As filed with the Securities and Exchange Commission on October __, 1999
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Registration No. 333-86105
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DISCOVERY LABORATORIES, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 350 Main Street 13-3711775
(State or Other Jurisdiction of Incorporation or Suite 307 (I.R.S. Employer
Organization) Doylestown, Pennsylvania 18901 Identification Number)
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
---------------------
Steve H. Kanzer, C.P.A., Esq.
Chairman of the Board
350 Main Street
Suite 307
Doylestown, Pennsylvania 18901
(215) 340-4699
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
Steven A. Fishman, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-7000
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Approximate date of commencement of proposed sale to public: From time to
time or at one time after the effective date of this registration statement as
determined by market conditions.
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. |_|
---------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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864725.8
The information in this prospectus is not complete and may be changed. We 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 such offer or sale is not permitted.
================================================================================
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER __, 1999
7,192,870 Shares
DISCOVERY LABORATORIES, INC.
Common Stock
---------------------
All of the shares of common stock covered by this prospectus are owned by
the stockholders listed in the section of this prospectus called "Selling
Stockholders" or are issuable on exercise of warrants owned by the selling
stockholders. The selling stockholders may sell any or all of their shares from
time to time. See "Plan of Distribution."
We will not receive any of the proceeds of sales by the selling
stockholders. We have agreed to bear all expenses related to this offering,
other than underwriting discounts and commissions and any transfer taxes on the
shares of common stock that the selling stockholders are offering.
Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"DSCO."
Investing in this common stock involves a high degree of risk. See "Risk
Factors" beginning on page 4.
---------------------
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.
---------------------
The date of this Prospectus is October___, 1999.
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864725.8
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY.............................................................1
COMPANY SUMMARY................................................................1
RISK FACTORS...................................................................2
FORWARD-LOOKING STATEMENTS....................................................10
USE OF PROCEEDS...............................................................10
SELLING STOCKHOLDERS..........................................................10
PLAN OF DISTRIBUTION..........................................................12
WHERE YOU CAN FIND MORE INFORMATION...........................................13
INFORMATION INCORPORATED BY REFERENCE.........................................13
EXPERTS.......................................................................14
LEGAL MATTERS.................................................................14
864725.8
PROSPECTUS SUMMARY
Because this is a summary, it does not contain all the details that may be
important to you. You should read this entire prospectus carefully before you
invest.
COMPANY SUMMARY
We are a development stage pharmaceutical company that is focused on
developing compounds intended for use by newborn infants in the hospital. We are
also developing our lead product candidate for the treatment of acute
respiratory distress syndrome and acute lung injury. These are diseases caused
by inflammation of the lungs. Both of our drug candidates are directed towards
respiratory diseases which affect the ability of the lungs to absorb oxygen. We
may seek to enter into collaborations with corporate partners for manufacturing
and marketing of these drugs.
Our lead product is Surfaxin(R), which is a peptide (or small protein
molecule) formulation of a synthetic (or artificial) lung surfactant.
Surfaxin(R) is patterned after a human surfactant protein. It is intended for
use in the treatment of several conditions characterized by insufficient
surfactants. Surfactants are substances produced inside of the lungs.
Surfactants lower the surface tension of the fluid normally present within the
alveoli (air sacs) inside of the lungs. In the absence of sufficient
surfactants, these air sacs tend to collapse. As a result, the lungs do not
absorb sufficient oxygen. Replacement surfactants are currently approved only
for treating respiratory distress syndrome in premature infants. In addition,
infants born with meconium (the baby's first bowel movement in the mother's
womb) in their lungs, also suffer from insufficient surfactant. This condition
can lead to meconium aspiration syndrome. Both of these conditions can be
life-threatening as a result of the failure of the lungs to absorb sufficient
oxygen. In addition, patients with acute respiratory distress syndrome and acute
lung injury typically suffer from surfactant deficiency. Acute respiratory
distress syndrome and acute lung injury can result from a variety of events
including, pneumonia, breathing in the contents of the stomach, trauma, smoke
inhalation and head injury.
We are also developing SuperVent(TM) as a therapy for airway diseases such
as cystic fibrosis and chronic bronchitis. We deliver SuperVent(TM) to patients
using a nebulizer. A nebulizer is a device which turns liquid into mist, making
it breathable. We anticipate using SuperVent(TM) for the treatment of conditions
that are characterized by inflammation, injurious oxidation (a condition where
atoms in tissue lose electrons, which can result in damage to the tissue) and
excessive mucus. Cystic fibrosis is a progressive, lethal respiratory disease
that afflicts approximately 23,000 patients in the United States and a
comparable number in Europe. It is the most common lethal genetic disease among
Caucasians. Because of this genetic defect, cystic fibrosis mucus accumulates
and clogs the lungs, impairing breathing. This can lead to gradual destruction
of the lungs of cystic fibrosis patients. The inability to clear mucus from the
lungs can lead to blockage of the airways in the lungs. A new therapy that
minimizes the complications of cystic fibrosis could have a major impact on the
length and quality of life of its patients.
We are conducting clinical trials of Surfaxin(R) for treatment of Meconium
aspiration syndrome and acute respiratory distress syndrome and acute lung
injury and SuperVent(TM) for treatment of cystic fibrosis.
Surfaxin(R) and SuperVent(TM) are our trademarks. This prospectus also
includes product names, trademarks and trade names of other companies, which
names are the exclusive property of the holders thereof.
Our executive offices are located at 350 South Main Street, Suite 307,
Doylestown, Pennsylvania 18901. Our telephone number is (215) 340-4699 and our
facsimile number is (215) 340-3940.
The Offering
This Prospectus relates to the public offering of up to 7,192,870 shares
of common stock by the stockholders listed in the section of this prospectus
called "Selling Stockholders". The selling stockholders are offering common
stock which is either outstanding or issuable on exercise of warrants owned by
the selling stockholders. The selling stockholders may sell shares to or through
broker-dealers, who may receive compensation in the form of discounts,
864725.8
concessions or commissions from the selling stockholders, the purchasers of the
shares, or both. We will not receive any of the proceeds of sales by the selling
stockholders.
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
consider carefully the following risk factors together with all of the other
information included or incorporated by reference in this prospectus before you
decide to purchase shares of our common stock. The risks and uncertainties
described below are not the only ones facing our company. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also impair our business operations.
If any of the following risks actually occur, our business, financial
condition and results of operations could be materially and adversely affected.
In this event, the trading price of our common stock could decline and you could
lose part or all of your investment.
Because We Are a Development Stage Company, We May Not Successfully Develop and
Market Our Products, and Even If We Do, We May Not Generate Enough Revenue or
Become Profitable.
We are a development stage company. Therefore, you must evaluate us in
light of the uncertainties and complexities present in a development stage
pharmaceutical company. We are conducting research and development on our
product candidates. Accordingly, we have not begun to market or generate
revenues from the commercialization of any of these products. We will need to
engage in significant time-consuming and costly research, development,
preclinical studies, clinical testing and regulatory approval for our products
under development prior to their commercialization. We may fail in the
development and commercialization of our products. We cannot assure you that our
products under development, if successfully developed, will generate sufficient
or sustainable revenues or that we will be profitable.
Because We Do Not Yet Have Product Revenues and Have a History of Losses, Our
Future Profitability Is Uncertain.
We are not currently generating any product revenues. We expect that we
will not generate significant product revenues for the foreseeable future, if
ever. As a development stage company engaged in conducting development and
clinical testing activities, we expect to generate significant operating losses
for the foreseeable future. We expect to incur significant increasing operating
losses over the next several years. To achieve profitable operations, we, either
alone or with others, must successfully develop and obtain regulatory approval
for marketing our products.
We cannot assure you that we will:
-- enter into potentially necessary collaborative arrangements with
third parties;
-- successfully complete preclinical or clinical trials;
-- obtain required regulatory approvals;
-- successfully develop, manufacture and market product candidates; or
-- generate additional revenues or profitability.
If we fail to achieve any of the above goals, we will continue to incur
loss from operations and may have to discontinue our operations.
The Types of Products We Are Developing Are Subject to Risks That Are Difficult
to Foresee, and We May Not Succeed In Our Development Efforts.
864725.8
2
Our development of products is subject to the risks of failure inherent in
the development of new pharmaceutical products based on innovative or new
technologies. During the development process, we could experience unforeseen
problems that could delay us from completing the development of our products. We
cannot assure you that:
-- we will succeed in our research and development efforts;
-- we will successfully market our proposed products.
If We Are Not Able to Raise Additional Capital We Will Need to Discontinue Our
Research and Development Activities. In Addition, Any Additional Financing Could
Result in Dilution.
We do not have enough working capital to continue to meet our research and
development requirements and we may not obtain the additional financing
necessary to meet these requirements. We will need substantial additional
funding to conduct our research and product development activities and, if we
are successful, to manufacture and market products. We intend to raise further
funds through collaborative ventures entered into with potential corporate
partners and through additional debt or equity financings. We cannot provide
assurance that we will obtain these types of arrangements. We have not entered
into arrangements to obtain any additional financing. Any additional financing
could include unattractive terms or result in significant dilution of
stockholders' interests. If we fail to enter into collaborative ventures or to
receive additional funding, we would have to scale back or discontinue our
research and development operations. Furthermore, we could cease to qualify for
listing of our securities on the Nasdaq SmallCap Market. See " We Face the
Possibility of Delisting From the Nasdaq SmallCap Market."
If We Fail to Obtain Regulatory Approval to Commercially Manufacture or Sell Any
of Our Products or If Approval Is Delayed, it Could Increase the Cost of Product
Development or Ultimately Prevent or Delay Our Ability to Sell Our Products and
Generate Revenues.
In order to sell our products that are under development, we must receive
regulatory approvals for our products. The testing, manufacture, distribution,
advertising and marketing of drug products are subject to extensive and rigorous
regulation by governmental authorities in the United States and other countries.
Prior to marketing, any pharmaceutical products developed or licensed by us must
undergo an extensive regulatory approval process required by the FDA and by
comparable agencies in other countries. This process includes preclinical
studies and clinical trials of each pharmaceutical compound to establish its
safety and effectiveness and confirmation by the FDA that good laboratory,
clinical and manufacturing practices were maintained during testing and
manufacturing. The process is lengthy, expensive and uncertain. Clinical trials
generally take two to five years or more to complete.
The testing and approval processes require the expenditure of substantial
resources. The FDA may not give us the requisite approvals for our products on a
timely basis, if ever. The FDA could withdraw any approvals we obtain. Further,
if there is a later discovery of unknown problems or if we fail to comply with
other applicable regulatory requirements at any stage in the regulatory process,
the FDA may restrict or delay our marketing of a product, or force us to make
product recalls. In addition, the FDA could impose other sanctions such as
fines, injunctions, civil penalties or criminal prosecutions. For marketing
outside the United States, we also need to comply with foreign regulatory
requirements governing human clinical trials and marketing approval for
pharmaceutical products. The FDA and foreign regulators have not yet approved
any of our products under development for marketing in the United States or
elsewhere. If the FDA and other regulators do not approve our products, it could
prevent us from marketing our products.
Our Strategy Is to Enter into Collaborative Agreements with Third Parties with
Respect to Our Products and We Have Not Yet Entered into Any of These
Agreements. In Addition, If We Enter into These Agreements and the Third Parties
Do Not Perform, it Could Impair Our Ability to Commercialize Our Products.
Our strategy for the completion of the development and clinical testing of
our products and for the manufacturing, marketing and commercialization of our
products depends upon entering into collaborative arrangements with
pharmaceutical companies. We have not yet entered into any of these
arrangements. Our success will depend upon obtaining partners. In addition, we
will depend on our partners' expertise and dedication of sufficient resources to
develop and commercialize our proposed products. We may in the future grant to
864725.8
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collaborative partners rights to license and commercialize pharmaceutical
products developed under these collaborative agreements. Those rights would
limit our flexibility in considering alternatives for the commercialization of
our products. If we fail to successfully develop these relationships or if our
collaborative partners fail to develop or commercialize successfully any of our
products, it may delay or prevent us from developing or commercializing our
products in a competitive and timely manner.
Discoveries or Developments of New Technologies by Our Competitors or Others May
Make Our Products less Competitive or Make Our Products Obsolete.
The market for biotechnology is characterized by rapidly changing
technology and evolving industry standards. We intend to market our products
under development for the treatment of diseases for which other technologies and
proposed treatments are rapidly developing. The research efforts of others may
render our research and product development efforts obsolete. Third parties
conducting research include governments, major research facilities and large
multinational corporations. Many of the third parties have greater research and
development, manufacturing, marketing, financial, technological, personal and
managerial resources than we have.
If We Are Unable to Protect Our Intellectual Property, Other Companies Could Use
Our Technology in Competitive Products. If We Infringe the Intellectual Property
Rights of Others, Other Companies Could be Prevented from Developing or
Marketing Our Products.
We seek patent protection for our drug candidates so as to prevent others
from commercializing equivalent products in substantially less time and at
substantially lower expense. The pharmaceutical industry places considerable
importance on obtaining patent and trade secret protection for new technologies,
products and processes. Our success will depend in part on our ability and that
of parties from whom we license technology to:
-- defend our patents and otherwise prevent others from infringing on
our proprietary rights;
-- protect trade secrets; and
-- operate without infringing upon the proprietary rights of others,
both in the United States and in other countries.
The patent position of firms relying upon biotechnology is highly
uncertain and involves complex legal and factual questions. To date, there has
emerged no consistent policy at the United States Patent and Trademark Office
("USPTO") regarding the breadth of claims allowed in biotechnology patents or
the degree of protection afforded under these types of patents.
Even If We Obtain Patents to Protect Our Products, Those Patents May Not
Be Sufficiently Broad and Others Could Compete with Us.
We or the parties licensing technologies to us have filed various United
States and foreign patents applications (including international applications
filed under the Patent Cooperation Treaty) with respect to the products and
technologies under our development and the USPTO and foreign patent offices have
issued patents with respect to our products and technologies. Our pending patent
applications, those we may file in the future or those we may license from third
parties may not result in the USPTO or foreign patent office issuing patents.
Also, if patent rights covering our products are not sufficiently broad, they
may not provide us with proprietary protection or competitive advantages against
competitors with similar products and technologies. Furthermore, if patents are
issued to us or our licensors, others may challenge the patents or circumvent
the patents, or the patent office or the courts may invalidate the patents.
Thus, any patents we own or license from third parties may not provide any
protection against competitors. In particular, our issued and pending patents
relating to SuperVent(TM) cover high concentrations of tyloxapol. These patents
could prove meaningless if low concentrations of tyloxapol are as effective as
higher concentrations of tyloxapol in treating the indications which we are
developing our SuperVent(TM) product to treat.
864725.8
4
Patents Obtained by Others Could Limit Our Ability to Market Our Products.
Our commercial success also depends significantly on our ability to
operate without infringing the patents or violating the proprietary rights of
others. The USPTO keeps United States patent applications confidential while the
application is pending. Accordingly, we cannot determine which inventions others
claim in pending patent applications filed by them. We may need to engage in
litigation to defend or enforce our patent and license rights or to determine
the scope and validity of the proprietary rights of others. It will be expensive
and time consuming to defend and enforce patent claims. Thus, even in those
instances in which the outcome is favorable to us, these proceedings can result
in the diversion of substantial resources from our other activities. An adverse
determination may subject us to significant liabilities or require us to seek
licenses that third parties may not grant to us. An adverse determination could
also require us to alter our products or processes or cease altogether any
related research and development activities or product sales.
If We Cannot Meet Requirements under Our License Agreements, We Could Lose
Our Rights to Our Products.
We depend on licensing arrangements to maintain rights to our products
under development. These agreements require us to make payments and satisfy
performance obligations in order to maintain our rights under these licensing
arrangements. In addition, we are responsible for the cost of filing and
prosecuting patent applications and maintaining issued patents licensed to us.
If we do not meet our obligations under our license agreements in a timely
manner, we could lose the rights to our proprietary technology.
We Rely on Confidentiality Agreements That Our Employees Could Breach.
We require all employees to enter into confidentiality agreements that
prohibit the disclosure of confidential information to third parties and require
disclosure and assignment to us of rights to our employees' ideas, developments,
discoveries and inventions while employed by us. In addition, we seek to obtain
these types of agreements from our consultants, advisors and research
collaborators. To the extent that consultants, key employees or other third
parties apply technological information independently developed by them or by
others to any of our proposed projects, disputes may arise as to the proprietary
rights to this type of information. In such case, a court may determine that the
right belongs to a third party. In addition, we will rely on trade secrets and
proprietary know-how that we will seek to protect in part by confidentiality
agreements with our employees, consultants, advisors or others. We cannot assure
you that:
-- they will not breach these agreements;
-- we would obtain adequate remedies for this type of breach; or
-- our trade secrets or proprietary know-how will not otherwise become
known or competitors will not independently develop similar
technology.
If the Third Parties We Depend on for the Manufacture of Our Pharmaceutical
Products Do Not Supply These Products in a Timely Manner, it May Delay or Impair
Our Ability to Develop and Market Our Products.
We rely on outside manufacturers, including Taylor Pharmaceuticals, Inc.,
to produce appropriate clinical grade material that meets standards for use in
clinical studies for our products. We may also enter into arrangements with
other manufacturers for the manufacture of material for use in clinical testing.
Our outside manufacturers may not perform as agreed or may not remain in
the contract manufacturing business for the time required to successfully
produce and market our product candidates. In this event we may fail to find a
replacement manufacturer or develop our own manufacturing capabilities. If we
cannot do so, it could delay or impair our ability to obtain regulatory approval
for our products.
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In addition, our third-party manufacturers are required to register
manufacturing facilities with the FDA and foreign regulatory authorities. The
facilities are subject to inspections confirming compliance with good
manufacturing practice requirements established with the FDA or corresponding
foreign regulations. If our third-party foreign or domestic suppliers or
manufacturers of our products fail to comply with good manufacturing practice
requirements or other FDA regulatory requirements, it could adversely affect our
ability to market our products.
We Do Not Have Marketing and Sales Experience, and Our Lack of That Experience
Could Limit Our Ability to Generate Revenues from Future Product Sales.
We do not have marketing and sales experience or marketing or sales
personnel. If we do not develop a marketing and sales force, then we will depend
on arrangements with corporate partners or other entities for the marketing and
sale of our products. We may not succeed in entering into any satisfactory
third-party arrangements for the marketing and sale of our products. In
addition, we may not succeed in developing marketing and sales experience and
personnel or we may not have sufficient resources to do so. If we fail to
establish marketing and sales capabilities or fail to enter into arrangements
with third parties, it will adversely affect sales of our products.
We Depend upon Key Employees and Consultants in a Competitive Market for Skilled
Personnel. If We Are Unable to Attract and Retain Key Personal, it Could
Adversely Effect Our Ability to Develop and Market Our Products.
We are highly dependent upon the principal members of our management team,
especially Dr. Capetola, and our directors, as well as our scientific advisory
board members, consultants and collaborating scientists. We have an employment
agreement with Dr. Capetola which expires on June 15, 2002. We also have
employment agreements with other key personnel with termination dates in 2001.
We do not maintain keyman life insurance. The loss of any of these persons'
services would adversely affect our ability to develop and market our products
and obtain necessary regulatory approvals.
Our future success also will depend in part on the continued service of
our key scientific and management personnel and our ability to identify, hire
and retain additional personnel, including marketing and sales staff. We
experience intense competition for qualified personnel.
While we attempt to provide competitive compensation packages to attract
and retain key personnel, some of our competitors are likely to have greater
resources and more experience than we have making it difficult for us to compete
for key personnel.
We Are in an Industry Characterized by Intense Competition and We Have less
Capital and Resources than Many of Our Competitors, and this May Give Them an
Advantage in Developing and Marketing Products Similar to Ours.
We are engaged in a highly competitive industry. Competition from numerous
existing companies and potential new entities is intense and expected to
increase. Many of these companies have substantially greater research and
development, marketing, financial, technological, personnel and managerial
resources than we have. In addition, many of these competitors, either alone or
with their collaborative partners, have significantly greater experience than we
do in:
-- developing products;
-- undertaking preclinical testing and human clinical trials;
-- obtaining FDA and other regulatory approvals or products; and
-- manufacturing and marketing products.
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Accordingly, our competitors may succeed in obtaining patent protection,
receiving FDA approval or commercializing products before us. If we commence
commercial product sales, we will compete against companies with greater
marketing and manufacturing capabilities. These are areas in which, as yet, we
have limited or no experience. In addition, developments by competitors may
render our product candidates obsolete or competitive. Our competitors may
succeed in developing and marketing products that are more effective than ours.
We also face, and will continue to face, competition from colleges,
universities, governmental agencies and other public and private research
organizations. These competitors are becoming more active in seeking patent
protection and licensing arrangements to collect royalties for use of technology
that they have developed. Some of these technologies may compete directly with
the technologies that we are developing. These institutions will also compete
with us in recruiting highly qualified scientific personnel. We expect that
therapeutic developments in the areas in which we are active may occur at a
rapid rate and that competition will intensify as advances in this field are
made. Accordingly, we need to continue to devote substantial resources and
efforts to research and development activities.
If We Become Subject to Product Liability Claims, it May Result in Reduced
Demand for Our Products or Damages That Exceed Our Insurance Coverage.
The marketing and use of our products exposes us to product liability
claims in the event that the use or misuse of those products causes injury,
disease or results in adverse effects. Use of our products in clinical trials,
as well as commercial sale could result in product liability claims. In addition
sales of our products through third party arrangements could also subject us to
product liability claims. We presently carry product liability insurance
relating to our clinical trials of SuperVent(TM) and our clinical trials of
Surfaxin(R) in treating acute respiratory distress syndrome and acute lung
injury and Meconium aspiration syndrome. However, this insurance coverage might
not fully cover any potential claims. We may need to obtain additional product
liability insurance coverage prior to initiation of other clinical trials. We
expect to obtain product liability insurance coverage before commercialization
of our proposed products; however, this insurance is expensive and insurance
companies may not issue this type of insurance when we need it. We cannot
provide assurance that we can obtain adequate insurance in the future at an
acceptable cost, if ever. Any product liability claim, even one that was not in
excess of our insurance coverage or one that is meritless, could adversely
affect our cash available for other purposes, such as research and development.
In addition, the existence of a product liability claim could affect the market
price of our common stock.
Healthcare Reform Measures and Reimbursement Procedures May Prevent Us from
Obtaining an Adequate Level of Reimbursement for Our Products That in Turn Would
Decrease Our Ability to Generate Revenues.
Efforts of governmental and third-party payers to contain or reduce the
costs of health care through various means could affect the levels of revenues
and profitability of pharmaceutical and/or biotechnology products and companies.
For example, in some foreign markets, pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States, there
have been a number of federal and state proposals to implement similar
government control. Pricing constraints on our products could negative impact on
our revenues and profitability.
In the United States and elsewhere, successful commercialization of our
products will depend in part on the availability of reimbursement to the
consumer using our products from third-party health care payers such as
government and private insurance plans. Third-party payors may not provide
sufficient reimbursement to enable us to maintain price levels sufficient to
realize an appropriate return on our investment in product development.
Third-party health care payers are increasingly challenging the price and
examining the cost-effectiveness of medical products and services. If we succeed
in bringing one or more products to market, and the government or third-party
payers fail to provide adequate coverage or reimbursement rates for those
products, it could reduce our product sales and product revenues.
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Directors, Executive Officers, Principal Stockholders and Affiliated Entities
Own a Significant Percentage of Our Capital Stock, and this Could Have an Effect
on Actions by the Stockholders.
As of August 13, 1999, our directors, executive officers, principal
stockholders and affiliated entities beneficially own, in the aggregate,
approximately 34% of our outstanding voting securities, assuming conversion of
convertible securities. Accordingly, these stockholders have the ability to
exert substantial influence over the election of our Board of Directors and the
outcome of issues requiring approval by our stockholders. This concentration of
ownership may have the effect of delaying or preventing a change in control.
This could prevent transactions in which stockholders might otherwise recover a
premium for their shares over current market prices.
We Face the Possibility of Being Delisted from the NASDAQ Smallcap Market.
To meet the current listing requirements for Nasdaq to continue to list
our securities on the Nasdaq SmallCap Market, we will have to maintain:
(a) (1) at least $2 million in net tangible assets or
(2) $35 million in market capitalization or
(3) $500,000 in net income (over two of the last three
years),
(b) a public float of at least 500,000 shares valued at $1 million or
more and
(c) a minimum bid price of $1 and
(d) at least 300 holders of our common stock and
(e) at least two active market makers.
At June 30, 1999, we had $2,090,000 in net tangible assets. In addition, we
received net proceeds of approximately $2.45 million in a private placement
completed in July 1999. The closing price of our common stock during the period
from January 1, 1999 to September 27, 1999 ranged from $1.00 to $4.00 and the
closing price of our common stock on September 27, 1999 was $1.44. We will need
to raise additional capital in order to continue to meet the listing
requirements.
If we are unable to satisfy the listing requirements, Nasdaq may delist
our securities from the Nasdaq SmallCap Market. If we are delisted, our
investors would not have a market to trade our securities except for the
over-the-counter market in the Pink Sheets(R) (a quotation medium operated by
the National Quotation Bureau, LLC), or on the NASD's OTC Bulletin Board(R).
Consequently, this would impair the liquidity of our securities could be
impaired. This could reduce the number of our securities investors could buy and
sell and could result in delays in the timing of the transactions, reduction in
securities analysts' and the news media's coverage of us and lower prices for
our securities.
The "Penny Stock" Rules May Adversely Affect the Liquidity of Our Common Stock.
If our securities were delisted from the Nasdaq SmallCap Market, to Rule
15g-9 under the Exchange Act would apply. Rule 15g-9 imposes additional sales
practice requirements on broker-dealers that sell these types of securities to
persons other than established customers and "accredited investors" (generally,
individuals with net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). For transactions covered by
this rule, a broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written consent to the transaction prior
to sale. Consequently, the rule may adversely affect the ability of
broker-dealers to sell our securities and may adversely affect the ability of
stockholders to sell any of our securities in the secondary market.
864725.8
8
The Commission has adopted regulations that define a "penny stock".
Generally, a penny stock is an equity security that has a market price of less
than $5.00 per share. For any transaction involving a penny stock that is not
exempt, the rules require that a broker-dealer deliver a disclosure schedule
prepared by the Commission relating to the penny stock market. The rule also
requires the broker-dealer to disclose information about commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, the broker-dealer is required to send monthly
statements disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.
These restrictions will not apply to our securities if the Nasdaq SmallCap
Market continues to list our securities. If Nasdaq delists our securities and
they become subject to the existing or proposed rules on penny stocks, it could
severely adversely affect the market liquidity for our securities.
A Substantial Number of Our Securities Are Eligible for Future Sale and this
Could Affect the Market Price for Our Stock and Our Ability to Raise Capital.
The market price of our common stock could drop due to sales of a large
number of shares of our common stock or the perception that these sales could
occur. As of August 10, 1999, there were approximately 9,064,881 shares of
common stock currently outstanding. In addition as of August 10. 1999 up to
10,951,289 shares of Common Stock were issuable on exercise of outstanding
options, warrants and convertible preferred stock. Additionally, shares of
Series C preferred stock are convertible into approximately 1,775,821 shares of
common stock based on the market price of the common stock as of June 1, 1999.
Holders of our stock options and warrants are likely to exercise them, if
ever, at a time when we otherwise could obtain a price for the sale of our
securities that is higher than the exercise price per security of the options or
warrants. This exercise or the possibility of this exercise may impede our
efforts to obtain additional financing through the sale of additional securities
or make this financing more costly.
We cannot predict the effect that the availability of these shares for
sale will have on the market price of our common stock. Nevertheless, because
holders may sell substantial amounts of our common stock in the public market,
the market price of our common stock could drop as a result of sales of these
securities or the perception that these types of sales may occur. These factors
could also make it more difficult for us to raise funds through future offerings
of securities.
We Are Subject to Antitakeover Provisions of Our Certificate of Incorporation
and Delaware Law.
Our Certificate of Incorporation and Delaware law contain provisions which
may discourage transactions involving actual or potential changes in control.
Our Certificate of Incorporation allows us to issue shares of preferred stock
without any vote or further action by our shareholders. Our Board of Directors
has the authority to fix and determine the relative rights and preferences of
preferred shares. Our Board of Directors also has the authority to issue these
shares without further stockholder approval. As a result, our Board of Directors
could authorize the issuance of a series of preferred stock that would grant to
holders the preferred right to our assets upon liquidation, the right to receive
dividend payments before dividends on common stock and the right to the
redemption of these shares, together with a premium, prior to the redemption of
our common stock. In addition, our Board of Directors, without further
stockholder approval, could issue large blocks of preferred stock to fend
against unwanted tender offers or hostile takeovers.
We are also subject to provisions of Delaware law that could delay or make
more difficult a merger, tender offer or proxy contest involving us. In
particular, we are subject to Section 203 of the Delaware General Corporation
Law that prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years unless
the transactions are approved in a prescribed manner. In general, Section 203
defines an interested stockholder as any entity or person beneficially owning
15% or more of the outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by this type of entity or
person. The possible issuance of preferred stock and the provisions of Delaware
law could have the effect of discouraging others from making tender offers for
our securities. As a consequence, they also may inhibit
864725.8
9
fluctuations in the market price of our common stock that otherwise could result
from actual or rumored takeover attempts. Those provisions also may have the
effect of preventing changes in our management.
The Year 2000 Issue Could Affect Our Business.
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer programs
or hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000.
In terms of our internal operations, we do not use equipment with embedded
chip technology that is date sensitive. We expect that the systems affected by
the Year 2000 date change include the database, networking and accounting
software licensed by us. We expect to incur out-of-pocket costs related to
making inquiries of, and receiving confirmations from, third parties of no more
than $10,000.
If our computer systems or the computer systems of any of our suppliers,
customers or other third parties are not Year 2000 compliant or if those systems
are unable to recover from system interruptions that may result from the Year
2000 date change it could delay or adversely affect our research and development
of our product candidates.
FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are subject to risks and
uncertainties. Those risks and uncertainties may cause us to have actual
results, performance or achievements which are different from what is expressed
or implied by the forward-looking statements. Forward- looking statements are
based on assumptions and describe our future plans, strategies and expectations.
Forward- looking statements are generally identifiable by use of the words
"may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend"
or "project" or comparable terminology.
USE OF PROCEEDS
We will not receive any proceeds from the sales of common stock by the
selling stockholders pursuant to this prospectus.
864725.8
10
SELLING STOCKHOLDERS
The following table sets forth information with respect to the amount of
common stock held by each selling stockholder as of the date of this prospectus
and the shares being offered by the selling stockholders. The table indicates
the nature of any position, office or other material relationship that the
selling stockholder has had within the past three years with Discovery
Laboratories or any of its predecessors or affiliates. This prospectus relates
to the offer and sale of the selling stockholders of up to 7,192,870 shares of
common stock, including 2,759,189 shares of common stock issuable upon the
exercise of outstanding warrants issued by Discovery Laboratories. The selling
stockholders may offer all or part of the shares of common stock covered by this
prospectus. Information with respect to shares owned beneficially after the
offering assumes the sale of all of the shares offered and no other purchases or
sales of common stock. The common stock offered by this prospectus may be
offered from time to time by the selling stockholders named below.
864725.8
11
Number of
Shares of Total
Common Number Number of Number of Percentage
Stock, not of Shares Shares of Percentage Shares to be Number of to be
including Represented Common Beneficially Offered for Shares to Beneficially
Warrants, by Warrants Stock Owned the Account be Owned Owned
Beneficially Beneficially Beneficially Before of the Selling after this after this
Name Owned Owned Owned + Offering Stockholder Offering Offering
---- ------------- ------------- ------------ ---------- ------------ --------- -----------
Moonlight International, Ltd.. 165,289 165,289 330,578 4.9% 330,578 0 *
Dr. Tis Prager................ 41,322 41,322 82,644 1.2% 82,644 0 *
Keys Foundation............... 165,289 165,289 330,578 4.9% 330,578 0 *
Finsbury Worldwide
Pharmaceutical Trust.......... 826,446 826,446 1,652,892 20.0% 1,652,892 0 *
Caduceus Capital II, L.P...... 165,289 165,289 330,578 4.9% 330,578 0 *
Winchester Global Trust
Company Ltd................... 661,157 661,157 1,322,314 16.7% 1,322,314 0 *
Windward Venture Partners..... 83,645 56,903 139,548 2.0% 139,548 0 *
Benjamin Bollag............... 61,693 42,677 104,370 1.5% 104,370 0 *
Michael Bollag................ 61,693 42,677 104,370 1.5% 104,370 0 *
Concordia Partners L.P........ 310,954 56,903 367,857 4.6% 139,548 175,117 2.6%
Aries Domestic Fund, L.P...... 385,576 117,529 503,105 7.4% 230,253 272,852 4.1%
The Aries Master Fund......... 907,012 274,237 1,181,249 17.0% 537,258 643,991 9.7%
126736 Canada, Inc............ 378,358 0 69,773 4.2% 69,773 0 3.4%
CPC Offshore Equity
Fund I LTD.................... 41,322 28,451 69,773 1.0% 69,773 0 *
Johnson & Johnson Inc......... 205,846 0 205,846 3.0% 205,846 0 *
Paramount Capital Inc......... 0 404,958 404,958 5.0% 404,958 0 *
Brobeck, Phleger
& Harrison LLP................ 14,000 0 14,000 0.21% 14,000 0 *
Yi, Tuan & Brunstein.......... 4,850 0 4,850 0.07% 4,850 0 *
Scripps Research Institute.... 117,500 0 117,000 1.7% 117,000 0 *
RAQ, LLC 1,001,739 0 1,001,739 15.2% 1,001,739 0 *
- ---------------
* Less than 1%.
+ The information contained in this table reflects "beneficial" ownership of
common stock within the meaning of Rule 13d-3 under the Exchange Act. On
August 13, 1999, Discovery Laboratories had 9,064,889 shares of common
stock outstanding. Beneficial ownership information reflected in the table
includes shares issuable upon the exercise of outstanding warrants issued
by Discovery Laboratories.
864725.8
12
PLAN OF DISTRIBUTION
The shares of common stock covered by this prospectus are owned by the
selling stockholders. As used in the rest of this section of the prospectus, the
term "selling stockholders" includes the named selling stockholders and any of
their pledgees, donees, transferees or other successors in interest selling
shares received from a named selling stockholder after the date of this
prospectus. The selling stockholders may offer and sell, from time to time, some
or all of the shares. We have registered the shares for sale by the selling
stockholders so that the shares will be freely tradeable by them. Registration
of the shares does not mean, however, that the shares necessarily will be
offered or sold. We will not receive any proceeds from any offering or sale by
the selling stockholders of the shares. We will pay all costs, expenses and fees
in connection with the registration of the shares. The selling stockholders will
pay all brokerage commissions and similar selling expenses, if any, attributable
to the sale of the shares.
The selling stockholders will act independently of us in making decisions
with respect to the timing, manner and size of each sale. The shares may be sold
by or for the account of the selling stockholders from time to time in
transactions on the Nasdaq SmallCap Market, the over-the-counter market, or
otherwise. These sales may be at fixed prices or prices that may be changed, at
market prices prevailing at the time of sale, at prices related to these
prevailing market prices or at negotiated prices. The shares may be sold by
means of one or more of the following methods:
-- in a block trade in which a broker-dealer will attempt to sell a
block of shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
-- purchases by a broker-dealer as principal and resale by that
broker-dealer for its account pursuant to this prospectus;
-- on markets where our common stock is traded or in an exchange
distribution in accordance with the rules of the exchange;
-- through broker-dealers, that may act as agents or principals;
-- directly to one or more purchasers;
-- through agents;
-- in connection with the loan or pledge of shares to a broker-dealer,
and the sale of the Shares so loaned or the sale of the Shares so
pledged upon a default;
-- in connection with put or call option transactions, in hedge
transactions, and in settlement of other transactions in
standardized or over-the-counter options;
-- through short sales of the Shares by the selling stockholders or
counterparties to those transactions, in privately negotiated
transactions; or
-- in any combination of the above. In addition, any of the shares that
qualify for sale pursuant to Rule 144 under the Securities Act may
be sold under Rule 144 rather than pursuant to this prospectus.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. The
broker-dealer transactions may include:
-- purchases of the shares by a broker-dealer as principal and resales
of the shares by the broker-dealer for its account pursuant to this
prospectus;
-- ordinary brokerage transactions; or
-- transactions in which the broker-dealer solicits purchasers.
864725.8
13
If a material arrangement with any broker-dealer or other agent is entered
into for the sale of any Shares through a block trade, special offering,
exchange distribution, secondary distribution, or a purchase by a broker or
dealer, a prospectus supplement will be filed, if necessary, pursuant to Rule
424(b) under the Securities Act disclosing the material terms and conditions of
these arrangement.
The selling stockholders and any broker-dealers or agents participating in
the distribution of the shares may be deemed to be "underwriters" within the
meaning of the Securities Act, and any profit on the sale of the Shares by the
selling stockholders and any commissions received by a broker-dealer or agents,
acting in this capacity, may be deemed to be underwriting commissions under the
Securities Act. The selling stockholders may agree to indemnify any agent or
broker-dealer that participates in transactions involving sales of the Shares
against certain liabilities, including liabilities arising under the Securities
Act.
The selling stockholders are not restricted as to the price or prices at
which they may sell their shares. Sales of such shares may have an adverse
effect on the market price of the common stock. Moreover, the selling
stockholders are not restricted as to the number of shares that may be sold at
any time, and it is possible that a significant number of shares could be sold
at the same time, which may have an adverse effect on the market price of the
common stock.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661- 2511. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our Securities and Exchange Commission filings are
also available to the public from the Securities and Exchange Commission's
Website at "http://www.sec.gov."
We have filed with the Securities and Exchange Commission a registration
statement (which contains this prospectus) on Form S-3 under the Securities Act
of 1933. The registration statement relates to the common stock offered by the
selling stockholders. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits and schedules to the
registration statement. Please refer to the registration statement and its
exhibits and schedules for further information with respect to us and the common
stock. Statements contained in this prospectus as to the contents of any
contract or other document are not necessarily complete and, in each instance,
we refer you to the copy of that contract or document filed as an exhibit to the
registration statement. You may read and obtain a copy of the registration
statement and its exhibits and schedules from the Commission, as described in
the preceding paragraph.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission 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. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any filings we make with
the Securities and Exchange Commission after the date of this prospectus under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Our Annual Report on Form 10-KSB and 10-KSB/A for the year ended
December 31, 1998;
2. Our Quarterly Reports on Form 10-Q-SB and Form 10-QSB/A for the quarter
ended March 31, 1999;
3. Our Quarterly Report on Form 10Q-SB for the quarter ended June 30,
1999;
864725.8
14
4. The description of our capital stock contained in our Form 8-A as filed
with the Securities and Exchange Commission on July 13, 1995; and
5. Our current report on Form 8-K as filed with the Securities and
Exchange Commission on August 9, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Discovery Laboratories, Inc., 305 South
Main Street, Doylestown, Pennsylvania 18901, Attention: Cynthia Davis. Telephone
requests may be directed to (215) 340-4699. Exhibits to the documents will not
be sent, unless those exhibits have specifically been incorporated by reference
in this prospectus.
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information
contained in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
EXPERTS
The consolidated financial statements of Discovery Laboratories as of
December 31, 1998 and each of the years in the two-year period ended December
31, 1998 and the period from May 18, 1993 (inception) through December 31, 1998
incorporated by reference in this registration statement have been audited by
Richard A. Eisner & Company, LLP ("RAE"), independent auditors, as stated in
their reports appearing therein. These financial statements have been so
included in reliance on the reports of RAE given on their authority as experts
in accounting and auditing.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been passed
upon for us by Battle Fowler LLP, New York, New York.
864725.8
15
We have not authorized anyone to provide you with information or to represent
anything not contained in this prospectus. You must not rely on any unauthorized
information or representations. The selling stockholders are offering to sell,
and seeking offers to buy, only the shares of Discovery Laboratories common
stock covered by this prospectus, and only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date, regardless of the time of delivery of
this prospectus or of any sale of the shares.
7,192,870 SHARES
DISCOVERY LABORATORIES, INC.
COMMON STOCK
OCTOBER __, 1999
864725.8
16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered hereby. Normal commission expenses and brokerage fees are payable
individually by the selling stockholders. All amounts are estimated except the
Commission registration fee.
Amount
------
SEC registration fee...................................... $ 1,769
Accounting fees and expenses.............................. 4,500
Legal fees and expenses................................... 25,000
Miscellaneous fees and expenses........................... 1,731
----------------
Total.............................................. $ 33,000
================
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation law empowers a Delaware
corporation to indemnify any persons who are, or are threatened to be made,
parties to any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than action by or in the right of such corporation), by reason of the fact that
such person was an officer or director of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided that such officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests and, for criminal proceedings, had no reasonable cause to believe his
conduct was illegal. A Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation in the
performance of his duty. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.
In accordance with Delaware law, our restated certificate of incorporation
contains a provision to limit the personal liability of our directors for
violations of their fiduciary duty as a director. This provision eliminates each
director's liability to us or our stockholders for monetary damages except (i)
for any breach of each director's duty of loyalty to us or our stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation law providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions or (iv)
for any transaction from which a director derived an improper personal benefit.
The effect of this provision is to eliminate the personal liability of directors
for monetary damages for actions involving a breach of their fiduciary duty of
care, including any such actions involving gross negligence.
864725.8
Item 16. Exhibits
EXHIBIT NO. DESCRIPTION
2.1* Agreement and Plan of Merger dated as of March 5, 1998 among Discovery,
ATI Acquisition Corp. and ATI.
2.2** Agreement and Plan of Reorganization and Merger, dated as of July 16,
1997, by and between Discovery and Old Discovery.
5.1+ Opinion of Battle Fowler LLP regarding the legality of the securities
being registered.
16.1*** Letter dated January 28, 1998 from Ernst & Young LLP to the Securities
and Exchange Commission.
23.1+ Consent of Richard A. Eisner & Company, LLP.
24.1+ Powers of Attorney.
- ----------------------
* Incorporated by reference to Discovery's Annual Report on Form 10-KSB for
the year ending December 31, 1997.
** Incorporated by reference to Discovery's Registration Statement on Form
S-4 (File No. 333-34337).
*** Incorporated by reference to Discovery's Current Report on Form 8-K/A
dated January 16, 1998.
+ Previously Filed.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other that 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registrant Statement:
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) that individually or
in the aggregate represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
864725.8
II-2
provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
15(d) of the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
864725.8
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of New York, New York, on the ___ day of October, 1999.
DISCOVERY LABORATORIES, INC.
(Registrant)
By:/s/ Robert J. Capetola
--------------------------
Robert J. Capetola, Ph.D.
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to this Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
Signature Title Date
--------- --------- ----------
/s/ Robert J. Capetola Chief Executive Officer August 30, 1999
- ---------------------------------------
Robert J. Capetola, Ph.D.
* Vice President, Finance August 30, 1999
- ---------------------------------------
Evan Myrianthopoulos
* Controller August 30, 1999
- --------------------------------------- (Principal Accounting Officer)
Cynthia Davis
* Chairman of the Board August 30, 1999
- ---------------------------------------
Steve H. Kanzer, C.P.A., Esq.
* Director August 30, 1999
- ---------------------------------------
Richard Power
* Director August 30, 1999
- ---------------------------------------
Marvin Rosenthale
Director August __, 1999
- ---------------------------------------
Mark C. Rogers, M.D.
* Director August 30, 1999
- ---------------------------------------
Herbert McDade, Jr.
Director August __, 1999
- ---------------------------------------
Max Link, Ph.D.
* Director August 30, 1999
- ---------------------------------------
David Naveh, Ph.D.
* Director August 30, 1999
- ---------------------------------------
Richard Sperber
- ---------------------------------------
Robert J. Capetola
*As Attorney-in-fact
864725.8
II-4
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1* Agreement and Plan of Merger dated as of March 5, 1998 among Discovery,
ATI Acquisition Corp. and ATI.
2.2** Agreement and Plan of Reorganization and Merger dated as of July 16,
1997, by and between Discovery and Old Discovery.
5.1+ Opinion of Battle Fowler LLP regarding the legality of the securities
being registered.
16.1*** Letter dated January 28, 1998 from Ernst & Young LLP to the Securities
and Exchange Commission.
23.1+ Consent of Richard A. Eisner & Company, LLP.
24.1+ Powers of Attorney.
- -------------------------------
* Incorporated by reference to Discovery's Annual Report on Form 10-KSB for
the year ending December 31, 1997.
** Incorporated by reference to Discovery's Registration Statement on Form
S-4 (File No. 333- 34337).
*** Incorporated by reference to Discovery's Current Report on Form 8-K/A
dated January 16, 1998.
+ Previously filed.
864725.8