As filed with the Securities and Exchange Commission on November 2, 2001
Registration No. 333- .
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NASTECH PHARMACEUTICAL COMPANY INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2658569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
45 ADAMS AVENUE
HAUPPAUGE, NEW YORK 11788
(631) 273-0101
ATTN: STEVEN C. QUAY, M.D., PH.D.
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
COPIES TO:
L. Kevin Sheridan, Jr., Esq.
Roberts Sheridan & Kotel
The New York Practice of
Dickstein Shapiro's Corporate & Finance Group
1177 Avenue of the Americas, 41st Floor
New York, NY 10036
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount to Proposed Maximum Proposed Maximum Amount of
Securities to Be Registered Be Registered Offering Price Per Share Aggregate Offering Price Registration Fee
--------------------------- ------------- ------------------------ ------------------------ ----------------
Common Stock, $.006 par value 1,100,000 (1) $9.22(4) $10,142,000 $2,535.50
Common Stock, $.006 par value 100,000 (2) $10.00(5) $1,000,000 $250.00
Common Stock, $.006 par value 68,000 (3) $9.56(6) $650,080 $162.52
Total ........................ 1,268,000 $9.59 $11,792,080 $2,948.02
(1) Represents shares currently beneficially owned by the selling stockholders.
(2) Represents shares issuable upon the exercise of warrants granted to
Castlebar Enterprises Limited. Pursuant to Rule 416, this registration statement
shall also cover any additional shares of common stock that become issuable by
reason of the antidilutive provisions of the warrants.
(3) Represents shares issuable upon the exercise of warrants granted to Jesup &
Lamont Securities Corporation. Pursuant to Rule 416, this registration statement
shall also cover any additional shares of common stock that become issuable by
reason of the antidilutive provisions of the warrants.
(4) The proposed maximum offering price is estimated solely for the purposes of
calculating the registration fee pursuant to Rule 457(c) and 457(g)(3) of the
Securities Act of 1933. It is based upon a price of $9.22 per share, which was
the average of the high and low reported prices of the registrant's common stock
as reported on the Nasdaq National Market System on October 31, 2001 ($9.59 and
$8.85, respectively).
(5) The proposed maximum offering price is estimated solely for the purposes of
calculating the registration fee pursuant to Rule 457(g) of the Securities Act
of 1933. It is based upon the higher of the price at which the warrants may be
exercised ($10.00) and the price of the underlying shares of common stock as
determined in accordance with Rule 457(c) ($9.22).
(6) The proposed maximum offering price is estimated solely for the purposes of
calculating the registration fee pursuant to Rule 457(g) of the Securities Act
of 1933. It is based upon the higher of the price at which the warrants may be
exercised ($9.56) and the price of the underlying shares of common stock as
determined in accordance with Rule 457(c) ($9.22).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 2, 2001
PROSPECTUS
[LOGO]
NASTECH PHARMACEUTICAL COMPANY INC.
1,268,000 Shares
Common Stock
This prospectus relates to the public offering of 1,268,000 shares of our
common stock which the selling stockholders named in this prospectus may resell
from time to time. These shares include 1,100,000 shares of common stock we sold
to the selling stockholders in a private offering, plus 100,000 shares of our
common stock underlying warrants we granted to Castlebar Enterprises Limited as
consideration for Castlebar's consent under an equity line of credit agreement
to our private offering of shares to the other selling stockholders as well as
all to future private offerings of our securities if we sell those securities
for cash with registration rights, plus 68,000 shares of our common stock
underlying warrants we granted to Jesup & Lamont Securities Corporation as a
placement fee for their services in introducing us to some of the selling
stockholders in connection with the private offering. The shares of common stock
that the selling stockholders may resell using this prospectus constitute 15.7%
of our issued and outstanding common stock as of September 30, 2001.
Our common stock is quoted on the Nasdaq National Market under the symbol
"NSTK." The closing bid price of our common stock on the Nasdaq National Market
on October 31, 2001, was $9.00 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Prospectus dated _________________, 2001
TABLE OF CONTENTS
Page
----
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 6
Special Note Regarding Forward-Looking Statements........................... 11
Use of Proceeds............................................................. 12
Price Range of Common Stock................................................. 12
Selling Stockholders........................................................ 13
Plan of Distribution........................................................ 16
Description of Capital Stock................................................ 17
Where You Can Find More Information......................................... 21
Incorporation of Information by Reference................................... 22
Legal Matters............................................................... 22
Experts..................................................................... 23
PROSPECTUS SUMMARY
This summary highlights information contained or incorporated by reference
elsewhere in this prospectus. For a more complete understanding of this
offering, you should read the entire prospectus carefully, especially the "Risk
Factors" section, and our financial statements and notes to those statements
incorporated by reference in this prospectus, before making your investment
decision.
Nastech Pharmaceutical Company Inc.
Nastech Pharmaceutical Company Inc. is a Formulation Science company and is
recognized as a leader in nasal drug delivery technology. Formulation Science is
a systematic approach to drug development using biophysics, physical chemistry
and pharmacology to maximize therapeutic efficacy and safety, which sometimes
involves a change in route of administration. The technology is essential in
designing an optimized, customizable dosage form and in delivering difficult
protein and large molecule drugs that can currently only be delivered by
injection.
Historically, our core technical competency involves the research, development
and manufacture of nasally administered prescription pharmaceuticals. We
investigate the commercial weaknesses of pharmaceutical products currently
available in oral, injectable or other dosage forms, and we determine the
advantages an alternative drug delivery system would have for the same drug in
the market place. For example, while the oral route of drug delivery is the most
popular and least expensive method of delivery, gastrointestinal and liver
metabolism can reduce an oral drug's effectiveness. Generally, a nasal delivery
system will provide faster absorption into the blood stream than an oral product
thereby resulting in faster onset of action. Other possible advantages of this
therapy may include lower drug doses, fewer side effects, greater safety and
efficacy, greater convenience to the patient, better patient compliance of
prescribed drug therapy, and lower overall health care costs for the patient.
Until August 2001, we had a commercial interest in two nasal drug products, both
of which are approved for sale in the U.S. In August 2001, our licensing
agreement with Bristol-Myers Squibb for one of these drugs, Stadol(R) NS(TM)
(Butorphanol Tartrate), terminated when the patent for the nasal administration
of Butorphanol Tartrate, the active ingredient in Stadol(R) NS(TM), expired. As
a result, we will no longer receive U.S. royalties for the sale of this product,
which will adversely affect the recording of revenue and contribution to
operations in the second half of 2001.
Our one remaining nasal drug product, Nascobal(R) (Cyanocobalamin, USP), is a
nasal vitamin B-12 product which provides patient benefits over the injectable
therapy for chronic B-12 deficiency anemia. Our licensee, Schwarz Pharma Inc.,
markets Nascobal(R). In addition to Nascobal(R), we have several drugs in
various stages of drug research and development.
In August 2001, we announced an exclusive licensing agreement with G. Pohl
Boskamp GmbH & Co for development and European commercialization rights to our
intranasal morphine franchise for treatment of moderate to severe pain.
Our current business strategy seeks to broaden applications of our commitment to
Formulation Science, allowing drugs to be more safe and effective in patient
treatment, with particular emphasis on the applications for nasal or oral drug
delivery in the prescription and over-the-counter markets. To accomplish this
objective, we plan to do the following:
o Focus initial efforts on significant injectable approved drugs
o Broaden strategic alliances
o Protect and expand intellectual property rights
The Private Offering
On October 18, 2001, we raised approximately $5,800,000 in gross proceeds
through a private sale of 1,100,000 newly issued shares of our common stock to
the investors listed in the "Selling Stockholders" section below. Dain Rauscher
Incorporated, a registered broker-dealer, acted as placement agent for the
private offering. In connection with the private offering, we granted warrants
to purchase 68,000 shares of our common stock to Jesup & Lamont Securities
Corporation, a registered broker-dealer, as a placement fee for their services
in introducing us to some of the selling stockholders. In addition, in order to
consummate the private placement to the selling stockholders, we needed to
obtain a consent to the private placement from Castlebar Enterprises Limited
under our equity line of credit agreement. As consideration for Castlebar's
consent to our private placement to the other selling stockholders, as well as
all future private offerings of our securities if we sell those securities for
cash with registration rights, we granted Castlebar warrants to purchase 100,000
3
shares of our common stock. Jesup & Lamont may exercise its warrants at any time
prior to May 11, 2005, at a strike price of $9.56 per share of common stock.
Castlebar may exercise its warrants at any time prior to July 11, 2003, at a
strike price of $10.00 per share of common stock. Neither Jesup & Lamont, nor
Castlebar will be obligated to exercise the warrants and to purchase any shares
of common stock under these warrants.
We are registering the 1,100,000 shares which we previously issued to the
selling stockholders, plus the 168,000 shares underlying the warrants we granted
to Jesup & Lamont and Castlebar, in order to permit the selling stockholders to
resell their shares when and as they deem appropriate. From time to time during
the period the registration statement remains effective, the selling
stockholders may offer for resale all 1,268,000 shares that this prospectus
covers. The number of shares subject to this prospectus represents 15.7% of our
issued and outstanding common stock as of September 30, 2001. We will prepare
and file amendments and supplements to the registration statement as may be
necessary in order to keep the registration statement effective until the
earliest of any of the following dates:
o October 18, 2003 or, in the case of Jesup & Lamont's warrant shares,
the first anniversary of the date of issuance of the warrant shares,
but in any event not later than May 11, 2005.
o the date after which the shares of common stock can be sold without
restriction by the volume limitations of Rule 144(e) of the
Securities Act of 1933;
o the date after which the selling stockholders sell all of the shares
of common stock covered by this registration statement.
We have agreed to bear the expenses of registering the shares, but not the
expenses associated with selling the shares, such as broker discounts and
commissions.
----------------------------
Nastech Pharmaceutical Company Inc. is incorporated under the laws of the state
of Delaware. Our principal executive offices are located at 45 Adams Avenue,
Hauppauge, New York 11788, and our telephone number is (631) 273-0101. Our
principal research & development and administrative facility is located in the
same Hauppauge, New York facility. We maintain a website at www.nastech.com.
Information contained in our website does not constitute part of this
prospectus.
References in this prospectus, and the documents incorporated by reference in
this prospectus, to "Nastech," "we," "our," and "us" refer to Nastech
Pharmaceutical Company Inc., a Delaware corporation.
Nastech and some of the names of our products are tradenames or trademarks of
Nastech Pharmaceutical Company Inc. This prospectus and the information
incorporated by reference also contain trademarks and tradenames of other
companies.
4
THE OFFERING
Shares of Common Stock That
Selling Stockholders May Offer ............... 1,268,000
Offering Price ............................... To be determined at the time selling stockholders sell
the shares
Common Stock Outstanding
Before the Offering...................... 9,154,676 (1) (2) (3)
After the Offering ...................... 9,322,676 (4)
Use of Proceeds .............................. We will not receive any proceeds from selling
stockholders' sales of common stock. However, we will
receive the proceeds upon Castlebar's and Jesup &
Lamont's exercise of warrants when, and if, they pay the
exercise price in cash. We expect to use substantially
all the net proceeds for general corporate purposes,
including working capital and research and development.
Nasdaq National Market symbol ................ NSTK
----------
(1) Includes the 8,054,676 shares outstanding as of September 30, 2001, plus
the 1,100,000 shares of common stock we issued to the selling stockholders
in the private offering of our shares which took place on October 18,
2001.
(2) Excludes the following, each of which as they were outstanding as of
September 30, 2001:
o 2,125,372 shares of common stock subject to outstanding stock
options we previously granted under our stock option plans as
of September 30, 2001, including 600,000 options we granted on
August 8, 2000 to Steven C. Quay, our President, Chief
Executive Officer and Chairman of the Board.
o 51,748 shares of common stock available for future grants
under our stock option plans as of September 30, 2001.
o 34,500 shares of common stock issuable upon exercise of the
warrants we granted to Wheat, First Securities, Inc., as
underwriters in connection with an offering of our shares in
1997.
o 34,500 shares of common stock issuable upon exercise of the
warrants we granted to Volpe, Welty & Company, as underwriters
in connection with an offering of our shares in 1997.
o 1,200,000 shares of common stock issuable under our equity
line of credit agreement with Castlebar Enterprises Limited.
o 33,000 shares of common stock issuable upon exercise of the
warrants that we granted, plus 33,000 shares of common stock
issuable upon exercise of the warrants that may grant in the
future, to Castlebar in connection with the equity line of
credit.
o 16,500 shares of common stock issuable upon exercise of the
warrants that we may grant in the future to Jesup & Lamont as
a placement fee in connection with the equity line of credit.
o 554,707 shares of common stock issuable upon exercise of
warrants that we granted to investors and the placement agent
in connection with the private offerings of our shares in
March 2001 and in May 2001.
o 100,000 shares of common stock issuable upon exercise of
warrants that we granted to Castlebar in connection with the
private offering of our shares in October 2001.
(3) Excludes 68,000 shares of common stock issuable upon exercise of warrants
that we granted on October 18, 2001 to Jesup & Lamont in connection with
the private offering of our shares in October 2001.
(4) Assumes that Castlebar and Jesup & Lamont exercise all 168,000 warrants we
granted to them in connection with the private offering of our shares on
October 18, 2001.
5
RISK FACTORS
A purchase of our common stock is speculative and involves a high degree of
risk. You should carefully consider the risks described below together with all
of the other information included or incorporated by reference in this
prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones facing our company. If any of the
following risks actually occur, our business, financial condition or operating
results could be harmed. In this case, the trading price of our common stock
could decline, and you could lose all or part of your investment.
Because of Significant R&D and Other Costs, We Have Never Been Profitable, We Do
Not Expect To Become Profitable in the Foreseeable Future, and We May Never
Become Profitable
We incurred losses in each of the last three years. We incurred a net loss of
$876,000 for fiscal year 1998, a net loss of $8.4 million for fiscal year 1999,
and a net loss of $9.7 million for fiscal year 2000. As of September 30, 2001,
we had an accumulated deficit of $36.2 million. The process of developing our
products requires significant research and development, including basic
research, pre-clinical and clinical development, as well as Food and Drug
Administration regulatory approval. These activities, together with our sales,
marketing, general and administrative expenses, have resulted in operating
losses in the past and, in the absence of significant licensing transactions for
products in our research and development pipeline, we expect these losses to
continue for the foreseeable future. We may never achieve profitability. As a
result, the market price of our common stock could decline.
Because Our Operating Results Are Subject To Significant Fluctuations and
Uncertainties, We May Not Be Able to Meet All of Our Future Expense Obligations,
and Our Failure to Meet Public Market Analysts or Investors' Expectations
Regarding Earnings May Cause Our Stock Price To Decline
Our operating results are subject to significant fluctuations and uncertainties
due to a number of factors including, among others:
o the timing and achievement of licensing transactions, including
milestones and other performance factors associated with these
contracts
o the time and costs involved in patent research and development of
our proprietary position
o continued scientific progress and level of expenditures in our
research and development programs
o the cost of manufacturing scale-up and production batches, including
vendor provided activities and costs
o the time and costs involved in obtaining regulatory approvals
o changes in general economic conditions and drug delivery
technologies
o new products and product enhancements that we or our competitors
introduce
o the expiration of existing patents and related revenues
As a result of these factors and other uncertainties, our operating results have
fluctuated significantly over the last three years, from a net loss of $876,000
in 1998, to a net loss of a net loss of $8.4 million in 1999 and a net loss of
$9.7 million in 2000. Over the past four quarters, our operating losses have
increased by as much as 82% and have decreased by as much as 11% from one
quarter to another. In order to illustrate these fluctuations, we had a larger
than expected loss per share in the second quarter of 2000 due to an unexpected
decline in royalty income from our licensee Bristol-Myers Squibb's decreased
sales of Stadol(R) NS(TM) and from unexpected compensation expenses we paid to
the estate of our former deceased CEO. Although this larger than expected loss
per share in the second quarter of 2000 did not affect our business or
operations because we had adequate cash reserves and in general do not rely
solely on our operating results to meet our expense obligations, it is possible
that larger than expected losses in the future during any single quarter could
affect our ability to meet all of our expense obligations or may require us to
prioritize, modify or cease some of our development programs.
Our revenues and operating results, particularly those reported on a quarterly
basis, may continue to fluctuate significantly. This makes it difficult to
forecast our operating results. Therefore, we believe that quarterly comparisons
of our operating results will not be meaningful, and you should not rely on them
as an indication of our future performance. Also, our
6
operating results in a future quarter or quarters may fall below the
expectations of public market analysts or investors. If this were to occur, the
price of our stock could decline.
Because Intellectual Property Rights Are of Limited Duration, Expiration of
Intellectual Property Rights and Licenses May Negatively Impact Our Operating
Results
Intellectual property, such as patents, and license agreements based on those
patents generally are of limited duration. Our operating results depend on our
patents and intellectual property licenses. Therefore, the expiration or other
loss of rights associated with intellectual property and intellectual property
licenses can negatively impact our business. For example, in the past we
received significant revenues from royalties on sale of Stadol(R)NS(TM). The
underlying patent on Stadol(R)NS(TM) expired in August 2001, resulting in the
discontinuance of U.S. royalties from Bristol-Myers Squibb, the licensee. We
expect that this event will adversely affect the recording of revenue and
contribution to operations in the second half of year 2001.
If We Are Unable to Adequately Protect Our Proprietary Technology from Legal
Challenges, Infringement or Alternative Technologies, This May Hurt Our
Competitive Position
We specialize in the nasal delivery of pharmaceutical products and rely on the
issuance of patents, both in the U.S. and internationally, for protection
against nasal product competition. Although we believe that we exercise the
necessary due diligence in our patent filings, our proprietary position is not
established until the appropriate regulatory authorities actually issue a
patent, which may take several years after initial filing.
Moreover, even the established patent positions of pharmaceutical companies are
generally uncertain and involve complex legal and factual issues. Although we
believe our issued patents are valid, it is possible that others may
nevertheless challenge our issued patents, that our issued patents will not
withstand review in a court of competent jurisdiction, and that a court will
hold our issued patents to be invalid. Furthermore, it is possible that others
will infringe or otherwise circumvent our issued patents and that we will be
unable to fund the cost of litigation against them.
In addition, we may not be able to protect our established and pending patent
positions from competitive drug delivery technologies, which may provide more
effective therapeutic benefit to patients and which may therefore make our
products, technology and/or proprietary position obsolete.
If we are unable to adequately protect our proprietary technology from legal
challenges, infringement or alternative technologies, we may not be able to
compete in the pharmaceutical delivery business.
If The Commercial Opportunity for Nasally Administered Products Is Limited, This
Could Impact Our Anticipated Future Revenue Growth
The physical and chemical properties of a drug affect our ability to develop a
method of delivering it intranasally. Although we continue to explore the
feasibility of nasally delivering drugs that are large, more complex molecules,
we have more expertise in nasal delivery of smaller, less complex molecules. The
universe of nasal products that qualify as small molecules and are available for
commercialization may be limited. Accordingly, we may be subject to intense
competition in these potential products, which can affect our anticipated future
revenue growth. Although we need to accelerate our research of larger molecules,
it is possible that we will not be successful in these areas. If we are not
successful in these areas, our future revenue may not grow at all or as quickly
as anticipated.
We May Require Additional Financing in the Future, and If Additional Capital Is
Not Available, We May Have To Curtail or Cease Operations
Subject to the success of our development programs and potential licensing
transactions, we may require an additional infusion of capital to complete the
research and development activities we currently contemplate and to
commercialize our proposed products. We may need to raise additional capital to
fund more rapid expansion, to develop and commercialize new products, to enhance
existing services to respond to competitive pressures, and to acquire
complementary businesses or technologies. Our future capital needs depend on
many factors, including:
o the scope, duration and expenditures associated with our current
research and development programs
o continued scientific progress in these programs
7
o the outcome of potential licensing transactions, if any
o competing technological developments
o our proprietary patent position, if any, in our products
o the regulatory approval process for our products
o other factors which may not be within our control
We may not be able to obtain additional financing at these times on terms
favorable to us, if at all. For example, a decline in the trading volume or
price of our common stock may reduce the maximum amount we may be able to draw
down under our equity line of credit agreement with Castlebar Enterprises
Limited.
Without additional funding, we may have to delay, reduce or eliminate one or
more research or development programs and reduce overall overhead expenses. This
action may reduce the market price of our common stock.
If We Fail To Obtain Regulatory Approvals For Our Products, We Will Be Prevented
From Marketing Our Products and We Will Incur Substantial Losses
We embark on specific research or development projects that address unmet
medical needs. Numerous governmental authorities in the United States and other
countries subject these projects to significant regulation. For example, we must
file New Drug Applications with the Food and Drug Administration for most of
these projects. The process of completing clinical testing and obtaining FDA
approval for a new drug product requires substantial resources over a number of
years. If we do not receive the necessary regulatory approvals along the way, we
will not be able to progress clinically in our projects and may be forced to
abandon projects after incurring substantial costs. For example, in 2000 the FDA
rejected the New Drug Application for our nasally administered scopolamine
product primarily because we failed to present adequate safety data. This
action, along with the uncertain costs associated with these studies and with
the re-filing of the New Drug Application, have contributed to an indefinite
deferral of our program until a collaborative partner is found to share the
future development, sales and marketing risks. Moreover, other factors, such as
a periodic reassessment of the ranking of projects within our portfolio, may
create further uncertainty of the continuing viability of any project in
process, including nasally administered scopolamine. Finally, we may encounter
significant delays or excessive costs in our efforts, even if we are eventually
successful in achieving regulatory approval. If we cannot obtain regulatory
approval of our products, we will not be able to generate revenues and become
profitable.
Because We Have No Experience in Marketing or Selling Our Proposed Products,
These Products May Never Be Successful
Even if we are able to develop our products and obtain necessary regulatory
approvals, we have no experience in marketing or commercializing any of our
proposed products. We are dependent on our ability to find collaborative
marketing partners for commercial sale of our products. Even if we find a
potential marketing partner, we may not be able to negotiate a licensing
contract on favorable terms to justify our investment or achieve adequate
revenues. In addition, a licensing transaction with a marketing partner does not
assure a product's success, which is dependent upon patients, physicians or
third-party payers accepting the product.
Our products may prove to be unsuccessful if various parties, including
government health administration authorities, private health care insurers and
other health care payers, such as health maintenance organizations and
self-insured employee plans that determine reimbursement to the consumer, do not
accept our products. We cannot assure you that reimbursement will be available
at all or at levels sufficient to allow our marketing partners to achieve
profitable price levels for our products. If we fail to achieve adequate
reimbursement levels, patients may not purchase our products and sales of these
products will be reduced.
Because We Will Face Intense Competition, This May Limit Our Ability To Achieve
Profitability
Our competitors are numerous and include, among others, major pharmaceutical
companies, biotechnology firms, universities and other research institutions.
Our competitors may succeed in developing technologies and products that are
more effective than the nasal technology we are developing or that will cause
our technology or products to become obsolete or noncompetitive.
8
Many of our competitors have substantially greater financial and technical
resources and production and marketing capabilities than we have. They also may
have greater experience in conducting preclinical testing and clinical trials of
pharmaceutical products and obtaining FDA and other regulatory approvals.
Therefore, our competitors may succeed in obtaining FDA approval for products
faster than we could. Even if we commence commercial sales of our products, we
will also be competing against their manufacturing efficiency and marketing
capabilities, areas in which we have limited or no experience.
Although we believe that our ownership of patents for our nasal delivery
products will limit direct competition with these products, we must also compete
with other promising technologies such as controlled release, target organ or
site release, pumps, polymers, microemulsion, monoclonal antibodies, inhalation,
ocular, liposomal, implants, transdermal passive and transdermal
electrotransport. Our competitors may develop other products using these or
other delivery alternatives that may be as or more effective than our products
and proposed products. We may not be able to compete effectively with other
commercially available products or drug delivery technologies.
If We Have a Problem With Our Manufacturing Facility, If We or Our Suppliers
Fail to Comply with Applicable Regulations, or If We Fail to Broaden Our Sources
of Supply, We May Not Be Able To Market Our Products or Conduct Clinical Trials
Generally, we manufacture all of our products for clinical and commercial use at
our principal manufacturing facility located in Hauppauge, New York. Although it
is our intent to have multiple suppliers for materials and components of our
manufactured products, we cannot ensure that this will occur. In addition, we
must produce these products in compliance with federal and state regulations.
These authorities also subject our facilities to inspection. In addition, some
of our key suppliers, such as Roussel Corporation, SGD Pharma, and Pfeiffer of
America, are also subject to regulatory compliance. If we have a problem at our
manufacturing facility, or if we or our suppliers fail to comply with federal
and state regulations or otherwise fail to perform their respective obligations
in a timely fashion or not at all, these problems or failures could cause a
delay in clinical trials or the supply of product to market. Any significant
delay or failure to perform could also jeopardize our performance contracts with
collaborative partners, result in material penalties to us, and jeopardize the
commercial viability of our products.
Changes in the Health Care Industry That Are Beyond Our Control May Be
Detrimental To Our Business
The health care industry is changing rapidly as the public, government, medical
professionals and the pharmaceutical industry examine ways to broaden medical
coverage while controlling the increase in health care costs. Potential changes
could put pressure on the prices of prescription pharmaceutical products and
reduce our business or prospects. We cannot predict when, if any, proposed
health care reforms will be implemented, and these changes are beyond our
control.
If There Are Unforeseen or Unknown Liabilities in Connection With the Operation
of Our Acquired Business, Atossa, These Liabilities Will Reduce Our Working
Capital, Liquidity and Profitability
On August 8, 2000, we acquired Atossa HealthCare Inc., a development stage
company based in Washington state which is developing a proprietary platform of
diagnostics and treatments related to breast cancer risk assessment and
therapeutics and other women's health care products. We effected the acquisition
via a merger of Atossa Acquisition Corporation Inc., a wholly owned subsidiary
of Nastech, with and into Atossa, after which Atossa became a wholly owned
subsidiary of Nastech. The total consideration we paid for Atossa -- 600,000
shares of our common stock with a market value of approximately $2.5 million --
was agreed upon between parties after extensive negotiations. The amount of
consideration paid to Atossa was based exclusively on these negotiations. The
consideration paid does not bear any relationship to the net book value of
Atossa and may not necessarily bear any relationship to any other recognized
measure of value.
Unforeseen and unknown liabilities may arise in connection with the ownership
and operation of Atossa. Although we believe that the acquisition structure and
due diligence we employed minimize the risk of pre-existing claims being
successfully asserted against Nastech, it is possible that others will assert
against us claims they originally had against Atossa and that these claims may
result in material liabilities to us. The occurrence of any liability of this
kind can reduce our working capital and liquidity and make us less profitable.
9
If We Lose Our Key Personnel, or If We Are Unable To Attract and Retain
Additional Personnel, Then We May Be Unable To Successfully Develop Our Business
If we lose our President, Chief Executive Officer and Chairman of the Board, Dr.
Steven Quay, or any of our other key managers, this event could seriously harm
our business. Although we generally execute employment agreements with key
personnel, this is not a guarantee that we will be able to retain them or that
we will be able to replace any of them if we lose their services for any reason.
Competition for these managers is intense. In addition, the location of our
facilities may limit the pool of technical talent available to us. We have
employed many of our key managers for several years. If we have to replace any
of these individuals, we will not be able to replace the significant amount of
knowledge that they have about our operations. We do not maintain "key man"
insurance policies on any of our managers.
We Expect To Sell Shares of Our Common Stock in the Future, and These Sales Will
Dilute the Interests of Security Holders and Depress the Price of Our Common
Stock
As of September 30, 2001, there were 8,054,676 shares of common stock
outstanding, there were outstanding options to purchase approximately 2,125,372
shares of our common stock, and there were outstanding warrants to purchase
approximately 756,707 shares of our common stock, including the 100,000 shares
of common stock which are issuable under the warrant we granted on August 16,
2001 to Castlebar as consideration for Castlebar's consent under the equity line
of credit agreement to our private placement of shares to the other selling
stockholders in October 2001. There are also 1,249,500 shares of common stock
which are issuable under the equity line of credit and under the warrants which
we may grant in the future to Castlebar and Jesup & Lamont, and 68,000 shares of
common stock underlying the warrants we granted to Jesup & Lamont on October 18,
2001 as a placement fee for their services in introducing us to some of the
selling stockholders in connection with the private placement of our shares in
October 2001. We may also issue additional shares in acquisitions, financings or
in connection with the grant of additional stock options to our employees,
officers, directors and consultants under our stock option plans.
The issuance or even the potential issuance of shares under the equity line of
credit, in connection with any other additional financing, and upon exercise of
warrants, options or rights will have a dilutive impact on other stockholders
and could have a negative effect on the market price of our common stock. In
addition, if we draw down under the equity line of credit, we will issue shares
to Castlebar at a discount to the daily volume weighted average prices of our
common stock during the 22 trading days after notification of a drawdown. This
will further dilute the interests of other stockholders.
If We Draw Down on the Equity Line of Credit When Share Prices Are Decreasing,
We Will Need To Issue More Shares, which Will Lead To Dilution and Potentially
Further Price Decrease
As we sell shares of our common stock to Castlebar under the equity line of
credit, and then Castlebar sells the common stock to third parties, our common
stock price may decrease due to the additional shares in the market. If we
decide to draw down on the equity line of credit as the price of our common
stock decreases, we will need to issue more shares of our common stock for any
given dollar amount that Castlebar invests, subject to the minimum selling price
we specify. The more shares that we issue under the equity line of credit, the
more diluted our shares will be and the more our stock price may decrease. This
may encourage short sales, which could place further downward pressure on the
price of our common stock.
The Anti-Takeover Provisions of Our Stockholder Rights Plan May Entrench
Management, May Delay or Prevent Beneficial Takeover Bids by Third Parties, and
May Prevent or Frustrate any Shareholder Attempt to Replace or Remove the
Current Management Even If the Shareholders Consider It Beneficial To Do So
We have a stockholder rights plan designed to protect our stockholders from
coercive or unfair takeover tactics. Under the plan, we declared a dividend of
one preferred stock purchase right for each share of common stock outstanding on
March 17, 2000. Each preferred stock purchase right entitles the holder to
purchase from Nastech 1/1000 of a share of Series A Junior Participating
Preferred Stock for $50. Generally, in the event any acquiring entity or group
accumulates or initiates a tender offer to purchase 15% or more of our common
stock, then each holder of a preferred stock purchase right, other than the
acquiring entity, will have the right to receive, upon exercise of the preferred
stock purchase right, shares of Nastech common stock or shares in the acquiring
entity having a value equal to two times the exercise price of the preferred
stock purchase right.
The intent of the stockholder rights plan is to protect our stockholders'
interests by encouraging anyone seeking control of our company to negotiate with
our board of directors. However, our stockholder rights plan could make it more
difficult
10
for a third party to acquire us without the consent of our board of directors,
even if doing so would be beneficial to our shareholders. These provisions apply
even if the offer may be considered beneficial by some stockholders.
Furthermore, the anti-takeover provisions of our stockholder rights plan may
entrench management and make it more difficult for shareholders to replace
management even if the shareholders consider it beneficial to do so.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus and in the documents
that are incorporated by reference in this prospectus, all of which are subject
to risks and uncertainties. Forward-looking statements include information
concerning our possible or assumed future results of operations. Also, when we
use words such as "believe," "expect," "anticipate" or similar expressions, we
are making forward-looking statements. You should not rely on the
forward-looking statements in this prospectus. Although we believe that the
expectations reflected in forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those
described in "Risk Factors" and elsewhere in this prospectus.
We believe that it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors described
in the preceding pages, as well as any cautionary language in this prospectus,
provide examples of risks, uncertainties and events that may cause our actual
results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in our common stock, you should be
aware that the occurrence of the events described in these risk factors and
elsewhere in this prospectus could materially affect our business, lower our
operating results and worsen our financial condition.
----------------------------
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. The information contained in this prospectus is
current only as of the date on the front of this prospectus.
11
USE OF PROCEEDS
We will not receive any proceeds from the selling stockholders' sales of common
stock. However, we will receive the proceeds upon the exercise of Castlebar's
and Jesup & Lamont's warrants when, and if, they exercise the warrants. If all
168,000 shares underlying the warrants granted to Castlebar and Jesup & Lamont
which are covered by this prospectus are issued through the exercise of those
warrants, then based upon the exercise price of $10.00 and $9.56 per share,
respectively, we would realize net proceeds of $1,650,080.
We expect to use substantially all the net proceeds from the exercise of the
warrants referred to above for general corporate purposes, including working
capital, and research and development. The amounts we actually expend for
working capital and other purposes may vary significantly and will depend on a
number of factors including, but not limited to, the actual net proceeds
received, the amount of our future revenues and other factors described under
"Risk Factors." Accordingly, our management will retain broad discretion in the
allocation of the net proceeds. A portion of the net proceeds may also be used
to acquire or invest in complementary businesses, technologies, product lines or
products. We have no current plans, agreements or commitments with respect to
any of these transactions, and we are not currently engaged in any negotiations
with respect to any of these transactions. Pending these uses, the net proceeds
of this offering will be invested in money market funds and/or short-term,
interest-bearing, investment-grade securities or guaranteed obligations of the
U.S. government.
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the symbol
"NSTK." The following table describes the range of high and low bid prices per
share of our common stock as reported on the Nasdaq National Market for the last
two and one-half years. These quotations represent prices between dealers and do
not reflect retail markups, markdowns or commissions and may not necessarily
represent actual transactions.
Low High
--- ----
2001
First Quarter........................................ $3.88 $9.94
Second Quarter ...................................... $4.37 $8.77
Third Quarter........................................ $5.70 $11.37
2000
First Quarter........................................ $2.53 $8.38
Second Quarter....................................... $3.25 $5.88
Third Quarter........................................ $3.81 $7.50
Fourth Quarter....................................... $5.44 $8.97
1999
First Quarter........................................ $3.00 $6.25
Second Quarter....................................... 2.56 3.63
Third Quarter........................................ 2.75 4.44
Fourth Quarter....................................... 1.56 3.63
We believe that there are currently approximately 5,000 record holders of our
common stock, including several brokerage firms holding shares in street name
for beneficial owners. On October 31, 2001, the closing bid price of our common
stock as quoted on the Nasdaq National Market was $9.00.
The selling stockholders will sell their shares on the Nasdaq National Market,
on the over-the-counter market or otherwise at prices related to the then
current market price, or in negotiated private transactions, or in a combination
of these methods. The selling stockholders will act independently of us in
making decisions with respect to the form, timing, manner and size of each sale.
12
SELLING STOCKHOLDERS
On October 18, 2001, we raised approximately $5,800,000 in gross proceeds
through a private sale of 1,100,000 newly issued shares of our common stock to
the investors listed in the "Selling Stockholders" section below. Dain Rauscher
Incorporated, a registered broker-dealer, acted as placement agent for the
private offering. In connection with the private offering, we granted warrants
to purchase 68,000 shares of our common stock to Jesup & Lamont Securities
Corporation, a registered broker-dealer, as a placement fee for their services
in introducing us to some of the selling stockholders. In addition, in order to
consummate the private placement to the selling stockholders, we needed to
obtain a consent to the private placement from Castlebar Enterprises Limited
under our equity line of credit agreement. As consideration for Castlebar's
consent to our private placement to the other selling stockholders, as well as
all future private offerings of our securities if we sell those securities for
cash with registration rights, we granted Castlebar warrants to purchase 100,000
shares of our common stock. Jesup & Lamont may exercise its warrants at any time
prior to May 11, 2005, at a strike price of $9.56 per share of common stock.
Castlebar may exercise its warrants at any time prior to July 11, 2003, at a
strike price of $10.00 per share of common stock. Neither Jesup & Lamont, nor
Castlebar will be obligated to exercise the warrants and to purchase any shares
of common stock under these warrants.
The selling stockholders may use this prospectus to resell the 1,100,000 shares
that we issued to them, plus the 168,000 shares underlying the warrants that we
granted to Castlebar and Jesup & Lamont.
The following table lists the selling stockholders and other information
regarding their beneficial ownership of the shares of common stock as of October
18, 2001. The second column lists the number of shares of common stock
beneficially owned by each selling stockholder on October 18, 2001, including
the shares of common stock underlying any warrants held by them. Because the
selling stockholders may sell all, a portion, or none of their shares, we cannot
estimate the number of shares that will be held by the selling stockholders
after the completion of this offering.
Maximum Number of Shares
Number of Shares Owned that May Be Sold in this
Name of Security Holder Prior to this Offering (1) Offering (2)
------------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. FBO: MPM BioEquities 225,000 225,000
Master Fund LP, as custodian for MPM
BioEquities Master Fund LP........................
Barnett & Company, as nominee for RS Smaller 75,000 75,000
Company Growth Fund...............................
Perceptive Life Sciences Master Fund, Ltd............ 200,000 200,000
Coralbasin & Co., as nominee for SAFECO Common 1,052,500 (6) 400,000
Stock Trust Growth Opportunities Fund (3).........
Coralrock & Co., as nominee for SAFECO
Resource Series Trust Growth Opportunities 515,000 (7) 200,000
Portfolio (3).....................................
Castlebar Enterprise Limited (4)..................... 133,000 100,000
Jesup & Lamont Securities Corporation (5)............ 139,475 (8) 68,000
----------
(1) Includes shares of common stock issuable upon the exercise of all warrants
beneficially owned by the selling stockholders.
(2) Assumes that each selling stockholder will sell all of the shares of
common stock offered under this prospectus, but not any other shares of
common stock beneficially owned by the selling stockholder.
(3) SAFECO Asset Management Company is the investment manager for the selling
stockholder and consequently has voting power and investment discretion
over the securities held by the selling stockholder.
(4) Excludes 1,200,000 shares of common stock issuable to Castlebar under our
equity line of credit agreement, and 33,000 shares of common stock
issuable upon exercise of the warrants that we may grant in the future to
Castlebar in connection with the equity line of credit.
13
(5) Howard F. Curd, the chief executive officer of Jesup & Lamont, has the
sole authority to exercise any warrants granted to Jesup & Lamont and to
sell and vote the shares of common stock issued under the warrants.
(6) Includes 435,000 shares of common stock that we issued to Coralbasin, plus
217,500 shares of common stock issuable upon exercise of warrants that we
granted to Coralbasin in our private placement of shares on March 22,
2001.
(7) Includes 210,000 shares of common stock that we issued to Coralrock, plus
105,000 shares of common stock issuable upon exercise of warrants that we
granted to Coralrock in our private placement of shares on March 22, 2001.
(8) Includes 71,475 shares of common stock underlying warrants that we
previously granted to Jesup & Lamont in connection with the private
placements of our shares on March 22, 2001 and on May 11, 2001. The 71,475
shares underlying these warrants are not being registered under this
registration statement and may not be offered and sold using this
prospectus.
Except for their ownership of common stock, to the best of our knowledge, none
of the selling stockholders, other than Castlebar, Jesup & Lamont, and the Funds
managed by SAFECO Asset Management Company, have held any position or office
with us, or had any other material relationship with us, within the past three
years.
Castlebar Enterprises Limited is a British Virgin Island corporation engaged in
the business of investing in publicly traded equity securities for its own
account. In July 2000, Castlebar entered into an equity line of credit agreement
with us, under which Castlebar agreed to purchase up to 1,200,000 shares of our
common stock during the 36-month period from January 26, 2001 until January 25,
2004. During this 36-month period, we may request a drawdown under the equity
line of credit by selling shares of our common stock to Castlebar, and Castlebar
will be obligated to purchase the shares. Castlebar may then resell all or a
portion of these shares using a registration statement which we previously filed
with the Securities and Exchange Commission to allow Castlebar to freely resell
their shares. Due to the nature of the equity line of credit, Castlebar is
deemed a statutory "underwriter" within the meaning of Section 2(11) of the
Securities Act of 1933 in connection with its resales of any shares it purchases
from us under the equity line of credit. Castlebar's principal offices are
located c/o Beacon Capital Management, Harbour House, 2nd Floor, Waterfront
Drive, Road Town, Tortola, British Virgin Islands. The two directors of
Castlebar, David Sims and Lamberto Banchetti, each have the authority to make
investment decisions for Castlebar and to vote any shares of our common stock
that Castlebar may hold from time to time.
Other than the 33,000 warrants we granted to Castlebar in connection with
closing the equity line of credit agreement and the 100,000 warrants we granted
to Castlebar as consideration for Castlebar's consent to our private placement
of shares to the other selling stockholders as well as to all future private
offerings of our securities if we sell those securities for cash with
registration rights, Castlebar does not currently own any of our securities.
Other than its obligation to purchase shares of common stock under the equity
line of credit agreement, Castlebar has no other commitments or arrangements to
purchase or sell any of our securities. Castlebar has not held any positions or
offices or had material relationships with us or any of our affiliates within
the past three years other than as stated above.
Jesup & Lamont acted as placement agent in connection with the private
placements of our shares on March 22, 2001 and on May 11, 2001, and received a
fee for such services. Jesup & Lamont also acted as placement agent in
connection with our equity line of credit agreement with Castlebar in July 2000.
In connection with private placements on March 22, 2001 and May 11, 2001, we
granted 86,475 warrants, of which 15,000 have been exercised, to Jesup & Lamont
and we paid them an amount in cash equal to 6% of the gross proceeds of the
March 2001 and May 2001 offerings as a placement fee and agreed to register the
shares underlying the warrants. In connection with the equity line of credit, we
granted 16,500 warrants to Jesup & Lamont as a placement fee and agreed to
register the shares underlying the warrants, all of which Jesup & Lamont has
previously exercised. At the closing of each drawdown under the equity line of
credit, we will also grant Jesup & Lamont warrants to purchase an additional
1,000 shares of common stock for each $100,000 we draw down under the equity
line of credit, up to a maximum of 16,500 additional warrants, and we will pay a
brokerage fee to Jesup & Lamont equal to 4% of the net purchase price for each
drawdown. Lastly, in connection with the private offering of our shares on
October 18, 2001, we granted 68,000 warrants Jesup & Lamont as a placement fee
for their services in introducing us to some of the selling stockholders.
Other than the 139,475 currently outstanding warrants that we granted to Jesup &
Lamont as placement fees in connection with the equity line of credit agreement,
our March 2001 private offering, our May 2001 offering, and our October 2001
offering, Jesup & Lamont does not currently own any of our securities. Except
for the financing events which resulted in their ownership of common stock and
warrants, to the best of our knowledge, neither Jesup & Lamont, nor any of its
affiliates or control persons has held any positions or offices, or had other
material relationships, with us or any of our affiliates within the past three
years. If, in the future, Jesup & Lamont's relationship with us changes, we will
amend or supplement this prospectus to update this disclosure.
14
The funds managed by SAFECO Asset Management Company currently own approximately
17.1% of our common stock. In connection with the private offering of our shares
on October 18, 2001, our board of directors approved SAFECO's acquisition of
more than 15% of our outstanding common stock and resolved that SAFECO would not
be an "acquiring person" under our stockholders rights plan, and therefore that
the preferred stock purchase rights under our stockholders rights plan would not
be triggered by SAFECO's acquisition of shares. See "Description of Capital
Stock--Stockholder Rights Plan" below. Except for the financing events which
resulted in their ownership of common stock and warrants, to the best of our
knowledge, neither SAFECO Asset Management Company, nor any of its affiliates,
managed funds, or control persons has held any position or office with us, or
had any other material relationship with us or our affiliates, within the past
three years.
15
PLAN OF DISTRIBUTION
The selling stockholders may offer for sale up to 1,268,000 shares of our common
stock using this prospectus. We do not know for certain how or when the selling
stockholders will choose to sell their shares of common stock. We will not
receive any proceeds from the selling stockholders' sale of shares of common
stock.
To permit the selling stockholders to resell the shares of common stock issued
to them, we agreed to file a registration statement and all necessary amendments
and supplements with the SEC for the purpose of registering and maintaining the
registration of the shares. We will bear all costs relating to the registration
of the common stock offered using this prospectus. We will keep the registration
statement effective until the earliest of any of the following dates:
o October 18, 2003 or, in the case of Jesup & Lamont's warrant shares,
the first anniversary of the date of issuance of the warrant shares,
but in any event not later than May 11, 2005;
o the date after which the shares of common stock can be sold without
restriction by the volume limitations of Rule 144(e) of the
Securities Act of 1933; or
o the date after which the selling stockholders sell all of the shares
of common stock covered by this registration statement.
Selling stockholders will offer our common stock into the public market from
time to time using this prospectus, although there can be no assurance that they
will in fact sell any or all of the securities that this prospectus covers. The
sales may be made on the Nasdaq National Market, on the over-the-counter market
or otherwise at prices related to the then current market price, or in
negotiated private transactions, or in a combination of these methods. The
selling stockholders will act independently of us in making decisions with
respect to the form, timing, manner and size of each sale. The selling
stockholders have informed us that there are no existing arrangements between
them and any other stockholder, broker, dealer, underwriter or agent relating to
the sale or distribution of shares of common stock which they may sell through
this prospectus.
The shares of common stock may be sold in one or more of the following manners:
o block trades in which the broker or dealer so engaged will attempt
to sell the shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases that a broker or dealer makes for its account under this
prospectus; or
o ordinary brokerage transactions and transactions in which the broker
solicits purchases.
The selling stockholders will pay all commissions and their own expenses, if
any, associated with the sale of the shares of common stock. The selling
stockholders will sell shares without paying any underwriting discounts or
commissions, except for usual and customary selling commissions paid to brokers
or dealers. However, in effecting sales, brokers or dealers that the selling
stockholders engage may arrange for other brokers or dealers to participate.
Except as disclosed in a supplement to this prospectus, no broker-dealer will be
paid more than a customary brokerage commission in connection with any of the
selling stockholders' sales of shares of common stock. The selling stockholders
may pay brokers or dealers commissions, discounts or other concessions in
amounts to be negotiated immediately prior to the sale. The compensation to a
particular broker-dealer may be in excess of customary commissions. Any profits
that these broker-dealers make on any resale of the shares of common stock as a
principal and any commissions that these broker-dealers receive may be deemed to
be underwriting discounts and commissions under the Securities Act of 1933. The
selling stockholders may pay commissions to any broker-dealer participating in
these transactions as agent. The purchaser of the shares of common stock may
also pay commissions to any broker-dealer participating in these transactions if
the broker-dealer acts as agent for the purchaser.
Broker-dealers may agree with the selling stockholders to sell a specified
number of shares of common stock at a stipulated price per share and, to the
extent a broker-dealer is unable to do so acting as agent for the selling
stockholders, to purchase as principal any unsold shares of common stock at a
price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares of common stock as principal may
thereafter resell the shares of common stock from time to time in transactions,
which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above, in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection
16
with the resales may pay to or receive from the purchasers of the shares of
common stock commissions computed as described above. Brokers or dealers who
acquire shares of common stock as principal and any other participating brokers
or dealers may be deemed to be underwriters in connection with resales of the
shares of common stock.
The selling stockholders and any broker-dealers or agents that participate with
the selling stockholders in the sale of shares may be "underwriters" within the
meaning of the Securities Act of 1933. Any commissions received by
broker-dealers or agents on the sales and any profit on the resale of shares
purchased by broker-dealers or agents may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933.
The selling stockholders are also subject to applicable state and federal
securities laws, rules and regulations, including Rule 10b-5 and Regulation M
under the Exchange Act of 1934, and the rules and regulations of the Nasdaq
National Market. Under these rules, the selling stockholders may not:
o engage in market making activities at the same time as they are
engaged in a distribution of the shares of common stock for a period
beginning when this person becomes a distribution participant and
ending upon this person's completion of participation in a
distribution;
o engage in any stabilization activity in connection with our
securities;
o impose penalty bids or effect passive market making bids; and
o bid for or purchase any of our common stock or attempt to induce any
person to purchase any of our common stock other than as permitted
under the Exchange Act.
In addition, if any of the selling stockholders is an "affiliated purchaser" as
defined in Regulation M, they must coordinate their sales under this prospectus
with each other and with us for purposes of Regulation M as Securities Exchange
Act Release 34-38067 (December 20, 1996) requires. None of the selling
stockholders, nor any of their controlling persons, has been an officer,
director or otherwise an affiliate of our company during the last three years.
These restrictions, and the other rules and regulations applicable to selling
stockholders, may affect the marketability of the shares of common stock.
Under the terms of the private offering of October 18, 2001, we agreed to
indemnify the selling stockholders against any liabilities they may incur as a
result of any untrue statement of a material fact or omission to state a
material fact in the registration statement, of which this prospectus is a part,
or arising out of any failure by us to fulfill any undertaking included in the
registration statement, or arising out of any inaccuracy in our representations
and warranties contained therein, or any failure by us to perform our
obligations under the private offering agreements. This indemnification includes
liabilities that the selling stockholders may incur under the Securities Act of
1933.
DESCRIPTION OF CAPITAL STOCK
The following summary describes the material provisions of our capital stock and
is subject to, and qualified in its entirety by, our Certificate of
Incorporation including any amendments, and our By-laws, all of which are
incorporated by reference as exhibits to the registration statement of which
this prospectus is a part and by provisions of applicable law.
We are authorized to issue up to 25,000,000 shares of common stock, par value
$0.006, and 100,000 shares of preferred stock, par value $0.01. As of September
30, 2001, 8,054,676 shares of common stock were issued and outstanding, and no
shares of preferred stock were outstanding. We believe that there are
approximately 5,000 record holders of our common stock, including several
brokerage firms holding shares in street name for beneficial owners.
Common Stock
All of our issued and outstanding shares of common stock are validly issued,
fully paid and non-assessable. All shares of our common stock to be outstanding
after this offering, when paid for and issued, will be validly issued, fully
paid and non-assessable. On March 2, 2000, in connection with the adoption of a
shareholder rights plan, our board of directors created and designated 10,000
shares of Series A Junior Participating Preferred Stock. The rights of holders
of our common stock are subject to the rights of the holders of our Series A
Junior Participating Preferred Stock and will be subject to the rights of any
preferred stock that we may create and issue in the future. The rights of
preferred stockholders may adversely affect the rights of the common
stockholders.
17
Voting Rights. Holders of our common stock are entitled to one vote per share on
all matters requiring a vote of the stockholders. Common stockholders have no
right to cumulative voting in the election of directors. Accordingly, a simple
majority of votes can elect each of our directors.
Liquidation Rights. In the event of liquidation of our company, all holders of
our common stock will participate on an equal basis in the net assets available
for distribution after payment of our liabilities and payment of any liquidation
preferences in favor of outstanding shares of preferred stock, if there are any.
Dividend Rights. Holders of our common stock are entitled to receive dividends
in cash or property on an equal basis, if and when the board of directors
declares dividends on the common stock, subject to any preference in favor of
outstanding shares of preferred stock, if there are any. It is our present
intention to retain our earnings, if any, for use in our business. Dividends
are, therefore, unlikely in the foreseeable future.
Preemptive Rights and Redemption. The holders of our common stock have no
preemptive rights to maintain their respective percentage ownership interest in
our other securities. Our common stock is not redeemable or subject to further
calls or assessments, although we have in the past effected a 1:100 reverse
split of our common stock followed immediately by a 100:1 forward split to
enable us to redeem odd-lot shares which were creating excessive administrative
costs for us. As of December 31, 1999, we redeemed and then retired 110,736
odd-lot shares. We also acquired 77,000 shares of our common stock in 1999 and,
as of September 30, 2001, we are holding 40,764 of these shares as treasury
stock.
Preferred Stock
We are authorized to issue up to 100,000 shares of preferred stock, without
stockholder approval.
Under the authority granted to and vested in our board of directors, in March
2000, the board of directors created a series of preferred stock and fixed the
relative rights, preferences and limitations of the stock. The series was
designated as Series A Junior Participating Preferred Stock and consisted of
10,000 shares. The dividend and distribution rights of the holders of the Series
A Junior Participating Preferred Stock are superior to the dividend and
distribution rights of the holders of our common stock, but are junior to all
series of any other class of our preferred stock with respect to the payment of
dividends and the distribution of assets. The Series A Junior Participating
Preferred Stock is not redeemable.
Each share of Series A Junior Participating Preferred Stock entitles the holder
to 1,000 votes on all matters submitted to a vote of our stockholders, and vote
together as one class with the holders of our common stock. However, the holders
of the Series A Junior Participating Preferred Stock are entitled to vote
together as a single class on any amendment to our Certificate of Incorporation
which would materially alter or change the powers, preferences or special rights
of the Series A Junior Participating Preferred Stock.
Upon our liquidation, dissolution or winding up, the holders of Series A Junior
Participating Preferred Stock are entitled to receive $1,000, plus the amount of
any accrued and unpaid dividends, for each share of Series A Junior
Participating Preferred Stock held, subject to adjustment. Additionally, upon
any consolidation or merger of our company in which the shares of our common
stock are exchanged for other stock, securities, cash or any other property,
then each share of Series A Junior Participating Preferred Stock shall be
similarly exchanged, at the same time, into an amount per share equal to 1,000
times the aggregate amount of stock, securities, cash or any other property in
which the common stock was exchanged. The relative rights, preferences and
limitations of the Series A Junior Participating Preferred Stock are more fully
described in the Designations of Rights, Terms and Preferences of Series A
Junior Participating Preferred Stock.
Our board of directors has the express authority, without any stockholder vote
or action, to create additional series of preferred stock and to fix the rights,
preferences, privileges and restrictions of the preferred stock, including
dividend rights, conversion rights, voting rights, terms of redemption,
redemption prices, and liquidation preferences, and to set the number of shares
constituting any series of preferred stock.
It is impossible for us to state the actual effect on common stockholders if the
board of directors designates a new series of preferred stock. The effects of
the designation will not be determinable until the rights accompanying the
series have been designated. The issuance of preferred stock could adversely
affect the voting power, liquidation rights or other rights that owners of
common stock or other series' of preferred stock hold. We have no present plans
to issue any additional shares of preferred stock.
18
Stockholder Rights Plan
In February 2000, we implemented a stockholder rights plan designed to protect
our stockholders from coercive or unfair takeover tactics by causing shares of
our preferred stock with voting or conversion rights to be issued to holders who
might side with our board of directors in opposing a takeover bid. In addition,
our issuance of the shares of preferred stock with voting or conversion rights
could dilute the stock ownership of those holders. Under the stockholder rights
plan, we declared a dividend of one preferred stock purchase right for each
share of common stock held of record on March 17, 2000. The preferred stock
purchase rights are exercisable when a person or group of affiliated persons
accumulate or initiate a tender offer to purchase 15% or more of our common
stock, unless our board of directors approves the transaction. Upon exercise,
each preferred stock purchase right will entitle its holder, other than the
acquirer and its affiliates, to purchase 1/1000 of a share of our Series A
Junior Participating Preferred Stock at a price of $50 per one one-thousandth of
a preferred share. The holder of each right will receive upon exercise, common
shares having a value equal to two times the exercise price of the right. For
example, at an exercise price of $50 per right, each right that the acquiror
does not own would be entitled to purchase $100 worth of common stock for $50.
Assuming a value of $25 per common share at the time, the holder of each right
would be entitled to purchase four common shares for $50.
In our private placement of October 2001, SAFECO Asset Management Company became
the beneficial owner of more than 15% of our outstanding common stock. Under the
stockholder rights plan, SAFECO's purchase of more than 15% of our outstanding
common stock would have triggered the exerciseability of the preferred stock
purchase rights. However, prior to SAFECO's accumulation of more than 15% of our
outstanding common stock, our board of directors approved SAFECO's acquisition
of these shares and resolved that SAFECO would not be an "acquiring person"
under our stockholders rights plan, and therefore that the preferred stock
purchase rights under our stockholder rights plan would not be triggered by this
acquisition.
Options and Warrants
Under our stock option plans, we are authorized to grant options to purchase a
maximum of 2,500,000 shares of common stock to our employees, officers, and
directors, and to other persons who provide us with services. As of September
30, 2001, a total of 2,882,079 options and warrants were outstanding, and 51,748
options were available for future grants under our stock option plans. Our board
of directors determine the terms of our options at the time of grant.
In connection with our 1997 public offering, we issued to the representatives of
the underwriters, warrants to purchase a total of 69,000 shares of common stock
at an exercise price of $16.80 per share, exercisable at any time through
January 23, 2002.
Following our acquisition of Atossa HealthCare Inc. on August 8, 2000, we hired
Dr. Steven C. Quay as our new President, Chief Executive Officer and Chairman of
the Board and granted him options to purchase a total of 600,000 shares of
common stock. The exercise price of the options varies from $4.09 per share to
$15.00 per share, with a weighted average exercise price of $8.60. All of these
options regardless of the exercise price will vest at the rate of 33.33% per
full year of service, and will not vest pro-rata during the interim periods.
In connection with a private offering of our shares in March 2001, we granted a
total of 430,062 warrants to the investors and 73,110 warrants to Jesup & Lamont
as placement agent, each with an exercise price of $6.3375 per share,
exercisable at any time through March 22, 2006. These warrants contain
antidilution protections which will adjust the applicable exercise price and/or
the number of shares issuable upon exercise of the warrants upon the occurrence
of specified events such as stock dividends, stock splits, mergers and sales of
all or substantially all of our assets.
In connection with a private offering of our shares in May 2001, we granted a
total of 78,618 warrants to the investors and 13,365 warrants to Jesup & Lamont
as placement agent, each with an exercise price of $6.3375 per share,
exercisable at any time through May 11, 2005. These warrants contain
antidilution protections which will adjust the applicable exercise price and/or
the number of shares issuable upon exercise of the warrants upon the occurrence
of specified events such as stock dividends, stock splits, mergers and sales of
all or substantially all of our assets.
In connection with the private offering of our shares in October 2001, we
granted 100,000 warrants to Castlebar Enterprises Limited as consideration for
Castlebar's consent to our private offering to the other selling stockholders,
as well as all future private offerings of our securities if we sell those
securities for cash with registration rights. Each warrant has an exercise of
$10.00 per share, and is exercisable at any time through July 11, 2001. The
Castlebar and Jesup & Lamont warrants contain antidilution protections which
will adjust the applicable exercise price and/or the number of shares issuable
upon exercise of the warrants upon the occurrence of specified events such as
stock dividends, stock splits, mergers and sales of all or substantially all of
our assets.
In connection with a private offering of our shares in October 2001, we granted
a total of 68,000 warrants to Jesup & Lamont, each with an exercise price of
$9.56 per share, exercisable at any time through May 11, 2005. These warrants
contain antidilution protections which will adjust the applicable exercise price
and/or the number of shares
19
issuable upon exercise of the warrants upon the occurrence of specified events
such as stock dividends, stock splits, mergers and sales of all or substantially
all of our assets.
The following table presents all the options and warrants that were outstanding
as of September 30, 2001, except as otherwise indicated in footnote 9 below:
Number of Shares Weighted Average
Purchasable Exercise Price (1)
----------- ------------------
1,550,372 (2) $5.60
575,000 (3) $8.79
69,000 (4) $16.80
33,000 (5) $5.53
483,232 (6) $6.34
71,475 (7) $6.34
100,000 (8) $10.00
68,000 (9) $9.56
------ -----
2,950,079 $6.86
========= =====
----------
(1) Exercise prices are rounded to the nearest cent.
(2) Shares issuable upon exercise of options granted under the stock option
plans. Does not include any options granted under the plans after
September 30, 2001.
(3) Shares issuable upon exercise of options granted on August 8, 2000, to Dr.
Steven C. Quay.
(4) Total shares issuable upon exercise of warrants granted to Wheat, First
Securities, Inc. and Volpe, Welty & Company, as underwriters in connection
with an offering of our shares in 1997.
(5) Shares issuable upon exercise of the warrants granted to Castlebar in
connection with closing the equity line of credit agreement. Does not
include the additional warrants that may be issued to Castlebar and Jesup
& Lamont upon each drawdown under the equity line of credit.
(6) Total shares issuable upon exercise of warrants granted to investors in
connection with the private offering of our shares in March 2001 and May
2001.
(7) Total shares issuable upon exercise of warrants granted to Jesup & Lamont
as a placement fee in connection with the private offering of our shares
in March 2001 and May 2001.
(8) Shares issuable upon exercise of warrants we granted to Castlebar on
August 16, 2001 in connection with the private offering of our shares in
October 2001.
(9) Shares issuable upon exercise of warrants we granted on October 18, 2001
to Jesup & Lamont in connection with the private offering of our shares in
October 2001.
Holders of options and warrants do not have any of the rights or privileges of
our stockholders, including voting rights, prior to exercise of the options and
warrants. We have reserved sufficient shares of authorized common stock to cover
the issuance of common stock subject to the options and warrants.
20
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 of the Delaware General Corporation Law, which
prevents an "interested stockholder" from engaging in a "business combination"
with a publicly held Delaware corporation for three years following the date the
person became an interested stockholder, unless:
(1) before the person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved
the business combination;
(2) upon consummation of the transaction that resulted in the interested
stockholder's becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced; or
(3) following the transaction in which the person became an interested
stockholder, the board of directors of the corporation approves the
transaction and holders authorize the transaction at a meeting of
stockholders by the affirmative vote of the holders of 66 2/3% of
the outstanding voting stock of the corporation that the interested
stockholder does not own.
The Delaware General Corporation Law defines an "interested stockholder" as a
person owning 15% or more of a corporation's outstanding voting stock. A
"business combination" includes mergers, stock or asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
The provisions of Section 203 of the Delaware General Corporation Law could have
the effect of delaying, deferring or preventing a change in control.
Indemnification and Limitation of Liability
Our Certificate of Incorporation limits the liability of directors to the
maximum extent that Delaware law as currently or hereafter in effect permits.
Delaware law provides that directors of a corporation will not be personally
liable for monetary damages for breach of their fiduciary duty as a director,
except for liability:
(1) for breach of their duty of loyalty to the corporation or its
stockholders;
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(3) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or
(4) for any transaction from which the director derives an improper
personal benefit.
Our Certificate of Incorporation provides for the mandatory indemnification of,
and advancement of expenses to, our directors, officers, employees and agents to
the maximum extent that Section 145 of the Delaware General Corporation Law, as
amended from time to time, permits.
Transfer Agent
The transfer agent and registrar for our common stock is the American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we have
filed with the SEC. Parts of the registration statement have been omitted from
this prospectus as the rules and regulations of the SEC permit, and this
prospectus does not contain all of the information contained or incorporated by
reference in the registration statement. In particular, statements in this
prospectus concerning the terms of certain agreements and other documents are
necessarily summaries of those documents, and in each case we refer you to the
copy of the applicable document to the extent we have filed it as an exhibit to
the registration statement. For further information on us and the information in
this prospectus, we refer you to the registration statement and its exhibits.
You may obtain copies of the registration statement and its exhibits by paying a
prescribed fee, or you may examine them without charge, at the Public Reference
Room that the SEC maintains at its office
21
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
Regional Offices of the SEC at Citicorp Center, 300 West Madison Street,
Chicago, Illinois 60661. You may obtain information on the operation of the
public reference facilities by calling the SEC at 1-800-SEC-0330. In addition,
you may obtain copies of the registration statement and its exhibits at the
SEC's website located at http://www.sec.gov.
We are a reporting company and file our annual, quarterly and current reports,
proxy material and other information with the Securities and Exchange
Commission. You may read and copy any materials that we file with the SEC at the
SEC's public reference facilities listed above, as well as on the SEC's website.
INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents that we filed separately with the SEC. Any document or
information incorporated by reference is considered to be part of this
prospectus from the date that we file that other document. Any document or
information that we file later with the SEC will automatically update and, where
applicable, supersede any information contained or incorporated by reference in
this prospectus. We specifically incorporate by reference into this prospectus
the following documents or information filed with the SEC:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30,
2001;
4. Our Quarterly Report on Form 10-Q for the quarter ended September
30, 2001;
5. Our Current Report on Form 8-K filed on March 26, 2001;
6. Our Notice of Annual Meeting and Proxy Statement on Schedule 14A for
our Annual Meeting of Stockholders on June 15, 2001;
7. The description of our capital stock contained in our Registration
Statement under Section 12 of the Exchange Act, including any
amendments or reports filed for the purpose of updating such
description; and
8. Any document or information that we file with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934 after the date
of this prospectus and before the date that the offering of the
shares of common stock offered through this prospectus is
terminated.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address (however, we will not include exhibits to those
documents unless they are specifically incorporated by reference into this
prospectus):
Nastech Pharmaceutical Company Inc.
Attn: Steven C. Quay, M.D., Ph.D.
President & Chief Executive Officer
45 Adams Avenue
Hauppauge, New York 11788
(631) 273-0101
In making a decision to buy our common stock, you should rely only on the
information incorporated by reference or contained in the prospectus. We have
not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it.
You should assume that the information appearing in this prospectus is accurate
only as of the date on the front cover of this prospectus. Our business,
financial condition, results of operations and prospectus may have changed since
that date.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon by Dickstein
Shapiro Morin & Oshinsky LLP.
22
EXPERTS
The consolidated financial statements of Nastech Pharmaceutical Company Inc. and
subsidiary as of December 31, 2000 and 1999, and for each of the years in the
three-year period ended December 31, 2000, are incorporated by reference in this
prospectus and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
upon the authority of said firm as experts in accounting and auditing.
23
1,268,000 Shares
[LOGO OF NASTECH PHARMACEUTICAL COMPANY, INC.]
Common Stock
PROSPECTUS
_____________, 2001
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The fees and expenses we incurred in connection with the offering are payable by
us and, other than registration, filing and listing fees, are estimated as
follows:
Securities and Exchange Commission Registration Fee.................. $2,948
Nasdaq Fee for Listing of Additional Shares.......................... $12,680
Legal Fees and Expenses.............................................. $25,000
Accounting Fees...................................................... $5,000
Miscellaneous Fees and Expenses...................................... $10,000
-------
Total................................................................ $55,628
=======
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Our Certificate of Incorporation provides that the indemnification provisions of
Sections 102(b)(7) and 145 of the Delaware General Corporation Law shall be
utilized to the fullest extent possible. Further, the Certificate of
Incorporation contains provisions to eliminate the liability of our directors to
Nastech or its stockholders to the fullest extent permitted by Section 102(b)(7)
of the Delaware General Corporation Law, as amended from time to time.
Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
any threatened, pending or completed actions, suits or proceedings in which such
person is made a party by reason of such person being or having been a director,
officer, employee or agent of the corporation. The Delaware General Corporation
Law provides that Section 145 is not exclusive of other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation
to provide in its certificate of incorporation that a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Our Certificate of Incorporation provides for such
limitation of liability.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, is permitted for our directors, officers or controlling
persons, pursuant to the above mentioned statutes or otherwise, we understand
that the Securities and Exchange Commission is of the opinion that such
indemnification may contravene federal public policy, as expressed in said Act,
and therefore, may be unenforceable. Accordingly, in the event that a claim for
such indemnification is asserted by any of our directors, officers or
controlling persons, and the Commission is still of the same opinion, we (except
insofar as such claim seeks reimbursement from us of expenses paid or incurred
by a director, officer of controlling person in successful defense of any
action, suit or proceeding) will, unless the matter has theretofore been
adjudicated by precedent deemed by our counsel to be controlling, submit to a
court of appropriate jurisdiction the question whether or not indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
At present, there is no pending litigation or proceeding involving any of our
directors, officers or employees as to which indemnification is sought, nor are
we aware of any threatened litigation or proceeding that may result in claims
for indemnification.
I-1
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
Exhibit
Number Description
------ -----------
4.1 Form of Stock Purchase Agreement dated October 18, 2001, between
Registrant and each selling stockholder
4.2 Form of Warrant to Purchase Common Stock dated August 16, 2001,
granted to Castlebar Enterprises Limited
4.3 Form of Warrant to Purchase Common Stock dated October 18, 2001,
granted to Jesup & Lamont
4.4 Rights Agreement dated February 22, 2000 between Registrant and
American Stock Transfer & Trust Registrant as Rights Agent. (Filed
as Exhibit 1 to Registrant's Current Report on Form 8-K (Commission
File No. 0-13789) dated August 8, 2000, and incorporated herein by
reference). The Rights Agreement includes the Designation of Rights,
Terms and Preferences of Series A Junior Preferred Stock as Exhibit
A, the form of Rights Certificate as Exhibit B, and the Summary of
Rights as Exhibit C thereto.
5.1 Opinion and consent of Dickstein Shapiro Morin & Oshinsky LLP
23.1 Consent of KPMG LLP
23.2 Consent of Dickstein Shapiro Morin & Oshinsky LLP (included in
Exhibit 5.1)
24 Power of Attorney (included on the signature page hereof)
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement 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; and
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Hauppauge, State of New York on this 2nd day of
November, 2001.
NASTECH PHARMACEUTICAL COMPANY INC.
By: /s/ Steven C. Quay
------------------------
Steven C. Quay, M.D., Ph.D.
President, Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven C. Quay, M.D., Ph.D., as his true
and lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments or post-effective amendments to this Registration Statement, and to
file the same, with all exhibits thereto, which amendments may make such changes
in this Registration Statement as such agent deems appropriate, and to file any
new registration statement (and any post-effective amendment thereto) which
registers additional securities of the same class and for the same offering as
this Registration Statement in accordance with Rule 462(b) under the Securities
Act (each, a "462(b) Registration Statement"), and the Registrant and each such
person hereby appoints each such Agent as attorney-in-fact to execute in the
name and on behalf of the Registrant and each such person, individually and in
each capacity stated below, any such amendments to this registration statement
and any such 462(b) Registration Statements, and other documents in connection
therewith, with the Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on November 2, 2001.
Signature Title
--------- -----
/s/ Steven C. Quay President, Chief Executive Officer and Chairman of the Board
---------------------------------- (Principal Executive Officer)
Steven C. Quay, M.D., Ph.D.
/s/ Andrew Zinzi Chief Financial Officer
---------------------------------- (Principal Financial and Accounting Officer)
Andrew Zinzi
/s/ Devin N. Wenig Director
----------------------------------
Devin N. Wenig
/s/ Bruce R. Thaw Director
----------------------------------
Bruce R. Thaw
/s/ Grant W. Denison Director
----------------------------------
Grant W. Denison
/s/ Ian R. Ferrier Director
----------------------------------
Dr. Ian R. Ferrier
II-3
/s/ Alvin Katz Director
----------------------------------
Alvin Katz
/s/ John V. Pollock Director
----------------------------------
John V. Pollock
II-4
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
4.1 Form of Stock Purchase Agreement dated October 18, 2001, between
Registrant and each selling stockholder
4.2 Form of Warrant to Purchase Common Stock dated August 16, 2001,
granted to Castlebar Enterprises Limited
4.3 Form of Warrant to Purchase Common Stock dated October 18, 2001,
granted to Jesup & Lamont
4.4 Rights Agreement dated February 22, 2000 between Registrant and
American Stock Transfer & Trust Registrant as Rights Agent. (Filed
as Exhibit 1 to Registrant's Current Report on Form 8-K (Commission
File No. 0-13789) dated August 8, 2000, and incorporated herein by
reference). The Rights Agreement includes the Designation of Rights,
Terms and Preferences of Series A Junior Preferred Stock as Exhibit
A, the form of Rights Certificate as Exhibit B, and the Summary of
Rights as Exhibit C thereto.
5.1 Opinion and consent of Dickstein Shapiro Morin & Oshinsky LLP
23.1 Consent of KPMG LLP
23.2 Consent of Dickstein Shapiro Morin & Oshinsky LLP (included in
Exhibit 5.1)
24 Power of Attorney (included on the signature page hereof)
II-5