone or in combination to treat HIV and
hepatitis B. As a result, our patent position regarding the use of Coviracil and
amdoxovir to treat HIV and/or hepatitis B is highly uncertain and involves
numerous complex legal and factual questions that are unknown or unresolved. If
any of these questions is resolved in a manner that is not favorable to us, we
would not have the right to commercialize Coviracil and/or amdoxovir in the
absence of a license from one or more third parties, which may not be available
on acceptable terms or at all. Even if any of these questions is resolved in our
favor, we may still attempt to obtain licenses from one or more third parties to
reduce the risks of challenges to our patent positions. These licenses may not
be available on acceptable terms or at all. Our inability
7
<Page>
to commercialize either of these drug candidates would adversely affect our
ability to achieve profitability.
COVIRACIL (EMTRICITABINE)
Coviracil, a purified form of FTC, belongs to the same general class of
nucleosides as lamivudine. In the United States, the FDA has approved lamivudine
for the treatment of hepatitis B and for use in combination with zidovudine,
also known as AZT, for the treatment of HIV. Regulatory authorities have
approved lamivudine for the treatment of hepatitis B and for use in combination
with other nucleoside analogues for the treatment of HIV in a number of other
countries. GlaxoSmithKline plc, Glaxo, currently sells lamivudine for the
treatment of HIV and hepatitis B under a license agreement with Shire
Pharmaceuticals Group, plc. Shire Pharmaceuticals obtained its rights under this
license agreement through a merger with BioChem Pharma, Inc. We obtained rights
to Coviracil under a license from Emory University. In 1990 and 1991, Emory
filed in the United States and then in numerous foreign countries patent
applications with claims to compositions of matter and methods to treat HIV and
hepatitis B with Coviracil. In 1991, Yale University filed in the United States
patent applications on FTC, including emtricitabine and its use to treat
hepatitis B, and subsequently licensed its rights under those patent
applications to Emory. Our license arrangement with Emory includes all rights to
Coviracil and its uses claimed in the Yale patent applications.
HIV. Emory received a United States patent in 1993 covering a method to
treat HIV with Coviracil. Emory has also received United States and European
patents containing composition of matter claims that cover Coviracil. BioChem
Pharma, now Shire Pharmaceuticals, filed a patent application in the United
States in 1989 and received a patent in 1991 covering a group of nucleosides in
the same general class as Coviracil, but which did not include Coviracil. Shire
Pharmaceuticals filed foreign patent applications in 1990, which expanded on its
1989 United States patent application to include FTC among a large class of
nucleosides. The foreign patent applications are pending in many countries and
patents have been issued in a number of countries with claims directed to FTC
that may cover Coviracil and its use to treat HIV. In addition, Shire
Pharmaceuticals filed a United States patent application in 1991 specifically
directed to Coviracil. Shire Pharmaceuticals has received two patents in the
United States based on this patent application, one directed to Coviracil and
the other directed to a method for treating viral diseases with Coviracil. The
Patent and Trademark Office has determined that there are conflicts between both
Shire Pharmaceuticals patents and patent applications filed by Emory because
they have overlapping claims to the same technology. The Patent and Trademark
Office is conducting two adversarial proceedings, interferences, to determine
whether Shire Pharmaceuticals or Emory is entitled to the patent claims in
dispute regarding Shire Pharmaceuticals' two issued patents. On July 5, 2001,
the Patent and Trademark Office issued a decision awarding the patent on the
method for treating HIV with Coviracil to Emory and ruled that Shire
Pharmaceuticals' patent on that subject matter is invalid. The time to appeal
this decision has now expired. The decision is therefore final. Emory may not
prevail in the remaining adversarial proceeding, and the proceeding may also
delay the decision of the Patent and Trademark Office regarding Emory's patent
application. Shire Pharmaceuticals also filed patent applications in many
foreign countries based on its 1991 United States patent application
8
<Page>
and has received patents in some of these countries. Shire Pharmaceuticals may
have additional patent applications pending in the United States.
In the United States, the first to invent a technology is entitled to
patent protection on that technology. For patent applications filed prior to
January 1, 1996, United States patent law provides that a party who invented a
technology outside the United States is deemed to have invented the technology
on the earlier of the date it introduced the invention in the United States or
the date it filed its patent application. In a filing with the Securities and
Exchange Commission, Shire Pharmaceuticals stated that prior to January 1, 1996,
it conducted substantially all of its research activities outside the United
States. Shire Pharmaceuticals also stated that it considered this to be a
disadvantage in obtaining United States patents based on patent applications
filed before January 1, 1996 as compared to companies that mainly conducted
research in the United States. We do not know whether Emory or Shire
Pharmaceuticals was the first to invent the technology claimed in their
respective United States patent applications or patents. We also do not know
whether Shire Pharmaceuticals invented the technology disclosed in its patent
applications in the United States or introduced that technology in the United
States before the date of its patent applications.
In foreign countries, the first party to file a patent application on a
technology, not the first to invent the technology, is entitled to patent
protection on that technology. We believe that Emory filed patent applications
disclosing Coviracil as a useful anti-HIV agent in many foreign countries before
Shire Pharmaceuticals filed its foreign patent applications on that technology.
However, Shire Pharmaceuticals has received patents in several foreign
countries. In addition, Shire Pharmaceuticals has filed patent applications on
Coviracil and its uses in countries in which Emory did not file patent
applications. Emory has opposed or otherwise challenged patent claims on
Coviracil granted to Shire Pharmaceuticals in Australia, Europe and South Korea.
Emory may not initiate patent opposition proceedings in any other countries or
be successful in any foreign proceeding attempting to prevent the issuance of,
revoke or limit the scope of patents issued to Shire Pharmaceuticals. Shire
Pharmaceuticals has opposed patent claims on Coviracil granted to Emory in
Europe, Japan, Australia and South Korea. The South Korean patent office issued
a decision upholding patent claims to Emory that cover Coviracil. Shire
Pharmaceuticals can appeal this decision. Shire Pharmaceuticals may make
additional challenges to Emory patents or patent applications, which Emory may
not succeed in defending. Our sales, if any, of Coviracil for the treatment of
HIV may be held to infringe United States and foreign patent rights of Shire
Pharmaceuticals. Under the patent laws of most countries, a product can be found
to infringe a third party patent either if the third party patent expressly
covers the product or method of treatment using the product, or if the third
party patent covers subject matter that is substantially equivalent in nature to
the product or method, even if the patent does not expressly cover the product
or method. If any governmental authority determined that the sale of Coviracil
for the treatment of HIV infringes a Shire Pharmaceuticals patent, we would not
have the right to make, use or sell Coviracil for the treatment of HIV in that
country in the absence of a license from Shire Pharmaceuticals. We may be unable
to obtain a license from Shire Pharmaceuticals on acceptable terms or at all.
HEPATITIS B. Burroughs Wellcome Co. filed patent applications in March
1991 and May 1991 in Great Britain on a method to treat hepatitis B with FTC and
purified forms of FTC, that
9
<Page>
include emtricitabine. Burroughs Wellcome filed similar patent applications in
other countries, including the United States. Glaxo subsequently acquired
Burroughs Wellcome's rights under those patent applications. Those patent
applications were filed in foreign countries prior to the date Emory filed its
patent application on the use of emtricitabine to treat hepatitis B. Burroughs
Wellcome's foreign patent applications, therefore, have priority over those
filed by Emory. In July 1996, Emory instituted litigation against Glaxo in the
United States District Court to obtain ownership of the patent applications
filed by Burroughs Wellcome, alleging that Burroughs Wellcome converted and
misappropriated Emory's invention and property and that an Emory employee is the
inventor or a co-inventor of the subject matter covered by the Burroughs
Wellcome patent applications. In May 1999, Emory and Glaxo settled the
litigation, and we became the exclusive licensee of the United States and all
foreign patent applications and patents filed by Burroughs Wellcome on the use
of emtricitabine to treat hepatitis B. Under the license and settlement
agreements, Emory and we were also given access to development and clinical data
and drug substance held by Glaxo relating to emtricitabine.
Shire Pharmaceuticals filed a patent application in May 1991 in Great
Britain also directed to a method to treat hepatitis B with FTC. Shire
Pharmaceuticals filed similar patent applications in other countries. In January
1996, Shire Pharmaceuticals received a patent in the United States, which
included a claim to treat hepatitis B with emtricitabine. The Patent and
Trademark Office has determined that there is a conflict between the Shire
Pharmaceuticals patent and patent applications filed by Yale and Emory. The
Patent and Trademark Office is conducting an adversarial proceeding, an
interference, to determine which party is entitled to the patent claims in
dispute. Yale licensed all of its rights relating to FTC, including
emtricitabine, and its uses claimed in this patent application to Emory, which
subsequently licensed these rights to us. Neither Emory nor Yale may prevail in
the adversarial proceeding, and the proceeding may delay the decision of the
Patent and Trademark Office regarding Yale's and Emory's patent applications. In
addition, the Patent and Trademark Office has recently added the U.S. patent
application filed by Burroughs Wellcome to this interference. Emory may not
pursue or succeed in these proceedings. We will not be able to sell
emtricitabine for the treatment of hepatitis B in the United States unless a
United States court or administrative body determines that the Shire
Pharmaceuticals patent is invalid or unless we obtain a license from Shire
Pharmaceuticals. We may be unable to obtain a license on acceptable terms or at
all. In July 1991, Shire Pharmaceuticals received a United States patent on the
use of lamivudine to treat hepatitis B and has corresponding patent applications
pending or issued in foreign countries. If the Patent and Trademark Office
determines that the use of emtricitabine to treat hepatitis B is not
substantially different from the use of lamivudine to treat hepatitis B, a court
could hold that the use of emtricitabine to treat hepatitis B infringes these
Shire Pharmaceuticals lamivudine patents.
In addition, Shire Pharmaceuticals has filed patent applications and
received patents in the United States and foreign countries on manufacturing
methods relating to a class of nucleosides that includes emtricitabine. If we
use a manufacturing method that is covered by any of Shire Pharmaceuticals'
patents, we will not be able to manufacture emtricitabine without a license from
Shire Pharmaceuticals. We may not be able to obtain a license on acceptable
terms or at all.
10
<Page>
AMDOXOVIR (FORMERLY KNOWN AS DAPD)
We obtained our rights to amdoxovir under a license from Emory and the
University of Georgia Research Foundation, Inc., University of Georgia. Our
rights to amdoxovir include a number of issued United States patents that cover:
o composition of matter,
o a method for the synthesis of amdoxovir,
o methods for the use of amdoxovir alone or in combination with
several other agents for the treatment of hepatitis B, and
o a method to treat HIV with amdoxovir.
We also have rights to several foreign patents and patent applications
that cover methods for the use of amdoxovir alone or in combination with other
anti-hepatitis B agents for the treatment of hepatitis B. Additional foreign
patent applications are pending which contain claims for the use of amdoxovir to
treat HIV. Emory and the University of Georgia filed patent applications
claiming these inventions in the United States in 1990 and 1992.
Shire Pharmaceuticals filed a patent application in the United States
in 1988 on a group of nucleosides in the same general class as amdoxovir and
their use to treat HIV, and has filed corresponding patent applications in
foreign countries. The Patent and Trademark Office issued a patent to Shire
Pharmaceuticals in 1993 covering a class of nucleosides that includes amdoxovir
and its use to treat HIV. Corresponding patents have been issued to Shire
Pharmaceuticals in many foreign countries. Emory has filed an opposition to
patent claims granted to Shire Pharmaceuticals by the European Patent Office
based, in part, on Emory's assertion that Shire Pharmaceuticals' patent does not
disclose how to make amdoxovir. In a patent opposition hearing held at the
European Patent Office on March 4, 1999, the Opposition Division ruled that the
Shire Pharmaceuticals European patent covering amdoxovir is valid. Emory has
appealed this decision to the European Patent Office Technical Board of Appeal.
If the Technical Board of Appeal affirms the decision of the Opposition
Division, or if we or Emory do not pursue the appeal, we would not be able to
sell amdoxovir in Europe without a license from Shire Pharmaceuticals, which may
not be available on acceptable terms or at all. Shire Pharmaceuticals has
opposed patent claims granted to Emory on both amdoxovir and DXG, the parent
drug into which amdoxovir is converted in the body, in the Australian Patent
Office.
In a decision dated November 8, 2000, the Australian Patent Office held
that Emory's patent claims directed to amdoxovir are not patentable over an
earlier Shire Pharmaceuticals patent. Emory has appealed this decision of the
Australian Patent Office to the Australian Federal Court. If Emory, the
University of Georgia or we are unsuccessful in the appeal, then we will not be
able to sell amdoxovir in Australia without a license from Shire
Pharmaceuticals, which may not be available on acceptable terms or at all. Shire
Pharmaceuticals' opposition to Emory's patent claims on DXG in Australia is
ongoing. If Emory, the University of Georgia or we do not challenge, or are not
successful in any challenge to, Shire Pharmaceuticals' issued patents, pending
patent applications, or patents that may issue from its applications, we will
not be able to manufacture, use or sell amdoxovir in the United States and any
foreign countries in
11
<Page>
which Shire Pharmaceuticals receives a patent without a license from Shire
Pharmaceuticals. We may not be able to obtain a license from Shire
Pharmaceuticals on acceptable terms or at all.
IMMUNOSTIMULATORY SEQUENCE PRODUCT CANDIDATES
In March 2000, we entered into a licensing and collaborative agreement
with Dynavax Technologies Corporation to develop immunostimulatory
polynucleotide sequence product candidates for the prevention and/or treatment
of serious viral diseases, which became effective in April 2000.
Immunostimulatory sequences are polynucleotides which stimulate the immune
system, and could potentially be used in combination with our small molecule
product candidates to increase the body's ability to defend against viral
infection. Immunostimulatory sequences can be stabilized for use through
internal linkages that do not occur in nature, including phosphorothioate
linkages.
There are a number of companies which have patent applications and
issued patents, both in the United States and in other countries, that cover
immunostimulatory sequences and their uses. Coley Pharmaceuticals, Inc. has
filed several patent applications in this area and has in addition exclusively
licensed a number of patent applications on this subject from the University of
Iowa and Isis Pharmaceuticals, Inc. A number of these patent applications have
been issued. A number of companies have also filed patent applications and have
or are expected to receive patents on a number of polynucleotides and methods
for their use and manufacture. These patents, if granted, could prevent us from
making, using or selling any immunostimulatory sequence that is covered by a
patent issued to a third party unless we obtain a license from that party which
may not be available on acceptable terms or at all.
With respect to any of our drug candidates, litigation, patent
opposition and adversarial proceedings, including the currently pending
proceedings, could result in substantial costs to us. The costs of the currently
pending proceedings are significant and may increase significantly during the
next several years. We anticipate that additional litigation and/or proceedings
will be necessary or may be initiated to enforce any patents we own or are
significant and license, or to determine the scope, validity and enforceability
of other parties' proprietary rights and the priority of an invention. Any of
these activities could result in substantial costs and/or delays to us. The
outcome of any of these proceedings may significantly affect our rights to
develop and commercialize drug candidates and technology.
United States patents carry a presumption of validity and generally can
be invalidated only through clear and convincing evidence. As indicated above,
the Patent and Trademark Office is conducting three adversarial proceedings in
connection with the emtricitabine technology. We cannot assure you that a court
or administrative body would hold our licensed patents valid or would find an
alleged infringer to be infringing. Further, the license and option agreements
with Emory, the University of Georgia, The Regents of the University of
California, The DuPont Pharmaceuticals Company, Mitsubishi Pharma Corporation
(formerly, Mitsubishi-Tokyo Pharmaceuticals, Inc.) and Dynavax provide that each
of these licensors is primarily responsible for any patent prosecution
activities, such as litigation, patent conflict proceeding, patent opposition or
other actions, for the technology licensed to us. These agreements also provide
that we generally must reimburse these licensors for the costs they incur in
performing
12
<Page>
these activities. Similarly, Yale and the University of Georgia, the licensors
of clevudine to Bukwang Pharm. Ind. Co., Ltd., are primarily responsible for
patent prosecution activities with respect to clevudine at our expense. As a
result, we generally do not have the ability to institute or determine the
conduct of any patent proceedings unless our licensors elect not to institute or
to abandon the proceedings. If our licensors elect to institute and prosecute
patent proceedings, our rights will depend in part on the manner in which these
licensors conduct the proceedings. In any proceedings they elect to initiate and
maintain, these licensors may not vigorously pursue or defend or may decide to
settle on terms that are unfavorable to us. An adverse outcome of these
proceedings could subject us to significant liabilities to third parties,
require disputed rights to be licensed from third parties or require us to cease
using technology, any of which could adversely affect our business. Moreover,
the mere uncertainty resulting from the initiation and continuation of any
technology related litigation or adversarial proceeding could adversely affect
our business pending resolution of the disputed matters.
BECAUSE WE MAY NOT BE ABLE TO MAINTAIN THE CONFIDENTIALITY OF OUR TRADE SECRETS
AND KNOW-HOW, WE MAY LOSE A COMPETITIVE ADVANTAGE.
We also rely on unpatented trade secrets and know-how to maintain our
competitive position, which we seek to protect, in part, by confidentiality
agreements with employees, consultants and others. These parties may breach or
terminate these agreements, and we may not have adequate remedies for any
breach. Our trade secrets may also be independently discovered by competitors.
We rely on technologies to which we do not have exclusive rights or which may
not be patentable or proprietary and may be available to competitors. We have
filed applications for, but have not obtained, trademark registrations for
various marks in the United States and other jurisdictions. We have received
U.S. trademark registrations for our corporate name and our corporate name and
logo, as well as the marks Coactinon(R) and Coviracil(R). We have received
Canadian trademark registrations for the marks Coactinon(R) and Coviracil(R). We
have also received registrations in the European Union for the mark Coactinon(R)
and our corporate logo. Our pending application in the European Union for the
mark CoviracilTM has been opposed by Orsem, based on registrations for the mark
Coversyl in various countries, and Les Laboratories Serveir, based on a French
registration for the mark Coversyl. We do not believe that the marks Coviracil
and Coversyl are confusingly similar, but, in the event they are found to be
confusingly similar, we may need to adopt a different product name for
emtricitabine in the applicable jurisdictions. Several other companies use trade
names that are similar to our name for their businesses. If we are unable to
obtain any licenses that may be necessary for the use of our corporate name, we
may be required to change our name. Our management personnel were previously
employed by other pharmaceutical companies. The prior employers of these
individuals may allege violations of trade secrets and other similar claims
relating to their drug development activities for us.
THE COSTS AND TIME REQUIRED TO COMPLY WITH EXTENSIVE GOVERNMENT REGULATIONS
COULD PREVENT OR DELAY THE COMMERCIALIZATION OF OUR PRODUCTS.
In addition to preclinical testing, clinical trials and other approval
procedures for human pharmaceutical products, we are subject to numerous
domestic and international regulations covering the development of
pharmaceutical products. These regulations affect:
13
<Page>
o manufacturing,
o safety,
o labeling,
o storage,
o record keeping,
o reporting, and
o marketing and promotion.
We must also comply with regulations governing non-clinical and
clinical laboratory practices, safe working conditions, and the use and disposal
of hazardous substances, including radioactive compounds and infectious disease
agents we use in connection with our development work. The requirements vary
widely from country to country and some requirements may vary from state to
state in the United States. We expect the process of obtaining these approvals
and complying with appropriate government regulations to be time consuming and
expensive. Even if our drug candidates receive regulatory approval, we may still
face difficulties in marketing and manufacturing those drug candidates. Any
approval may be contingent on postmarketing studies or other conditions. The
approval of any of our drug candidates may limit the indicated uses of the drug
candidate. A marketed product, its manufacturer and the manufacturer's
facilities are subject to continual review and periodic inspections. 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:
o fines,
o suspended regulatory approvals,
o refusal to approve pending applications,
o refusal to permit exports from the United States,
o product recalls,
o seizure of products,
o injunctions,
o operating restrictions, and
o criminal prosecutions.
In addition, adverse clinical results by others could negatively impact
the development and approval of our drug candidates. Some of our drug candidates
are intended for use as combination therapy with one or more other drugs, and
adverse safety, effectiveness or regulatory developments in connection with the
other drugs will also have an adverse effect on our business.
INTENSE COMPETITION MAY RENDER OUR DRUG CANDIDATES NONCOMPETITIVE OR OBSOLETE.
We are engaged in segments of the drug industry that are highly
competitive and rapidly changing. Any of our current drug candidates that we
successfully develop will compete with numerous existing therapies. In addition,
many companies are pursuing novel drugs that target
14
<Page>
the same diseases we are targeting. We believe that a significant number of
drugs are currently under development and will become available in the future
for the treatment of HIV and hepatitis B. We anticipate that we will face
intense and increasing competition as new products enter the market and advanced
technologies become available. Our competitors' products may be more effective,
or more effectively marketed and sold, than any of our products. Competitive
products may render our products obsolete or noncompetitive before we can
recover the expenses of developing and commercializing our drug candidates.
Furthermore, the development of a cure or new treatment methods for the diseases
we are targeting could render our drug candidates noncompetitive, obsolete or
uneconomical. Many of our competitors:
o have significantly greater financial, technical and human
resources than we have and may be better equipped to develop,
manufacture and market products,
o have extensive experience in preclinical testing and clinical
trials, obtaining regulatory approvals and manufacturing and
marketing pharmaceutical products, and
o have products that have been approved or are in late stage
development and operate large, well-funded research and
development programs.
Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical and
biotechnology companies. Academic institutions, governmental agencies and other
public and private research organizations are also becoming increasingly aware
of the commercial value of their inventions and are more actively seeking to
commercialize the technology they have developed.
If we successfully develop and obtain approval for our drug candidates,
we will face competition based on many factors including:
o the safety and effectiveness of our products,
o the timing and scope of regulatory approvals,
o the availability of supply,
o marketing and sales capability,
o reimbursement coverage,
o price, and
o patent position.
Our competitors may develop or commercialize more effective or more
affordable products, or obtain more effective patent protection, than we do.
Accordingly, our competitors may commercialize products more rapidly or
effectively than we do, which could hurt our competitive position.
15
<Page>
IF OUR LICENSORS TERMINATE THEIR AGREEMENTS WITH US, WE COULD LOSE OUR RIGHTS TO
OUR DRUG CANDIDATES.
We have licensed or obtained an option to license our drug candidates
under agreements with our licensors. These agreements permit our licensors to
terminate the agreements in circumstances such as our failure to achieve
development milestones or the occurrence of an uncured material breach by us.
The termination of any of these agreements would result in the loss of our
rights to a drug candidate. On the termination of most of our license
agreements, we are required to return the licensed technology to our licensors.
In addition, most of these agreements provide that we generally must reimburse
our licensors for the costs they incur in performing any patent prosecution
activities such as litigation, patent conflict, patent opposition or other
actions, for the technology licensed to us. We believe that these costs as well
as other costs under our license and option agreements will be substantial and
may increase significantly during the next several years. Our inability or
failure to pay any of these costs with respect to any drug candidate could
result in the termination of the license or option agreement for the drug
candidate.
IF WE ARE NOT ABLE TO SUCCESSFULLY MANUFACTURE OUR DRUG CANDIDATES, OUR BUSINESS
MAY NEVER ACHIEVE PROFITABILITY.
We do not have any internal manufacturing capacity and we rely on third
party manufacturers for the manufacture of all of our clinical trial material.
We plan to expand our existing relationships or to establish relationships with
additional third party manufacturers for products that we develop. The terms of
the Abbott Alliance provide that Abbott Laboratories will manufacture all or a
portion of our product requirements for those products that are or become
covered by the Abbott Alliance. We may be unable to maintain our relationship
with Abbott or to establish or maintain relationships with other manufacturers
on acceptable terms, and manufacturers may be unable to manufacture products in
commercial quantities on a cost effective basis. Our dependence on third parties
for the manufacture of our products may adversely affect our profit margins and
our ability to develop and commercialize products on a timely and competitive
basis. Further, third party manufacturers may encounter manufacturing or quality
control problems in manufacturing our products and may be unable to maintain the
necessary governmental licenses and approvals to continue manufacturing our
products.
BECAUSE WE DEPEND ON THIRD PARTIES, WE MAY BE UNABLE TO SUCCESSFULLY MARKET,
SELL OR DISTRIBUTE PRODUCTS WE DEVELOP.
In the United States, we currently intend to market the products
covered by the Abbott Alliance in collaboration with Abbott and to market other
products that we successfully develop, that do not become part of the Abbott
Alliance, through a direct sales force or through arrangements or collaborations
with third parties. Outside of the United States, we expect Abbott to market
products covered by the Abbott Alliance and, for any other drug candidates that
we successfully develop that do not become part of the Abbott Alliance, we
intend to market and sell through arrangements or collaborations with third
parties. In addition, we expect Abbott to handle the distribution and sale of
products covered by the Abbott Alliance both inside and outside the United
States. With respect to the United States, our ability to market the products
16
<Page>
that we successfully develop may be contingent on recruitment, training and
deployment of a sales and marketing force as well as the performance of Abbott
under the Abbott Alliance. We may be unable to establish marketing or sales
capabilities or to maintain arrangements or enter into new arrangements with
third parties to perform those activities on favorable terms. In addition, third
parties may have significant control or influence over important aspects of the
commercialization of our drug candidates, including market identification,
marketing methods, pricing, composition of sales force and promotional
activities. We may have limited control over the amount and timing of resources
that a third party devotes to our products. Our business may never achieve
profitability if we fail to establish or maintain a sales force and marketing,
sales and distribution capabilities.
BECAUSE WE DEPEND ON THIRD PARTIES FOR THE DISCOVERY AND DEVELOPMENT OF DRUG
CANDIDATES, WE MAY NOT SUCCESSFULLY ACQUIRE ADDITIONAL DRUG CANDIDATES OR
DEVELOP OUR CURRENT DRUG CANDIDATES.
We do not currently intend to engage in drug discovery. Our strategy
for obtaining additional drug candidates is to utilize the relationships of our
management team and scientific consultants to identify drug candidates for
in-licensing from companies, universities, research institutions and other
organizations. We may not succeed in acquiring additional drug candidates on
acceptable terms or at all.
Because we have engaged and intend to continue to engage third party
contract research organizations and other third parties to help us develop our
drug candidates, many important aspects of our drug development programs have
been and will continue to be outside of our direct control. In addition, the
contract research organizations may not perform all of their obligations under
arrangements with us. If the contract research organizations do not perform
clinical trials in a satisfactory manner or breach their obligations to us, the
development and commercialization of any drug candidate may be delayed or
precluded.
BECAUSE WE MAY NOT BE ABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND ADVISORS, WE
MAY NOT SUCCESSFULLY DEVELOP OUR DRUG CANDIDATES OR ACHIEVE OUR OTHER BUSINESS
OBJECTIVES.
We are highly dependent on our senior management and scientific staff,
including Dr. David Barry, our Chairman and Chief Executive Officer. The loss of
the services of any member of our senior management or scientific staff may
significantly delay or prevent the achievement of product development and other
business objectives. In order to pursue our drug development programs and
marketing plans, we will need to hire additional qualified scientific and
management personnel. Competition for qualified individuals is intense and we
face competition from numerous pharmaceutical and biotechnology companies,
universities and other research institutions. If we are not able to attract and
retain these individuals we may not be able to successfully commercialize our
drug candidates.
17
<Page>
HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT PRACTICES ARE
UNCERTAIN AND MAY DELAY OR PREVENT THE COMMERCIALIZATION OF OUR DRUG CANDIDATES.
The efforts of governments and third party payors to contain or reduce
the cost of health care will continue to affect the business and financial
condition of drug companies. A number of legislative and regulatory proposals to
change the health care system have been considered in recent years. In addition,
an increasing emphasis on managed care in the United States has and will
continue to increase pressure on drug pricing. We cannot predict whether
legislative or regulatory proposals will be adopted or what effect those
proposals or managed care efforts may have on our business. The announcement
and/or adoption of proposals could have an adverse effect on our ability to earn
profits and financial condition. Sales of prescription drugs depend
significantly on the availability of reimbursement to the consumer from third
party payors, such as government and private insurance plans. These third party
payors frequently require that drug companies give them predetermined discounts
from list prices, and they are increasingly challenging the prices for medical
products and services. Present combination treatment regimens for the treatment
of HIV are expensive and costs may increase as new combinations are developed.
These costs have resulted in limitations in the reimbursement available from
third party payors for the treatment of HIV infection, and we expect these
limitations will continue in the future. Third party payers may not consider
products we may bring to the market cost effective and may not reimburse the
consumer sufficiently to allow us to sell our products on a profitable basis.
IF OUR PRODUCTS DO NOT ACHIEVE MARKET ACCEPTANCE, OUR BUSINESS MAY NEVER ACHIEVE
PROFITABILITY.
Our success will depend on the market acceptance of any products we
develop. The degree of market acceptance will depend on a number of factors,
including:
o the receipt and scope of regulatory approvals,
o the establishment and demonstration in the medical community of
the safety and effectiveness of our products and their potential
advantages over existing treatment methods, and
o reimbursement policies of government and third party payors.
Physicians, patients, payors or the medical community in general may
not accept or utilize any product that we may develop.
WE MAY NOT HAVE ADEQUATE INSURANCE PROTECTION AGAINST PRODUCT LIABILITY.
Our business exposes us to potential product liability risks that are
inherent in the testing of drug candidates and the manufacturing and marketing
of drug products and we may face product liability claims in the future. We
currently have only limited product liability insurance. We may be unable to
maintain our existing insurance and/or obtain additional insurance in the future
at a reasonable cost or in sufficient amounts to protect against potential
losses. A successful product liability claim or series of claims brought against
us could require us to pay substantial amounts that would decrease our
profitability, if any.
18
<Page>
WE MAY INCUR SUBSTANTIAL COSTS RELATED TO OUR USE OF HAZARDOUS MATERIALS.
We use hazardous materials, chemicals, viruses and various radioactive
compounds in our drug development programs. Although we believe that our
handling and disposing of these materials comply with state and federal
regulations, the risk of accidental contamination or injury still exists. We
could be held liable for any damages or fines that result from any accidental
contamination or injury and the liability could exceed our resources.
OUR CONTROLLING STOCKHOLDERS MAY MAKE DECISIONS YOU DO NOT CONSIDER TO BE IN
YOUR BEST INTEREST.
As of October 12, 2001, our directors, executive officers and their
affiliates, excluding Abbott and Warburg Pincus Private Equity VIII, L.P., owned
approximately 12.8% of our outstanding common stock. Abbott owned approximately
10.3% of our outstanding common stock and Warburg Pincus owned approximately
30.4% of our outstanding common stock. Under the terms of the Abbott Alliance,
Abbott has the right to purchase additional shares of our common stock up to a
maximum aggregate percentage of 21% of our outstanding common stock and has
rights to purchase shares directly from us in order to maintain its existing
level of ownership. For so long as Warburg Pincus continues to own at least
5,846,222 shares of our common stock and at least 10% of our outstanding common
stock, Warburg Pincus has the right to participate in any sales of equity
securities by Triangle, other than sales in connection with a registered
underwritten offering, a merger or similar transaction or a stock option or
similar plan, in proportion to the percentage of all outstanding securities of
Triangle held by Warburg Pincus at the time of the transaction. Abbott has the
right to designate one person to serve as a member of our Board of Directors and
Warburg Pincus has the right to designate two people to serve as members of our
Board of Directors. As a result, our controlling stockholders are able to
significantly influence all matters requiring stockholder approval, including
the election of directors and the approval of significant corporate
transactions. This concentration of ownership could also delay or prevent a
change in control of Triangle that may be favored by other stockholders.
THE MARKET PRICE OF OUR STOCK MAY FALL AS A RESULT OF MARKET VOLATILITY AND
FUTURE DEVELOPMENTS IN OUR INDUSTRY.
The market price of our common stock is likely to be volatile and could
fluctuate widely in response to many factors, including:
o announcements of the results of clinical trials by us or our
competitors,
o announcements of the timing of regulatory submissions and/or
approvals by us or our competitors,
o developments with respect to patents or proprietary rights,
o announcements of technological innovations by us or our
competitors,
o announcements of new products or new contracts by us or our
competitors,
19
<Page>
o actual or anticipated variations in our operating results due to
the level of development expenses and other factors,
o changes in financial estimates by securities analysts and whether
our earnings meet or exceed analysts' estimates,
o conditions and trends in the pharmaceutical and other industries,
o new accounting standards,
o general economic, political and market conditions and other
factors, and
o the occurrence of any of the risks described in these "Risk
Factors."
In the past, following periods of volatility in the market price of the
securities of companies in our industry, securities class action law suits have
often been brought against those companies. If we face litigation in the future,
it would result in substantial costs and a diversion of management attention and
resources, which would negatively impact our business.
APPROXIMATELY 28,000,000 SHARES OF OUR COMMON STOCK MAY BE SOLD WITHOUT
RESTRICTION AND APPROXIMATELY 38,950,000 SHARES ARE REGISTERED FOR SALE. SALES
OF A LARGE NUMBER OF OUR SHARES MAY CAUSE OUR STOCK PRICE TO FALL EVEN IF OUR
BUSINESS IS DOING WELL.
If our stockholders sell a substantial number of shares of our common
stock in the public market, the market price of our common stock could decline.
As of October 12, 2001, there were 76,816,387 shares of common stock
outstanding, of which approximately 28,000,000 were immediately eligible for
resale in the public market without restriction. Holders of approximately
42,200,000 shares, including the shares offered by this prospectus, have rights
to cause us to register their shares for sale to the public. We have filed
registration statements to register the sale of approximately 38,950,000 of
these shares, including the shares offered by this prospectus. In addition,
Abbott will have the right on or after June 30, 2002 to cause us to register for
resale in the public market the 6,571,428 shares of common stock purchased at
the closing of the Abbott Alliance.
Declines in our stock price might harm our ability to issue equity or
secure other types of financing arrangements. The price at which we issue shares
is generally based on the market price of our common stock and a decline in our
stock price would result in our needing to issue a greater number of shares to
raise a given amount of funds or acquire a given amount of goods or services.
For this reason, a decline in our stock price might also result in increased
ownership dilution to our stockholders. A low stock price might impair our
ability to raise capital under our Facility because Ramius Securities is not
obligated to sell our common stock under the Facility on a given day if our
average stock price during that day is less than $4.00 per share or less than
any higher floor price specified by us.
The perceived risk associated with the possible sale of a large number
of shares under the Facility could cause some of our stockholders to sell their
stock, causing the price of our stock to decline. In addition, actual or
anticipated downward pressure on our stock price could cause some institutions
or individuals to engage in short sales of our common stock, which may itself
cause the price of our stock to decline.
20
<Page>
ANTITAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD DELAY,
DEFER OR PREVENT A TENDER OFFER OR TAKEOVER ATTEMPT THAT YOU CONSIDER TO BE IN
YOUR BEST INTEREST.
We have adopted a number of provisions that could have antitakeover
effects. We have adopted a preferred stock purchase rights plan, commonly
referred to as a "poison pill." The rights plan is intended to deter an attempt
to acquire Triangle in a manner or on terms not approved by the Board of
Directors. The rights plan will not prevent an acquisition of Triangle which is
approved by the Board of Directors. Our charter authorizes the Board of
Directors to determine the terms of any shares of undesignated preferred stock
and issue them without stockholder approval. The issuance of preferred stock may
make it more difficult for a third party to acquire, or may discourage a third
party from acquiring, voting control of Triangle. Our bylaws divide the Board of
Directors into three classes of directors with each class serving a three year
term. These and other provisions of our charter and our bylaws, as well as
provisions of Delaware law, could delay or impede the removal of incumbent
directors and could make more difficult a merger, tender offer or proxy contest
involving Triangle, even if the events could be beneficial to our stockholders.
These provisions could also limit the price that investors might be willing to
pay for our common stock.
III. FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical facts, included in, or incorporated by
reference into this prospectus, are forward-looking statements. In addition,
when we use the words "anticipate," "estimate," "project," and similar
expressions in this document, we are identifying forward-looking statements.
These forward-looking statements are subject to various risks and uncertainties
and are based on our assumptions. Should one or more of these risks or
uncertainties materialize, or should our underlying assumptions prove incorrect,
actual results may vary materially from those contained in these forward looking
statements. We cannot assure you that our expectations will prove to have been
correct. We have outlined risks we can identify under "Risk Factors," which may
cause our or our industry's actual results, levels of activity, performance or
achievements to be materially different from future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of these
statements. We are under no duty to update any of the forward-looking statements
after the date of this prospectus or to conform these statements to actual
results unless required by law.
IV. USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by
the selling stockholders.
21
<Page>
V. SELLING STOCKHOLDERS
We are registering all 28,301,887 shares of common stock covered by
this prospectus on behalf of the selling stockholders named in the table below.
We issued and sold all of the shares to the selling stockholders in a private
placement completed in two stages. We completed the first stage on August 24,
2001 by issuing 9,628,002 shares and completed the second stage on October 10,
2001 by issuing 18,673,885 shares. We have registered the shares of common stock
to permit the selling stockholders and their pledgees, donees, transferees or
other successors-in-interest that receive their shares from a selling
stockholder as a gift, partnership distribution or other non-sale related
transfer after the date of this prospectus to resell the shares when they deem
appropriate.
We have agreed to file any amendments and supplements to the
registration statement that are necessary to keep the registration statement
effective until the earlier of the date on which all of the shares may be sold
under Rule 144 under the Securities Act or two years from the effective date of
the registration statement.
The following table contains:
o the name of each of the selling stockholders,
o the number of shares owned by each of the selling stockholders as
of October 12, 2001,
o the number of shares that may be offered under this prospectus,
and
o the number of shares of our common stock owned by each of the
selling stockholders after this offering is completed.
Except as described in the table below, none of the selling
stockholders has had a material relationship with us within the past three years
other than as a result of the ownership of the shares or other securities of
Triangle. The number of shares in the column "Number of Shares Being Offered"
represent all of the shares that each selling stockholder may offer under this
prospectus. We do not know how long the selling stockholders will hold the
shares before selling them or if they will sell them and we currently have no
agreements, arrangements or understandings with any of the selling stockholders
regarding the sale of any of the shares other than our agreement to register the
shares covered by this prospectus.
The registration statement of which this prospectus is a part will also
cover any additional shares of common stock which are issued to the selling
stockholders as a result of any stock dividend, stock split, recapitalization or
other similar transaction which results in an increase in the number of
Triangle's outstanding shares of common stock.
Except as indicated in the table below, each person has sole investment
and voting power with respect to the shares listed in the table. For purposes of
this table, a person or group of persons is deemed to have "beneficial
ownership" of any shares which the person has the right to acquire within 60
days. Percentage ownership is based on 76,816,387 shares of common stock of
Triangle outstanding on October 12, 2001. For purposes of computing the
percentage of outstanding shares held by each person named below, any security
which a person has the right to acquire within 60 days is deemed to be
outstanding for the purpose of computing the
22
<Page>
percentage ownership for that person, but is not deemed to be outstanding for
the purpose of computing the percentage ownership for other persons.
<Table>
<Caption>
SHARES SHARES
BENEFICIALLY OWNED NUMBER OF BENEFICIALLY OWNED
PRIOR TO OFFERING SHARES BEING AFTER OFFERING (1)
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
----------------------------------------------- ----------- ----------- -------------- ----------- ----------
Caduceus Capital II, L.P. 950,000 1.2% 540,000 410,000 *
PW Eucalyptus Fund, L.L.C. 1,940,000 2.5 940,000 1,000,000 1.3%
PW Eucalyptus Fund, Ltd. 227,000 * 147,000 80,000 *
QFinance, Inc. (2) 3,803,000 4.9 2,275,000 1,528,000 2.0
Warburg Pincus Private Equity VIII, L.P. (3) 23,384,887 30.4 23,384,887 0 *
Winchester Global Trust Company Limited as 1,825,000 2.4 1,015,000 810,000 1.1
Trustee for Caduceus Capital Trust
TOTAL 32,129,887 28,301,887 3,828,000
========== ========== =========
</Table>
----------
* Represents beneficial ownership of less than one percent.
(1) Assumes the sale of all shares offered by this prospectus and no other
purchases or sales of Triangle's common stock.
(2) Includes 20,000 shares of common stock and 8,000 shares of common stock
issuable upon the exercise of options beneficially owned by Dennis B. Gillings.
QFinance, Inc. is a wholly-owned subsidiary of Quintiles Transnational Corp. Dr.
Gillings, a director of Triangle, is Chairman of Quintiles Transnational Corp.
Dr. Gillings disclaims beneficial ownership of shares beneficially owned by
QFinance, Inc.
(3) Warburg, Pincus & Co. is the sole general partner of Warburg Pincus Private
Equity VIII, L.P., which is managed by Warburg Pincus LLC. Lionel I. Pincus is
the managing partner of Warburg, Pincus & Co. and the managing member of Warburg
Pincus LLC, and may be deemed to control both entities. Jonathan S. Leff, a
director of Triangle, is a general partner of Warburg, Pincus & Co. and a
managing director and member of Warburg Pincus LLC. Stewart J. Hen, a Vice
President of Warburg Pincus LLC, is also a director of Triangle.
VI. PLAN OF DISTRIBUTION
The selling stockholders or donees, pledgees or transferees of any
selling stockholders may effect the sale or distribution of the shares
directly to purchasers as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions,
which may involve block transactions, or
(i) on any exchange or in the over-the-counter market,
(ii) in transactions otherwise than in the over-the counter
market,
(iii) through the writing of put or call options, whether the
options are listed on an options exchange or otherwise,
(iv) through the distribution of the shares by any selling
stockholder to its partners, members or shareholders, or
23
<Page>
(v) through a combination of any of the above.
Any of these transactions may be effected at market prices, at prices
related to market prices, at prices determined at the time of sale or at
negotiated or fixed prices, in each case as determined by the selling
stockholder or by agreement between the selling stockholder and underwriters,
brokers, dealers, agents or purchasers. If the selling stockholders effect
transactions by selling shares to or through underwriters, brokers, dealers or
agents, the underwriters, brokers, dealers or agents may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of shares for whom they may act as agent, which
discounts, concessions or commissions as to particular underwriters, brokers,
dealers or agents may be in excess of those customary in the types of
transactions involved. Brokers, dealers or agents and any other participating
brokers, dealers or the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, in connection with
sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act. Because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with hedging
transactions, broker-dealers or other financial institutions may engage in short
sales of Triangle's common stock in the course of hedging the positions they
assume with selling stockholders. The selling stockholders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery to the broker-dealer or other financial
institution of shares offered under this prospectus. The broker-dealer or other
financial institution may then resell those shares pursuant to this prospectus,
as supplemented or amended to reflect the transaction.
Under the securities laws of some states, the shares may be sold in
those states only through registered or licensed brokers or dealers. In
addition, in some states the shares may not be sold unless the shares have been
registered or qualified for sale in the state or an exemption from registration
or qualification is available and is complied with.
Selling stockholders may also resell all or a portion of the shares in
open market transactions in reliance on Rule 144 under the Securities Act,
rather than under this prospectus, provided they meet the criteria and conform
to the requirements of Rule 144.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, as amended, any person engaged in the distribution of the shares
may not simultaneously engage in market making activities with respect to our
common stock for a period of two business days prior to the commencement of the
distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
selling stockholders. We will make copies of this prospectus available to the
selling stockholders and have informed them of the
24
<Page>
need to deliver copies of this prospectus to purchasers at or prior to the time
of any sale of the shares.
We will pay all of the expenses incident to the registration, offering
and sale of the shares to the public under this prospectus other than
commissions, fees and discounts of underwriters, brokers, dealers and agents. We
have agreed to indemnify the selling stockholders against a number of
liabilities, including liabilities under the Securities Act. The selling
stockholders may agree to indemnify any agent, dealer or broker that
participates in sales of the shares against liabilities, including liabilities
under the Securities Act. We will not receive any of the proceeds from the sale
of any of the shares by the selling stockholders.
We have agreed to keep the registration statement of which this
prospectus constitutes a part effective until the earlier of the date on which
all of the shares may be sold under Rule 144 under the Securities Act or two
years from the effective date of the registration statement.
VII. LEGAL MATTERS
For purposes of this offering, Smith, Anderson, Blount, Dorsett,
Mitchell & Jernigan, L.L.P., Raleigh, North Carolina, is giving its opinion as
to the legality of the selling stockholders' shares.
VIII. EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K of Triangle for the year ended December 31,
2000, have been incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
auditing and accounting.
IX. WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
You may read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public on the SEC's website at
http://www.sec.gov.
X. INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered part of this prospectus. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 until this offering is complete.
1. Our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2001 filed on May 10, 2001;
25
<Page>
2. Our Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2001 filed on August 13, 2001;
3. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 filed on February 26, 2001, including
information in our Definitive Proxy Statement in connection
with our 2001 Annual Meeting of Stockholders;
4. Our Current Reports on Form 8-K filed March 21, 2001, August
7, 2001, August 10, 2001, August 24, 2001 and October 10,
2001; and
5. The description of our common stock contained in our
Registration Statements on Form 8-A filed October 18, 1996,
February 10, 1999, June 18, 1999 and August 24, 2001.
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
We will provide a copy of these filings, at no cost, if you so request
by writing or telephoning us at:
Triangle Pharmaceuticals, Inc.
4611 University Drive
P.O. Box 50530
Durham, North Carolina, 27717
(919) 493-5980
Attn: General Counsel
26
<Page>
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT AN OFFER TO BUY, THESE SECURITIES IN ANY STATE IN WHICH
THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER THAT
DATE.
28,301,887 Shares
TRIANGLE
PHARMACEUTICALS, INC.
COMMON STOCK
-----------------------------
PROSPECTUS
-----------------------------
OCTOBER ___, 2001
<Page>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All the amounts shown are estimates,
except for the registration fee.
Registration Fee.................................. $ 27,241
Printing and engraving expenses................... 5,000
Legal fees and expenses........................... 10,000
Accounting fees and expenses...................... 5,000
Transfer Agent and Registrar Fees................. 10,000
Miscellaneous Expenses............................ 12,759
-------------------
TOTAL.................................... $ 70,000
===================
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of Triangle under certain conditions
and subject to certain limitations. Section 145 of the Delaware General
Corporation Law also provides that a corporation has the power to purchase and
maintain insurance on behalf of its officers and directors against any liability
asserted against the person and incurred by him or her in his or her capacity as
an officer or director, or arising out of his or her status, whether or not the
corporation would have the power to indemnify him or her against the liability
under the provisions of Section 145 of the Delaware General Corporation Law.
Article VII, Section (1) of the Restated Bylaws of Triangle provides
that Triangle shall indemnify its directors and executive officers to the
fullest extent not prohibited by the Delaware General Corporation Law. The
rights to indemnity thereunder continue as to a person who has ceased to be a
director, officer, employee or agent and inure to the benefit of the heirs,
executors and administrators of the person. In addition, expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of Triangle (or was serving at Triangle's request
as a director or officer of another corporation) shall be paid by Triangle in
advance of the final disposition of the action, suit or proceeding on receipt of
an undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately be determined that he or she is not entitled to be indemnified
by Triangle as authorized by the relevant section of the Delaware General
Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, Article 5, Section (a) of Triangle's Second Restated Certificate of
Incorporation provides that a director of Triangle shall not be personally
liable for monetary damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to Triangle
or its stockholders, (ii) for acts or omissions not in good faith or acts or
omissions that involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware
II-1
<Page>
General Corporation Law or (iv) for any transaction from which the director
derived any improper personal benefit.
Triangle has entered into indemnification agreements with its directors
and executive officers. Generally, the indemnification agreements attempt to
provide the maximum protection permitted by Delaware law as it may be amended
from time to time. Under such additional indemnification provisions, however, an
individual will not receive indemnification for judgments, settlements or
expenses if he or she is found liable to Triangle (except to the extent the
court determines he or she is fairly and reasonably entitled to indemnity for
expenses), for settlements not approved by Triangle or for settlements and
expenses if the settlement is not approved by the court. The indemnification
agreements provide for Triangle to advance to the individual any and all
reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding. In order to
receive an advance of expenses, the individual must submit to Triangle copies of
invoices presented to him or her for such expenses. Also, the individual must
repay such advances on a final judicial decision that he or she is not entitled
to indemnification.
The Registrant has an insurance policy covering the directors and
officers of the Registrant with respect to certain liabilities, including
liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS.
The following documents, unless otherwise indicated, are filed
with and made a part of this registration statement:
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Second Restated Certificate of Incorporation of Triangle
Pharmaceuticals. Reference is made to Exhibit 3.2 to the
Registration Statement on Form S-1 filed September 9, 1996.
4.2 Certificate of Amendment to Second Restated Certificate of
Incorporation of Triangle Pharmaceuticals. Reference is made
to the Current Report on Form 8-K filed October 10, 2001.
4.3 Restated Bylaws of Triangle Pharmaceuticals. Reference is made
to Exhibit 3.4 to the Registration Statement on Form S-1 filed
September 9, 1996.
4.4 Rights Agreement, dated February 1, 1999 as amended on June 2,
1999 and August 24, 2001, between Triangle Pharmaceuticals and
American Stock Transfer & Trust Company. Reference is made to
the Current Reports on Form 8-K, filed February 10, 1999, June
18, 1999 and August 24, 2001.
II-2
<Page>
4.5 Purchase Agreement dated August 24, 2001 between Triangle
Pharmaceuticals and Warburg Pincus Private Equity VIII, L.P.
Reference is made to Exhibit 10.1 to the Current Report on
Form 8-K filed August 24, 2001.
4.6 Form of Purchase Agreement, each dated August 30, 2001,
between Triangle Pharmaceuticals and each of QFinance, Inc.,
Caduceus Capital II, L.P., Winchester Global Trust Company
Limited as Trustee for Caduceus Capital Trust, PW Eucalyptus
Fund, L.L.C., and PW Eucalyptus Fund, Ltd. Reference is made
to Exhibit 10.1 to the Current Report on Form 8-K filed
October 10, 2001.
5.1 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to pages II-5 and II-6 of
this Registration Statement.
ITEM 17. UNDERTAKINGS.
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:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(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; and
(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 (1)(i) and (1)(ii) 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 under Section 13 or 15(d) of the Securities
Exchange Act of 1934 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
II-3
<Page>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
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
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, Delaware Corporation Law, the
Purchase Agreements or otherwise, the Registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefor, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the question has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Durham, State of North Carolina, on the 18th day of
October, 2001.
TRIANGLE PHARMACEUTICALS, INC.
By: /s/ DAVID W. BARRY
----------------------------------------
David W. Barry
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, David W.
Barry and Chris A. Rallis, and each of them acting individually, as his
attorney-in-fact, each with full power of substitution and resubstitution, for
him or her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith as fully to all
intents and purpose as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitute and substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<Table>
<Caption>
SIGNATURE TITLE
/s/ David W. Barry Chairman of the Board and Chief Executive Officer October 18, 2001
--------------------------------------- (Principal Executive Officer)
David W. Barry
/s/ Chris A. Rallis Director, President and Chief Operating Officer October 18, 2001
---------------------------------------
Chris A. Rallis
/s/ Robert F. Amundsen, Jr. Executive Vice President and Chief Financial October 18, 2001
--------------------------------------- Officer (Principal Financial and Accounting
Robert F. Amundsen, Jr. Officer)
/s/ Anthony B. Evnin Director October 18, 2001
---------------------------------------
Anthony B. Evnin
/s/ Standish M. Fleming Director October 18, 2001
---------------------------------------
Standish M. Fleming
II-5
<Page>
/s/ Dennis B. Gillings Director October 18, 2001
---------------------------------------
Dennis B. Gillings
/s/ Henry G. Grabowski Director October 18, 2001
---------------------------------------
Henry G. Grabowski
/s/ Stewart J. Hen Director October 18, 2001
---------------------------------------
Stewart J. Hen
/s/ Jonathan S. Leff Director October 18, 2001
---------------------------------------
Jonathan S. Leff
/s/ George McFadden Director October 18, 2001
---------------------------------------
George McFadden
/s/ James L. Tyree Director October 18, 2001
---------------------------------------
James L. Tyree
</Table>
II-6
<Page>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Second Restated Certificate of Incorporation of Triangle
Pharmaceuticals. Reference is made to Exhibit 3.2 to the
Registration Statement on Form S-1 filed September 9, 1996.
4.2 Certificate of Amendment to Second Restated Certificate of
Incorporation of Triangle Pharmaceuticals. Reference is made
to the Current Report on Form 8-K filed October 10, 2001.
4.3 Restated Bylaws of Triangle Pharmaceuticals. Reference is made
to Exhibit 3.4 to the Registration Statement on Form S-1 filed
September 9, 1996.
4.4 Rights Agreement, dated February 1, 1999 as amended on June 2,
1999 and August 24, 2001, between Triangle Pharmaceuticals and
American Stock Transfer & Trust Company. Reference is made to
the Current Reports on Form 8-K, filed February 10, 1999, June
18, 1999 and August 24, 2001.
4.5 Purchase Agreement dated August 24, 2001 between Triangle
Pharmaceuticals and Warburg Pincus Private Equity VIII, L.P.
Reference is made to Exhibit 10.1 to the Current Report on
Form 8-K filed August 24, 2001.
4.6 Form of Purchase Agreement, each dated August 30, 2001,
between Triangle Pharmaceuticals and each of QFinance, Inc.,
Caduceus Capital II, L.P., Winchester Global Trust Company
Limited as Trustee for Caduceus Capital Trust, PW Eucalyptus
Fund, L.L.C., and PW Eucalyptus Fund, Ltd. Reference is made
to Exhibit 10.1 to the Current Report on Form 8-K filed
October 10, 2001.
5.1 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to pages II-5 and II-6 of
this Registration Statement.
II-7