As filed with the Securities and Exchange Commission on June 20, 1997
Registration No. 33-93914
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DURA PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-3645543
(State or other juris- (I.R.S. Employer
diction of incorpo- Identification No.)
ration or organization)
5880 Pacific Center Blvd., San Diego, California 92121
(619) 457-2553
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Mitchell R. Woodbury
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
DURA PHARMACEUTICALS, INC.
5880 Pacific Center Blvd., San Diego, California 92121
(619) 457-2553
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
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Copies to:
Craig S. Andrews, Esq.
Faye H. Russell, Esq.
John R. Cook, Esq.
BROBECK, PHLEGER & HARRISON LLP
550 West C Street, Suite 1300
San Diego, California 92101
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: /x/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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637,444 SHARES
DURA PHARMACEUTICALS, INC.
COMMON STOCK
(NO PAR VALUE)
----------------
This Prospectus relates to the public offering, which is not being
underwritten, of 637,444 shares of Common Stock, no par value, of Dura
Pharmaceuticals, Inc. ("Dura" or the "Company"). Of these 637,444 shares, 8,068
shares are currently issued and outstanding (the "Issued Shares") and are held
by certain shareholders of the Company who received such shares pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act") provided by Section 4(2) thereof. In addition,
204,014 shares (the "Warrant Shares") are issuable by the Company upon the
exercise of outstanding warrants to purchase Common Stock (the "Warrants"). The
Issued Shares and Warrant Shares (collectively, the "Shares") may be offered by
holders of the Issued Shares and current holders of the Warrants who
subsequently exercise the Warrants to purchase Warrant Shares (collectively,
"Selling Shareholders"). The Shares are being registered by the Company
pursuant to registration rights obligations with the Selling Shareholders. See
"Selling Shareholders."
The number of shares that may be offered by the Selling Shareholders
reflects the 2-for-1 stock split in the form of a 100% stock dividend of the
Company's Common Stock that was distributed on July 1, 1996 to shareholders of
record on June 17, 1996. As of the date of this prospectus, a total of 424,944
shares which were originally registered have been sold by the Selling
Shareholders and 418 have been cancelled.
The Shares may be offered by the Selling Shareholders from time to time in
transactions on the Nasdaq National Market ("Nasdaq"), in the over-the-counter
market, in negotiated transactions or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices.
The Selling Shareholders may effect such transactions by selling the Shares to
or through broker-dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they may sell as principals or both (which compensation as to
a particular broker-dealer might be in excess of customary commissions). See
"Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed, among
other things, to bear certain expenses (other than underwriting discounts and
commission and brokerage commissions and fees) in connection with the
registration and sale of the Shares being offered by the Selling Shareholders.
See "Selling Shareholders."
Dura Common Stock is traded on Nasdaq under the symbol "DURA." On June 17,
1997, the last sale price of Dura Common Stock as reported on Nasdaq was $41.63
per share.
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution."
----------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGES 5 TO 10 FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS
OF THE COMMON STOCK OFFERED HEREBY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is June 20, 1997.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING SHAREHOLDER OR BY ANY OTHER PERSON. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE
MADE.
--------------------------------
ENTEX-Registered Trademark- is a registered trademark of the Company. The
Company claims common law trademark rights to Spiros-TM- and Healthco
HomeRx-TM-. This Prospectus also includes names and trademarks of companies
other than the Company.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information may be inspected at the
Commission's Public Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the Commission's regional offices at
7 World Trade Center, 13th Floor, New York, New York 10048; and Northwest Atrium
Center, 500 West Madison Street, Room 1400, Chicago, Illinois 60661-2511.
Copies of such materials can also be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Common Stock is traded on the Nasdaq
National Market, and copies of such materials can also be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus:
(1) The Annual Report of the Company on Form 10-K for the fiscal year
ended December 31, 1996;
(2) The Quarterly Report of the Company Form 10-Q for the quarter ended
March 31, 1997;
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(3) The Current Report of the Company on Form 8-K dated May 7, 1997; and
(4) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed on January 21, 1992.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this Offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement incorporated herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Mitchell R. Woodbury, Senior Vice President
and General Counsel, at Dura Pharmaceuticals, Inc., 5880 Pacific Center
Boulevard, San Diego, California 92121 or by telephone at (619) 457-2553.
THE COMPANY
THIS PROSPECTUS MAY CONTAIN, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE THOSE DISCUSSED UNDER "RISK FACTORS," AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS OR DOCUMENTS INCORPORATED BY REFERENCE
HEREIN. THE COMPANY UNDERTAKES NO OBLIGATION TO RELEASE PUBLICLY THE RESULTS OF
ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES ARISING AFTER THE DATE HEREOF.
Dura Pharmaceuticals, Inc. ("Dura" or the "Company") is a specialty
respiratory pharmaceutical and pulmonary drug delivery company. The Company is
engaged in marketing prescription products to physicians in the U.S. who treat
patients suffering from asthma, hay fever, chronic obstructive pulmonary
disease, the common cold and related respiratory ailments (the "U.S. Respiratory
Market"). Dura has strategically focused on the U.S. Respiratory Market because
of its size (approximately $9.5 billion in sales in 1996) and growth
opportunities. Additionally, the fragmented nature of the market and the
identifiable base of physician prescribers allow the Company to achieve
significant market penetration with a specialized sales force.
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The Company currently markets 29 prescription products, including 25 which are
off-patent. The Company also has a separate mail service pharmacy which
dispenses respiratory pharmaceuticals, Health Script Pharmacy Services, Inc.
("Health Script").
Dura employs a dual marketing strategy utilizing its focused field sales
force of approximately 182 people and a dedicated managed care sales and
marketing group that covers managed care organizations and retail pharmacy
chains. Dura's field sales force targets a physician base which includes
approximately 80,000 U.S. allergists, ear, nose and throat physicians ("ENTs"),
pulmonologists and a selected subset of pediatricians and generalist physicians,
who the Company believes collectively write approximately 75% of respiratory
pharmaceutical prescriptions. Dura believes that its field sales force calls on
approximately one-half of the target physician base. The Company's managed care
sales and marketing group concentrates on sales to large regional and national
managed care organizations. The Company expects to continue expanding both the
field sales force and the managed care sales and marketing group as warranted by
market opportunities.
This marketing strategy has allowed Dura to leverage its distribution
capabilities by acquiring the rights to market additional prescription
pharmaceutical products through acquisition, in-license or co-promotion
arrangements. Since 1992, the Company has acquired 21 products targeted at the
U.S. Respiratory Market. In July 1996, the Company acquired from Procter &
Gamble Pharmaceuticals, Inc. ("P&G") worldwide rights to the Entex products,
consisting of four prescription upper respiratory drugs. In September 1996, the
Company acquired from Eli Lilly and Company ("Lilly") U.S. marketing rights to
the antibiotics Keftab and Ceclor CD. The Company began marketing Keftab in
September 1996, and launched Ceclor CD in late October 1996.
Another key component of Dura's strategy is to develop the Spiros pulmonary
drug delivery system ("Spiros"). Spiros is being designed to aerosolize
pharmaceuticals in dry powder formulations for delivery to the lungs while
providing certain advantages over other currently-used methods of pulmonary drug
delivery. The Company has a three-level development program for Spiros which
entails (i) developing, on behalf of Spiros Development Corporation ("Spiros
Corp."), certain drug applications for use in Spiros, including in the near-term
albuterol, beclomethasone and ipratropium, three of the most
frequently-prescribed pharmaceutical agents to treat respiratory conditions,
and, in the longer term, certain proteins and peptides, (ii) licensing Spiros
primarily to pharmaceutical companies, including Mitsubishi Chemical Corporation
and Fujisawa Pharmaceutical Co., Ltd., generally for use with certain of their
proprietary respiratory products, and (iii) developing Spiros, in collaboration
with third parties, for the systemic delivery of compounds through the lungs for
respiratory and non-respiratory indications as an alternative to current
invasive delivery techniques. The Company has licensed certain rights to Spiros
Corp. to continue a significant portion of the development program
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for Spiros, including funding of ongoing and future clinical trials of albuterol
and beclomethasone in a cassette version of Spiros, and formulation, preclinical
development and clinical trials of albuterol, beclomethasone and ipratropium in
a blisterdisk version of Spiros. The Company has the right to purchase all of
the currently outstanding shares of callable common stock of Spiros Corp.
through December 31, 1999 at predetermined prices (the "Purchase Option").
In July 1996, the Company commenced long-term and short-term clinical
trials which, along with earlier studies, are intended to serve as the basis for
the filing of a New Drug Application ("NDA") by Dura in late 1997 seeking United
States Food and Drug Administration ("FDA") approval, on behalf of Spiros Corp.,
to market albuterol in the Spiros cassette system. The patient dosing clinical
studies which the Company believes to be necessary for this submission have been
completed. The Company has also filed on behalf of Spiros Corp., an
Investigational New Drug ("IND") Application for U.S. studies on beclomethasone
in the Spiros cassette system. In the first quarter of 1997, clinical trials of
beclomethasone in the U.S. commenced under this IND. In addition, Dura, on
behalf of Spiros Corp., has performed powder formulation work with the peptide
drug salmon calcitonin which in a clinical trial demonstrated the ability to
develop macromolecule aerosol powder formulation which achieved systemic
delivery using the Spiros technology.
The Company was incorporated under the laws of California in 1981. The
Company's principal executive offices are located at 5880 Pacific Center
Boulevard, San Diego, California 92121. Its telephone number is (619) 457-2553.
RECENT DEVELOPMENTS
On May 7, 1997, the Company acquired from Syntex (USA), Inc., and other
members of the Roche Group ("Roche"), the U.S. rights to the intranasal steroid
products Nasarel-Registered Trademark- and Nasalide-Registered Trademark- for
$70 million, which was paid at closing. Additional future contingent payments
are due through December 1998, subject to the products remaining without a
competing nasal formulation of flunisolide.
In July 1996, the Company acquired from P&G worldwide rights to the Entex
products consisting of four prescription upper respiratory drugs. In September
1996, the Company acquired from Lilly the U.S. rights to the cephalosporin
antibiotics Keftab and Ceclor CD. The U.S. oral antibiotic market was $4.6
billion in 1996, of which $1.3 billion was accounted for by cephalosporin
antibiotics. The Company believes that this acquisition complements its
existing strategy since approximately 70% of antibiotics are prescribed for
respiratory infections. Keftab is an antibiotic indicated for respiratory
tract, skin and soft tissue infections. Ceclor CD is a twice-a-day dosage form
of cefaclor typically taken for seven days. Ceclor-Registered Trademark-,
Lilly's currently marketed cefaclor, is normally taken three times a day for 10
days, and generated $161.0 million in sales in the U.S. for the 12 months ended
June 30, 1996. The Company launched Ceclor CD in late October 1996. The
Company believes these product acquisitions further its strategy of acquiring
prescription pharmaceuticals which are marketed by its sales force to its
targeted physicians. To support the introduction and growth of these products,
the Company intends to increase its field sales force to approximately 250
people during 1997.
The Company recently reported revenues and net income of $104.1 million and
$24.3 million, respectively, for the twelve months ended December 31, 1996,
compared to revenues of $51.5 million and a net loss of $35.8 million,
respectively, for the comparable period of 1995. The Company's revenues and net
income for the first quarter of 1997 totaled $40.9 million and $8.8 million,
respectively, compared to revenues of $18.6 million and net income of $4.1
million for the first quarter of 1996. Increased revenues and net income were
primarily the result of increased sales of newly-acquired products, higher
revenues at Health Script and increased contract revenues.
-5-
In April 1997, the Company entered into a loan agreement with a bank which
provides for the borrowing of up to $50 million on an unsecured basis through
May 1, 1999. Borrowings under the agreement bear interest at the bank's
reference rate or an offshore rate plus 1.5% as selected by the Company. The
agreement places restrictions on the payment of cash dividends and on the
incurrence of additional indebtedness by the Company.
At the Company's 1997 annual meeting of shareholders, the Company's
shareholders approved a proposal to reincorporate the Company as a Delaware
corporation. The Company anticipates that the reincorporation will be completed
by July 1997.
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RISK FACTORS
THIS PROSPECTUS MAY CONTAIN, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE THE FOLLOWING RISK FACTORS AS WELL AS THOSE DISCUSSED
ELSEWHERE IN THIS PROSPECTUS OR DOCUMENTS INCORPORATED BY REFERENCE HEREIN. THE
COMPANY UNDERTAKES NO OBLIGATION TO RELEASE PUBLICLY THE RESULTS OF ANY
REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES
ARISING AFTER THE DATE HEREOF.
REDUCTION IN GROSS MARGINS. There is no proprietary protection for most of
the products sold by the Company and substitutes for such products are sold by
other pharmaceutical companies. The Company expects average selling prices for
many of its products to decline over time due to competitive and reimbursement
pressures. While the Company will seek to mitigate the effect of this decline
in average selling prices, there can be no assurance that the Company will be
successful in these efforts.
THIRD-PARTY REIMBURSEMENT; PRICING PRESSURES. The Company's commercial
success will depend in part on the availability of adequate reimbursement from
third-party health care payors, such as government and private health insurers
and managed care organizations. Third-party payors are increasingly challenging
the pricing of medical products and services. There can be no assurance that
reimbursement will be available to enable the Company to achieve market
acceptance of its products or to maintain price levels sufficient to realize an
appropriate return on the Company's investment in product acquisition,
in-licensing and development. The market for the Company's products may be
limited by actions of third-party payors. For example, many managed health care
organizations are now controlling the pharmaceuticals that are on their
formulary lists. The resulting competition among pharmaceutical companies to
place their products on these formulary lists has created a trend of downward
pricing pressure in the industry. In addition, many managed care organizations
are pursuing various ways to reduce pharmaceutical costs and are considering
formulary contracts primarily with those pharmaceutical companies that can offer
a full line of products for a given therapy sector or disease state. There can
be no assurance that the Company's products will be included on the formulary
lists of managed care organizations or that downward pricing pressure in the
industry generally will not negatively impact the Company's operations.
DEPENDENCE ON ACQUISITION OF RIGHTS TO PHARMACEUTICAL PRODUCTS. The
Company's strategy for growth is dependent, in part, upon acquiring,
in-licensing and co-promoting pharmaceuticals targeted primarily at allergists,
ENTs, pulmonologists and a selected subset of pediatricians and generalist
physicians. Other companies, including those with substantially greater
resources, are competing with the Company for the rights to such products.
There can be no assurance that the Company will be able to acquire, in-license
or co-promote additional pharmaceuticals on acceptable terms, if at all. The
failure of the Company to acquire, in-license, co-promote, develop or market
commercially successful pharmaceuticals would have a material adverse effect on
the Company. Furthermore, there can be no assurance that the Company, once it
has obtained rights to a pharmaceutical product and committed to payment terms,
will be able to generate sales sufficient to create a profit or otherwise avoid
a loss.
DEVELOPMENT RISKS ASSOCIATED WITH SPIROS-TM-. Spiros will require
significant additional development. There can be no assurance that development
of Spiros will be completed successfully, that Spiros will not encounter
problems in clinical trials that will cause the delay or suspension of such
trials, that current or future testing will show Spiros to be safe or
efficacious or that Spiros will receive regulatory approval. In
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addition, regulatory approvals will have to be obtained for each drug to be
delivered through the use of Spiros prior to commercialization. Moreover, even
if Spiros does receive regulatory approval, there can be no assurance that
Spiros will be commercially successful, have all of the patent and other
protections necessary to prevent competitors from producing similar products and
not infringe on patent or other proprietary rights of third parties. The
failure of Spiros to receive timely regulatory approval and achieve commercial
success would have a material adverse effect on the Company.
RISKS ASSOCIATED WITH RECENT ACQUISITIONS. In May 1997, the Company
acquired from Roche exclusive U.S. rights to market and distribute
Nasarel-Registered Trademark- and Nasalide-Registered Trademark- and entered
into a supply agreement with Roche and a manufacturing agreement with third
party manufacturers which terminate in certain circumstances. In addition, in
September 1996, the Company acquired from Lilly exclusive U.S. rights to market
and distribute Keftab and Ceclor CD and entered into a manufacturing agreement
with Lilly which terminates in certain circumstances. Any interruption in the
supply of Nasarel-Registered Trademark-, Nasalide-Registered Trademark-, Keftab
or Ceclor CD due to regulatory or other causes could result in the inability of
the Company to meet demand and could have a material adverse impact on the
Company.
Both Nasarel-Registered Trademark- and Nasalide-Registered Trademark- are
steroid products and Keftab and Ceclor CD are both antibiotics, and the Company
has limited or no experience in marketing such products. There can be no
assurance that the Company will be able to successfully market and distribute
Nasarel-Registered Trademark-, Nasalide-Registered Trademark- and Keftab or that
each of these products will continue to be accepted by the market at the levels
previously achieved by Roche and Lilly or at a level sufficient to maintain
growth of the product. In addition, Ceclor CD has not previously been marketed
to physicians, and no assurance can be given that the Company will be successful
in introducing this product or will be able to successfully compete with
currently available products. Failure to successfully market and sell
Nasarel-Registered Trademark-, Nasalide-Registered Trademark-, Keftab and Ceclor
CD would have a material adverse effect on the Company's business, financial
condition and results of operations.
CUSTOMER CONCENTRATION; CONSOLIDATION OF DISTRIBUTION NETWORK. The
distribution network for pharmaceutical products has in recent years been
subject to increasing consolidation. As a result, a few large wholesale
distributors control a significant share of the market and the number of
independent drug stores and small chains has decreased. Further consolidation
among, or any financial difficulties of, distributors or retailers could result
in the combination or elimination of warehouses thereby stimulating product
returns to the Company. Further consolidation or financial difficulties could
also cause customers to reduce their inventory levels, or otherwise reduce
purchases of the Company's products which could result in a material adverse
effect on the Company's business, financial condition or results of operations.
Dura's customers include McKesson Drug Company, Bergen Brunswig Drug
Company, Cardinal Health Inc., Bindley Western Drug Company and major drug store
chains. For the first quarter of 1997, four wholesale customers individually
accounted for 18%, 17%, 15% and 14% of sales. For 1996, three wholesale
customers individually accounted for 17%, 14% and 13% of sales. Two wholesale
customers individually accounted for 16% and 11% of 1995 sales and three
wholesale customers individually accounted for 21%, 14% and 12% of 1994 sales.
The loss of any of these customer accounts could have a material adverse effect
upon the Company's business, financial condition or results of operations.
SEASONALITY AND FLUCTUATING QUARTERLY RESULTS. Historically, as a result
of the winter cold and flu season, industry-wide demand for respiratory products
has been stronger in the first and fourth quarters than during the second and
third quarters of the year. In addition, variations in the timing and severity
of the winter cold and flu season have influenced the Company's results of
operations in the past. While the growth and productivity of the Company's
sales force and the introduction by the Company of new products have
historically mitigated the impact of seasonality on the Company's results of
operations, recent product acquisitions by the Company are likely to increase
the impact of seasonality on the Company's results of operations. No assurances
can be given that the Company's results of operations will not be materially
adversely affected by the seasonality of product sales.
COMPETITION. Many companies, including large pharmaceutical firms with
financial and marketing resources and development capabilities substantially
greater than those of Dura, are engaged in developing, marketing and
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selling products that compete with those offered by the Company. The selling
prices of such products typically decline as competition increases. Further,
other products now in use or under development by others may be more effective
than Dura's current or future products. The industry is characterized by rapid
technological changes, and competitors may develop their products more rapidly
than Dura. Competitors may also be able to complete the regulatory process
sooner, and therefore, may begin to market their products in advance of Dura's
products. Dura believes that competition among both prescription
pharmaceuticals and pulmonary delivery systems aimed at the asthma and allergy,
cough and cold markets will be based on, among other things, product efficacy,
safety, reliability, availability and price.
Dura directly competes with at least 25 other companies in the U.S. which
are currently engaged in developing, marketing and selling respiratory
pharmaceuticals. Additionally, there are at least 10 companies currently
involved in the development, marketing or sales of dry powder pulmonary drug
delivery systems. There are two types of dry powder inhalers ("DPIs") currently
in commercial use worldwide. In the U.S., only individual dose DPIs are
marketed, including the Rotohaler (developed and marketed by Glaxo Wellcome,
Inc. ("Glaxo")) and the Spinhaler (developed and marketed by Fisons Limited
("Fisons")). The Turbuhaler (developed and marketed by Astra Pharmaceuticals
("Astra")), a multiple dose DPI and the leading DPI in worldwide sales, is
considered the current industry standard. As of the date of this Prospectus, it
is not marketed in the U.S., although the FDA has issued an approvable letter
for the first Turbuhaler product.
DEPENDENCE ON THIRD PARTIES; LIMITED MANUFACTURING EXPERIENCE. The
Company's strategy for development and commercialization of certain of its
products is dependent upon entering into various arrangements with corporate
partners, licensors and others and upon the subsequent success of these
partners, licensors and others in performing their obligations. There can be no
assurance that the Company will be able to negotiate acceptable arrangements in
the future or that such arrangements, or its existing arrangements, will be
successful. In addition, partners, licensors and others may pursue alternative
technologies or develop alternative compounds or drug delivery systems either on
their own or in collaboration with others, including the Company's competitors.
The Company has limited experience manufacturing products for commercial
purposes and currently does not have the capability to manufacture its
pharmaceutical products and therefore is dependent on contract manufacturers for
the production of such products for development and commercial purposes. The
manufacture of the Company's products is subject to current Good Manufacturing
Practice ("CGMP") regulations prescribed by the FDA. The Company relies on a
single manufacturer for each of its products. In the event that the Company is
unable to obtain or retain third-party manufacturing, it may not be able to
commercialize its products as planned. There can be no assurance that the
Company will be able to continue to obtain adequate supplies of such products in
a timely fashion at acceptable quality and prices. Also, there can be no
assurance that the Company will be able to enter into agreements for the
manufacture of future products with manufacturers whose facilities and
procedures must comply with CGMP and other regulatory requirements. The
Company's current dependence upon others for the
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manufacture of its products may adversely affect future profit margins, if any,
on the sale of those products and the Company's ability to develop and deliver
products on a timely and competitive basis.
In June 1995, the Company completed construction of its manufacturing
facility located in a Company-owned building adjacent to its headquarters. The
Company is currently expanding its facilities to provide additional
manufacturing capabilities. The facility initially is intended to be used to
formulate, mill, blend and manufacture drugs to be used with Spiros, pending
regulatory approval. Equipment purchases and validation are currently scheduled
through 1997. The Company's manufacturing facility must be registered with and
licensed by various regulatory authorities and comply with CGMP requirements
prescribed by the FDA and the State of California. Any failure or significant
delay in the validation of or obtaining a satisfactory regulatory inspection of
the new facility could have a material adverse effect on the Company's ability
to manufacture products in connection with Spiros.
MANAGING GROWTH OF BUSINESS. The Company has experienced significant
growth as total revenues increased 80% in 1994, 58% in 1995, 102% for 1996 and
120% for the first quarter of 1997, as compared to prior periods. In May 1997,
the Company acquired rights to Nasarel-Registered Trademark- and
Nasalide-Registered Trademark-. During 1996, the Company executed agreements
relating to the acquisition of the rights to the Entex, Ceclor CD and Keftab
products. During 1995, the Company executed three agreements relating to the
acquisition, in-licensing and co-promotion of products and acquired Health
Script. Due to the Company's emphasis on acquiring and in-licensing respiratory
pharmaceutical products, the Company anticipates that the integration of the
recently acquired businesses and products, as well as any future acquisitions,
will require significant management attention and expansion of its sales force.
The Company's ability to achieve and maintain profitability is based on
management's ability to manage its changing business effectively.
UNCERTAINTY OF PROFITABILITY; NEED FOR ADDITIONAL FUNDS. The Company has
experienced significant operating losses in the past and at March 31, 1997, the
Company's accumulated deficit was $70.2 million. Although the Company has
achieved profitability on an annual basis in 1994, 1995 (prior to the charge of
approximately $43.8 million in the fourth quarter of 1995 in connection with the
exercise of its option to purchase all of the outstanding stock of Dura Delivery
Systems, Inc. ("DDSI") and its cash contribution to Spiros Corp.), 1996 and in
the first quarter of 1997, there can be no assurance that revenue growth or
profitability will continue on a quarterly or annual basis in the future. The
acquisition and in-licensing of products, the expansion of the Company's sales
force in response to acquisition and in-licensing of products, the maintenance
of the Company's existing sales force, the upgrade and expansion of its
facilities, continued pricing pressure and the potential exercise of the Spiros
Purchase Option or the Albuterol Purchase Option (as defined below), as well as
funds that Dura, at its option, may provide for Spiros development, both
internally and through Spiros Corp., will require the commitment of substantial
capital resources and may also result in significant losses. Depending upon,
among other things, the acquisition and in-licensing opportunities available,
the Company may need to raise additional funds for these purposes. The Company
may seek such additional funding through public and private financings,
including equity financings. Adequate funds for these purposes, whether through
financial markets or from other sources, may not be available when needed or on
terms acceptable to the Company. Insufficient funds may require the Company to
delay, scale back or prevent some or all of its product acquisition and
in-licensing programs, the upgrade and expansion of its facilities, the
potential exercise of the Spiros Purchase Option and/or the Albuterol Purchase
Option and further development of Spiros. The Company anticipates that its
existing capital resources, together with cash expected to be generated from
operations and available bank borrowings, should be sufficient to finance its
current operations and working capital requirements through March 1998.
POTENTIAL EXERCISE OF PURCHASE OPTIONS FOR SPIROS CORP. CALLABLE COMMON
STOCK AND ALBUTEROL PRODUCT; DILUTION. Dura has a purchase option with respect
to all of the currently outstanding shares of callable common stock of Spiros
Corp. ("Spiros Purchase Option"). If Dura exercises the Spiros Purchase Option,
it will be required to make a substantial cash payment or to issue shares of
Common Stock, or both. A payment in cash would reduce Dura's capital resources.
A payment in shares of Common Stock would result in a decrease in the percentage
-10-
ownership of Dura's shareholders at that time. The exercise of the Spiros
Purchase Option will likely require Dura to record a significant charge to
earnings and may adversely impact future operating results. If Dura does not
exercise the Spiros Purchase Option prior to its expiration, the Company's
rights in and to Spiros with respect to certain compounds will terminate. Dura
also has the option to provide funding for Spiros development in certain
circumstances. Dura believes that the current funds of Spiros Corp. will be
sufficient to fund product development by Spiros Corp. through 1997.
Development of Spiros Corp. products will require significant additional funds.
As part of the Company's contractual relationship with Spiros Corp., the
Company received an option to purchase certain rights to an albuterol product in
a cassette version of Spiros (the "Albuterol Purchase Option") exercisable at
any time through the earlier of 60 days after FDA approval of such albuterol
product or December 31, 1999. If the Company exercises the Albuterol Purchase
Option, it will be required to make a cash payment of at least $15.0 million
which could have an adverse effect on its capital resources. The Company may not
have sufficient capital resources to exercise the Albuterol Purchase Option
which may result in the Company's loss of valuable rights. In addition,
continuation of development and commercialization of an albuterol product in a
cassette version of Spiros may require substantial additional expenditures by
Dura. As of the date of this Prospectus, Dura has not made any determination as
to the likelihood of its exercise of the Spiros Purchase Option or the Albuterol
Purchase Option.
GOVERNMENT REGULATION; NO ASSURANCE OF FDA APPROVAL. Development, testing,
manufacturing and marketing of the Company's products are subject to extensive
regulation by numerous governmental authorities in the U.S. and other countries.
The process of obtaining FDA approval of pharmaceutical products and drug
delivery systems is costly and time-consuming. Any new pharmaceutical must
undergo rigorous preclinical and clinical testing and an extensive regulatory
approval process mandated by the FDA. Marketing of drug delivery systems also
requires FDA approval, which can be costly and time-consuming to obtain. The
Company will need to obtain regulatory approval for each drug to be delivered
through the use of Spiros. There can be no assurance that the pharmaceutical
products currently in development, or those products acquired or in-licensed by
the Company, will be approved by the FDA. In addition, there can be no
assurance that all necessary clearances will be granted to the Company or its
licensors for future products or that FDA review or actions will not involve
delays adversely affecting the marketing and sale of the Company's products.
For both currently marketed and future products, failure to comply with
applicable regulatory requirements can, among other things, result in the
suspension of regulatory approval, as well as possible civil and criminal
sanctions. In addition, changes in regulations could have a material adverse
effect on the Company.
The FDA is continuing an evaluation of the effectiveness of all drug
products containing ingredients marketed prior to 1962 (the year of enactment of
the "Drug Amendments of 1962" to the Federal Food, Drug, and Cosmetic Act) as
part of its Drug Efficacy Study Implementation program and will determine which
drugs are considered "new drugs" requiring approval through a New Drug
Application ("NDA") for marketing. A policy guide issued by the FDA indicates
that the FDA will implement procedures to determine whether the new drug
provisions are applicable to existing products. If a final determination is
made that a particular drug requires an approved NDA, such approval will be
required for marketing to continue. If such a determination is made, the FDA
might impose various requirements; for example, it might require that the
current product be the subject of an approved NDA, that the product be
reformulated and an NDA approval be obtained, that the product must be sold on
an over-the-counter basis rather than as a prescription drug or that the product
must be removed from the market. There can be no assurance as to which of these
courses the FDA will require, if any, with respect to most of the Company's
pharmaceutical products or whether the Company will be able to obtain any
approvals that the FDA may deem necessary. If any of these actions are taken by
the FDA, such actions could have a material adverse effect on the Company's
business. In addition, the Company's Tornalate Metered Dose Inhaler uses
chlorofluorocarbon ("CFC") propellants. If CFCs are banned for use in the
Tornalate Metered Dose Inhaler, then the Company will not be able to market that
product for sale. Health Script is subject to regulation by state regulatory
authorities, principally state boards of pharmacy. In addition, Health Script
is subject to regulation by other state and federal agencies with respect to
reimbursement for prescription drug benefits provided to individuals covered
primarily by publicly-funded programs.
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PATENTS AND PROPRIETARY RIGHTS. The Company's success will depend in part
on its ability to obtain patents on current or future products or formulations,
defend its patents, maintain trade secrets and operate without infringing upon
the proprietary rights of others, both in the U.S. and abroad. However, only
four of the pharmaceuticals currently marketed by the Company are covered by
patents. The Company also has licenses or license rights to certain other U.S.
and foreign patents and patent applications. There can be no assurance that
patents, U.S. or foreign, will be obtained, or that, if issued or licensed to
the Company, they will be enforceable or will provide substantial protection
from competition or be of commercial benefit to the Company or that the Company
will possess the financial resources necessary to enforce or defend any of its
patent rights. Federal court decisions establishing legal standards for
determining the validity and scope of patents in the field are in transition.
There can be no assurance that the historical legal standards surrounding
questions of validity and scope will continue to be applied or that current
defenses as to issued patents in the field will offer protection in the future.
The commercial success of the Company will also depend upon avoiding the
infringement of patents issued to competitors and upon maintaining the
technology licenses upon which certain of the Company's current products are, or
any future products under development might be, based. Litigation, which could
result in substantial cost to the Company, may be necessary to enforce the
Company's patent and license rights or to determine the scope and validity of
the proprietary rights of third parties. If any of the Company's products are
found to infringe upon patents or other rights owned by third parties, the
Company could be required to obtain a license to continue to manufacture or
market such products. There can be no assurance that licenses to such patent
rights would be made available to the Company on commercially reasonable terms,
if at all. If the Company does not obtain such licenses, it could encounter
delays in marketing affected products while it attempts to design around such
patents or it could find that the development, manufacture or sale of products
requiring such licenses are not possible. The Company currently has certain
licenses from third parties and in the future may require additional licenses
from other parties to develop, manufacture and market commercially viable
products effectively. There can be no assurance that such licenses will be
obtainable on commercially reasonable terms, if at all, or that the patents
underlying such licenses will be valid and enforceable.
PRODUCT LIABILITY AND RECALL. The Company faces an inherent business risk
of exposure to product liability claims in the event that the use of its
technologies or products is alleged to have resulted in adverse effects. Such
risks will exist even with respect to those products that receive regulatory
approval for commercial sale. While the Company has taken, and will continue to
take, what it believes are appropriate precautions, there can be no assurance
that it will avoid significant product liability exposure. The Company
currently has product liability insurance; however, there can be no assurance
that the level or breadth of any insurance coverage will be sufficient to fully
cover potential claims. There can be no assurance that adequate insurance
coverage will be available in the future at acceptable costs, if at all, or that
a product liability claim or recall would not materially and adversely affect
the business or financial condition of the Company.
ATTRACTION AND RETENTION OF KEY PERSONNEL. The Company is highly dependent
on the principal members of its management staff, the loss of whose services
might impede the achievement of development objectives. Although the Company
believes that it is adequately staffed in key positions and that it will be
successful in retaining skilled and experienced management, operational and
scientific personnel, there can be no assurance that the Company will be able to
attract and retain such personnel on acceptable terms. The loss of the services
of key scientific, technical and management personnel could have a material
adverse effect on the Company, especially in light of the Company's recent
significant growth.
-12-
SHARES ELIGIBLE FOR FUTURE SALE. Sales of a substantial number of shares
of the Company's Common Stock in the public market following this offering could
adversely affect the market price of the Common Stock. As of March 31, 1997,
there were approximately 43.5 million shares of Common Stock outstanding. Of
those shares, approximately 42.4 million, in addition to the Shares, were
immediately eligible for resale in the public market without restriction.
VOLATILITY OF THE COMPANY STOCK PRICE. The market prices for securities of
emerging companies, including the Company, have historically been highly
volatile. Future announcements concerning the Company or its competitors may
have a significant impact on the market price of the Company's Common Stock.
Such announcements might include financial results, the results of testing,
technological innovations, new commercial products, changes to government
regulations, government decisions on commercialization of products, developments
concerning proprietary rights, litigation or public concern as to safety of the
Company's products.
ABSENCE OF DIVIDENDS. The Company has never paid any cash dividends on its
Common Stock. In accordance with certain bank loan agreements, the Company is
restricted from paying cash dividends without prior bank approval. The Company
currently anticipates that it will retain all available funds for use in its
business and does not expect to pay any cash dividends in the foreseeable
future.
CHANGE IN CONTROL. Certain provisions of the Company's charter documents
and terms relating to the acceleration of the exercisability of certain warrants
and options relating to the purchase of such securities by the Company in the
event of a change in control may have the effect of delaying, deferring or
preventing a change in control of the Company, thereby possibly depriving
shareholders of receiving a premium for their shares of the Common Stock.
SELLING SHAREHOLDERS
Except as otherwise indicated, the following table sets forth certain
information regarding the beneficial ownership of the Company's Common Stock as
of January 17, 1997 (assuming the exercise of the Warrants) by each Selling
Shareholder. Except as otherwise indicated in this Prospectus, none of the
Selling Shareholders has had a material relationship with the Company within the
past three years other than as a result of the ownership of the Shares or other
securities of the Company. The numbers set forth in the column "Number of
Shares Being Offered" below constitute all of the Shares that each Selling
Shareholder may distribute in the offering; however, there are currently no
agreements, arrangements or understandings with respect to the sale of any of
the Shares and the table below assumes the exercise of the Warrants and the sale
of all Shares held by each Selling Shareholder. The Shares are being registered
to permit public secondary trading of the Shares, and the Selling Shareholders
may offer the Shares for resale from time to time. As of the date of this
Prospectus, a total of 424,944 shares have been sold by the Selling Shareholders
and 418 have been cancelled. See "Plan of Distribution."
Each Selling Shareholder represented that it was acquiring the Issued
Shares or the Warrants (and the Shares issuable upon exercise thereof), as the
case may be, for investment and with no present intention of distributing the
Warrants or any such Shares. In recognition of the fact that Selling
Shareholders, even though purchasing Issued Shares or the Warrants (and the
Shares issuable upon exercise thereof), as the case may be, without a view to
distribution, may wish to be legally permitted to sell their Shares when they
deem appropriate, the Company has filed with the Commission a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares. The Shares may be resold by the Selling Shareholders
from time to time at prevailing prices on Nasdaq, in the over-the-counter
market, in privately-negotiated transactions or a combination of such methods.
The Company has also agreed to prepare and file such amendments and
-13-
supplements to the Registration Statement as may be necessary to keep the
Registration Statement effective until all Shares offered hereby have been sold
pursuant hereto or until such Shares are no longer, by reason of Rule 144 under
the Securities Act or any other rule of similar effect, required to be
registered for the sale thereof by the Selling Shareholders.
-14-
Names and Addresses Shares Beneficially Number of Shares Beneficially
Owned Prior Shares Being Owned
to Offering(1)(2) Offered(3) After Offering(2)
-15-
Number Percent Number Percent
Douglas Sangouard(4). . . . . . . . . . . . . . . 30,132 * 970 29,162 *
282 Huntley Court
Castle Rock, CO 80104
Dooner International, Inc. . . . . . . . . . . . 1,290 * 1,290 0 0
P.O. Box 109
Quincy, FL 32353-0109
Nader Ghaderi . . . . . . . . . . . . . . . . . . 1,086 * 1,086 0 0
11725 Montana Avenue, #208
Los Angeles, CA 90049
William Lobb. . . . . . . . . . . . . . . . . . . 1,002 * 926 76 *
3414 Peachtree Road N.E., #1200
Atlanta, GA 30326
Norbert Siegel. . . . . . . . . . . . . . . . . . 184 * 184 0 0
Greywell House, The Hockering
Woking, Surrcy,
ENGLAND GU22 7 HP
Edward Stanton. . . . . . . . . . . . . . . . . . 198 * 198 0 0
1111 Herman Drive, #7D
Houston, TX 77004
Stanley Stern . . . . . . . . . . . . . . . . . . 639 * 639 0 0
480 Ocean Avenue
Lawrence, NY 11559
Richard Wiseley . . . . . . . . . . . . . . . . . 1,655 * 1,655 0 0
1201 Stone Canyon
Los Angeles, CA 90077
Mark Harms. . . . . . . . . . . . . . . . . . . . 56 * 56 0 0
c/o Oppenheimer & Co., Inc.
One World Financial Center
200 Liberty Street
New York, NY 10281
Michael Kessler . . . . . . . . . . . . . . . . . 60 * 60 0 0
c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
World Financial Center, 39th Floor
New York, NY 10281
Meryl Mann. . . . . . . . . . . . . . . . . . . . 60 * 60 0 0
53 Farbrook Drive
Shore Hills, NJ 07078
Ronald Stuart . . . . . . . . . . . . . . . . . . 470 * 470 0 0
7 Topping Road
Greenwich, CT 06831
Mark Sunshine . . . . . . . . . . . . . . . . . . 60 * 60 0 0
660 James Street
Pelham, NY 10803
Cary Thompson . . . . . . . . . . . . . . . . . . 60 * 60 0 0
1944 Fairburn Avenue
Los Angeles, CA 90025
Laura Weil. . . . . . . . . . . . . . . . . . . . 60 * 60 0 0
220 East 73rd Street, Apt. 7H
New York, NY 10021
-16-
Daniel Alpert . . . . . . . . . . . . . . . . . . 60 * 60 0 0
21 East 90th Street
New York, NY 10128
Gadi Ben-Menachem . . . . . . . . . . . . . . . . 192 * 192 0 0
8 Cross Gates
Short Hills, NJ 07078
Paul Cyr. . . . . . . . . . . . . . . . . . . . . 458 * 458 0 0
1002 James Street
Geneva, IL 60134
Robin Davis . . . . . . . . . . . . . . . . . . . 498 * 498 0 0
97 Palmers Hill Road
Stamford, CT 06902
Richard Power . . . . . . . . . . . . . . . . . . 5,644 * 3,000 2,644 *
14-F Andover Circle
Princeton, NJ 08540
J.P. Morgan Securities, Inc. . . . . . . . . . . 200,000 * 200,000 0 0
60 Wall Street, 14th Floor
New York, NY 10260
- - - - ----------------------------------------------
* Less than 1%.
1/ Unless otherwise indicated, the persons named in the table have sole voting
and sole investment power with respect to all shares beneficially owned.
2/ Percentage of ownership is calculated pursuant to SEC Rule 13d-3(d)(1) and
assumes that all of the Warrants have been exercised.
3/ This Registration Statement shall also cover any additional shares of
Common Stock which become issuable in connection with the shares registered
for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which result in an increase in the number of the Company's
outstanding shares of Common Stock.
4/ Includes options, now exercisable or exercisable within 60 days of January
17, 1997, to purchase 29,162 shares of Common Stock held by Mr. Sangouard.
Mr. Sangouard is a national sales director of the Company.
ISSUANCE OF WARRANT SHARES
The Warrant Shares are issuable upon exercise of the Warrants. As of the
date of this prospectus, the Company has received a total of $1,817,710 as a
result of the exercise of Warrants and could receive an additional $1,297,244 on
exercise of the remaining Warrants. The Company intends to use any such
proceeds for general corporate purposes, including working capital.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Shareholders, or by pledges, donees, transferees or other successors in
interest. The Company will receive no proceeds from the sale of any of the
Shares. However, the Company will receive the exercise price payable upon
exercise of the Warrants. See "Issuance of Warrant Shares." The sale of the
Shares may be made on Nasdaq or in the over-the-counter market
-17-
or otherwise, at prices and on terms then prevailing or related to the
then-current market price, or in negotiated transactions. The Shares may be
sold to or through one or more broker-dealers, acting as agent or principal, in
underwritten offerings, block trades, agency placements, exchange distributions,
brokerage transactions or otherwise, or in any combination of transactions.
At the time a particular offer of Shares is made, to the extent required, a
supplemental Prospectus will be distributed which will set forth the number of
shares being offered and the terms of the offering including the name or names
of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from the Selling Shareholders, any
discounts, commissions and other items constituting compensation from the
Selling Shareholders and any discounts, concessions or commissions allowed or
reallowed or paid to dealers.
In connection with any transaction involving the Shares, broker-dealers or
others may receive from the Selling Shareholders, and may in turn pay to other
broker-dealers or others, compensation in the form of commissions, discounts or
concessions in amounts to be negotiated at the time (which compensation may be
in excess of customary commissions). Broker-dealers and any other persons
participating in a distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such distribution,
and any such commissions, discounts or concessions may be deemed to be
underwriting discounts or commissions under the Securities Act.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by the Selling Shareholders, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any Shares
that qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Shareholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Shareholders.
All costs associated with this offering will be paid by the Company.
The Company and the Selling Shareholders may agree to indemnify certain
persons, including broker-dealers or others, against certain liabilities in
connection with any offering of the Shares, including liabilities under the
Securities Act.
-18-
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, San Diego, California.
EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
-19-
DURA PHARMACEUTICALS, INC.
TABLE OF CONTENTS
Tab
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INFORMATION INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . . . 2
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ISSUANCE OF WARRANT SHARES . . . . . . . . . . . . . . . . . . . . . . . . 12
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various costs and expenses to be paid by
the Company with respect to the sale and distribution of the securities being
registered. All of the amounts shown are estimates except the Securities and
Exchange Commission registration fee.
SEC Registration Fee. . . . . . . $ 1,841
Legal Fees and Expenses . . . . . 5,000
Accounting Fees and Expenses. . . 2,500
Miscellaneous . . . . . . . . . . 2,000
-------
Total. . . . . . . . . . . . $11,341
-------
-------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Section 317 of the California General Corporation Law provides for the
indemnification to officers and directors of the Company against expenses,
judgments, fines and amounts paid in settlement under certain conditions and
subject to certain limitations.
(b) Article VI of the Bylaws of the Company provides that the Company shall
have power to indemnify any person who is or was an agent of the Company as
provided in Section 317 of the California General Corporation Law. The Bylaws
also provide that such indemnification is not exclusive of any additional rights
to indemnification such person may have pursuant to contract, vote of
shareholders or disinterested directors or otherwise. The rights to indemnity
thereunder continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director or
officer in defending a civil or criminal action, suit or proceeding by reason of
the fact that he or she is or was a director or officer of the Company (or was
serving at the Company's request as a director or officer of another
corporation) shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Company as
authorized by the relevant section of the California General Corporation Law.
(c) Article IV of the Company's Sixth Restated Articles of Incorporation
provides that the liability of the directors of the Company for monetary damages
shall be eliminated to the fullest extent permissible under California law.
Accordingly, a director will not be liable for monetary damages for breach of
duty to the Company or its shareholders in any action brought by or in the right
of the Company. However, a director remains liable to the extent required by law
(i) for acts or omissions that involve intentional misconduct or a knowing and
culpable violation of law, (ii) for acts or omissions that a director believes
to be contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of the director, (iii) for any
transaction from which a director derived an improper personal benefit, (iv) for
acts or omissions that show a reckless disregard for the director's duty to the
Company or its shareholders in circumstances in which the director was aware, or
should have been aware, in the ordinary course of performing a director's
duties, of a risk of serious injury to the Company or its shareholders, (v) for
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the Company or its
shareholders, (vi) for any act or omission occurring prior to the date when the
exculpation provision became effective and (vii) for any act or omission as an
officer, notwithstanding that the officer is also a director or that his or her
actions, if negligent or improper, have been ratified by the directors. The
effect of the provisions in the Sixth Restated Articles of Incorporation is to
eliminate the rights of the Company and its shareholders (through shareholders'
derivative suits on behalf of the Company) to recover monetary damages against a
II-1
director for breach of duty as a director, including breaches resulting from
negligent behavior in the context of transactions involving a change of control
of the Company or otherwise, except in the situations described in clauses (i)
through (vii) above. These provisions will not alter the liability of directors
under federal securities laws.
(d) Pursuant to authorization provided under the Sixth Restated Articles of
Incorporation, the Company has entered into indemnification agreements with each
of its present and certain of its former directors. The Company has also entered
into similar agreements with certain of the Company's executive officers who are
not directors. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by California law as it may be amended from time to
time. Moreover, the indemnification agreements provide for certain additional
indemnification. 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 the Company (except to the extent the
court determines he or she is fairly and reasonably entitled to indemnity for
expenses), for settlements not approved by the Company or for settlements and
expenses if the settlement is not approved by the court. The indemnification
agreements provide for the Company 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 the Company copies
of invoices presented to him or her for such expenses. Also, the individual
must repay such advances upon a final judicial decision that he or she is not
entitled to indemnification. The Company's Bylaws contain a provision of
similar effect relating to advancement of expenses to a director or officer,
subject to an undertaking to repay if it is ultimately determined that
indemnification is unavailable.
(e) There is directors and officers liability insurance now in effect which
insures directors and officers of the Company.
ITEM 16. EXHIBITS
EXHIBIT NUMBER
+ 5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP.
+23.2 Consent of Brobeck, Phleger & Harrison LLP (contained in
their opinion filed as Exhibit 5.1).
+24.1 Power of Attorney.
- - - - ------------------------------
+ Incorporated by reference to the same-numbered exhibit to the Registration
Statement on Form S-3 (No. 33-93914), filed with the Commission on June 23,
1995.
II-2
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;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the state of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided, that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Securities Act of 1933 or Rule 3-19 of this chapter if such
financial statements and information are contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Form F-3.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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 is 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
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, Delaware Corporation law, the
Underwriting Agreement or otherwise, the Registrant has been advised that in the
opinion
II-3
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 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 hereunder, 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 of 1933 and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Post-Effective
Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Diego, State of
California, on the 20th day of June, 1997.
DURA PHARMACEUTICALS, INC.
By: /s/ Cam L. Garner
-----------------
Cam L. Garner
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Cam L. Garner Chairman, President and Chief June 20, 1997
- - - - ----------------- Executive Officer (Principal
(Cam L. Garner) Executive Officer)
/s/ James W. Newman Senior Vice President, Finance June 20, 1997
- - - - -------------------- and Administration, and Chief
(James W. Newman) Financial Officer (Principal
Finance and Accounting Officer)
/s/ David S. Kabakoff Executive Vice President and June 20, 1997
- - - - --------------------- Director
(David S. Kabakoff)
* Senior Vice President, Sales and June 20, 1997
- - - - ------------------- Marketing, and Director
(Walter F. Spath)
*
- - - - -------------------
(James C. Blair) Director June 20, 1997
*
- - - - -------------------
(Herbert J. Conrad) Director June 20, 1997
II-5
*
- - - - -------------------
(Joseph C. Cook, Jr.) Director June 20, 1997
*
- - - - -------------------
(David F. Hale) Director June 20, 1997
*
- - - - -------------------
(Gordon V. Ramseier) Director June 20, 1997
*
- - - - -------------------
(Charles G. Smith) Director June 20, 1997
*/s/ Cam L. Garner
- - - - ------------------------------- June 20, 1997
Cam L. Garner, Attorney-in-Fact
II-6
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-3
UNDER
SECURITIES ACT OF 1933
DURA PHARMACEUTICALS, INC.
EXHIBIT INDEX
-------------
Exhibit
Number Exhibits
- - - - ------- --------
+ 5.1 Opinion of Brobeck, Phleger & Harrison LLP
23.1 Consent of Deloitte & Touche LLP.
+23.2 Consent of Brobeck, Phleger & Harrison LLP
(included in Exhibit 5.1).
+24.1 Power of Attorney.
- - - - ----------------------------
+ Incorporated by reference to the same numbered exhibit to the
Registration Statement on Form S-3 (No. 33-93914), filed with the
Commission on June 23, 1995.