AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 2004
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CALLISTO PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3894575
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification Number)
420 LEXINGTON AVENUE, SUITE 1609
NEW YORK, NEW YORK 10170
(Address of Principal Executive Offices)
CALLISTO PHARMACEUTICALS, INC. 1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN AND NON-PLAN EXECUTIVE AND DIRECTOR OPTIONS
(Full Title of Plan)
GARY S. JACOB, PHD.
CHIEF EXECUTIVE OFFICER
CALLISTO PHARMACEUTICALS, INC.
420 LEXINGTON AVENUE, SUITE 1609
NEW YORK, NEW YORK 10170
(212) 297-0010
(Name, address, including ZIP code, and
telephone number, including area code,
of agent for service)
COPY TO:
JEFFREY J. FESSLER, ESQ.
SILLS CUMMIS EPSTEIN & GROSS, P.C.
ONE RIVERFRONT PLAZA
NEWARK, NEW JERSEY 07102
(973) 643-5974
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities to be Amount to be Offering Aggregate Amount of
Registered Registered(1) Price Per Share(6) Offering Price Registration Fee
-----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.0001 per share 216,945 shares (2) $ .75 $5,898,931 $747.39
200,000 shares (2) $1.25
333,055 shares (2) $1.30
1,325,000 shares (3) $1.50
75,000 shares (4) $1.61
675,000 shares (4) $3.00
175,000 shares (5) $3.20
100,000 shares (4) $3.60
=============================================================================================================================
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended, this registration statement covers such indeterminate
additional shares of common stock to be offered or issued to prevent
dilution as a result of future stock splits, stock dividends or other
similar transactions.
(2) Consists of shares of common stock underlying outstanding non-Plan
options.
(3) Consists of 950,000 shares of common stock underlying outstanding
options granted under the Registrant's 1996 Incentive and Non-Qualified
Stock Option Plan (the "1996 Plan") and 375,000 shares of common stock
underlying outstanding non-Plan options.
(4) Consists of shares of common stock underlying outstanding options
granted under the 1996 Plan.
(5) Consists of 75,000 shares of common stock underlying outstanding
options granted under the 1996 Plan and 100,000 shares of common stock
underlying outstanding non-Plan options.
(6) Pursuant to Rule 457(h) under the Securities Act, the proposed maximum
offering price per share was calculated for an aggregate of 3,100,000
shares of common stock issuable upon exercise of outstanding non-Plan
options and outstanding options granted under the 1996 Plan, based on
the per share exercise prices of such options, as set forth in the
Calculation of Registration Fee table.
EXPLANATORY NOTE
The Registrant has prepared this Registration Statement in accordance with the
requirements of Form S-8 under the Securities Act of 1933, as amended (the
"Securities Act"), to register (i) 1,875,000 shares of common stock that are
issuable upon the exercise of options previously granted under the Registrant's
1996 Incentive and Non-Qualified Stock Option Plan (the "1996 Plan") and (ii)
1,225,000 shares of common stock issuable upon exercise of options granted
outside of the 1996 Plan ("non-Plan Options").
This Registration Statement also includes a prospectus (the "REOFFER
PROSPECTUS") prepared in accordance with General Instruction C of Form S-8 and
in accordance with the requirements of Part I of Form S-3. This REOFFER
PROSPECTUS may be used for reofferings or resales on a continuous or delayed
basis in the future by affiliates of the Company of an aggregate of 3,100,000
shares of common stock that may be issued upon exercise of 1996 Plan and
non-Plan Options previously granted by the Company.
PART I
------
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
The document(s) containing the information specified in Part I of Form S-8 will
be sent or given to participants in the 1996 Plan as specified by Rule 428(b)(1)
under the Securities Act of 1933, as amended (the "Securities Act"). Such
documents are not being filed with the Securities and Exchange Commission, but
constitute, along with the documents incorporated by reference into this
Registration Statement, a prospectus that meets the requirements of Section
10(a) of the Securities Act.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
The Company will furnish without charge to each person to whom the prospectus is
delivered, upon the written or oral request of such person, a copy of any and
all of the documents incorporated by reference in Item 3 of Part II of this
Registration Statement, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference to the information that is
incorporated). Requests should be directed to Callisto Pharmaceuticals, Inc.,
420 Lexington Avenue, Suite 1609, New York, New York 10170, Attention: Gary S.
Jacob; telephone number (212) 297-0010.
NOTE: The REOFFER PROSPECTUS referred to in the Explanatory Note follows this
page.
PROSPECTUS
CALLISTO PHARMACEUTICALS, INC.
3,100,000 shares of Common Stock
Callisto Pharmaceuticals, Inc. 1996 Incentive and Non-Qualified
Stock Option Plan and Non-plan Executive and Director Options
This prospectus is being used in connection with the offering from time
to time by certain selling stockholders of our company or their successors in
interest of shares of the common stock which have been issued under, or may be
acquired upon the exercise of, stock options pursuant to our 1996 Incentive and
Non-Qualified Stock Option Plan and Non-plan Executive and Director Options
(collectively, the "Plans").
The common stock may be sold from time to time by the selling
stockholders or by their pledgees, donees, transferees or other successors in
interest. Such sales may be made in the over-the-counter market or otherwise at
prices and at terms then prevailing or at prices related to the then current
market price, or in negotiated transactions. The common stock may be sold by one
or more of the following: (a) block trades in which the broker or dealer so
engaged will attempt to sell the shares as agent but may position and resell
portions of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this prospectus; (c) an exchange distribution in accordance
with the rules of such exchange; and (d) ordinary brokerage transactions and
transactions in which the broker solicits purchases. In effecting sales, brokers
or dealers engaged by the selling stockholders may arrange for other brokers or
dealers to participate. Brokers or dealers will receive commissions or discounts
from selling stockholders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or dealers may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Act") in connection with such sales. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this prospectus. We will
not receive any of the proceeds from the sale of these shares, although we have
paid the expenses of preparing this prospectus and the related registration
statement.
On October 7, 2004, the last reported sale price for our common stock
on the OTC Bulletin Board was $2.08 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is October 8, 2004.
TABLE OF CONTENTS
Page
----
Prospectus Summary........................................................ 3
Where You Can Find More Information....................................... 3
Documents Incorporated By Reference....................................... 4
The Company............................................................... 4
Forward Looking Statements ............................................... 5
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 20
Selling Stockholders...................................................... 20
Plan of Distribution...................................................... 22
Legal Matters............................................................. 23
Experts................................................................... 23
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
2
PROSPECTUS SUMMARY
The following summary contains basic information about Callisto
Pharmaceuticals, Inc. and this prospectus. It may not contain all of the
information that is important to you. For a more complete understanding, we
encourage you to read the entire prospectus and the documents incorporated by
reference into this prospectus. In this prospectus, the words "Callisto,"
"Company," "we," "our" and "us" refer to Callisto Pharmaceuticals, Inc.
THIS OFFERING
Common Stock outstanding
before the offering 29,175,102 shares (1)
Common Stock issuable upon
exercise of outstanding options
which may be offered pursuant
to this prospectus 3,100,000 shares
Use of Proceeds We will not receive any of the proceeds from
the sale of common stock by the selling
stockholders. We will receive proceeds to
the extent that currently outstanding options
are exercised for cash. We will use the
exercise proceeds, if any, for working
capital and general corporate purposes.
Risk Factors The purchase of our common
stock involves a high degree of
risk. You should carefully review
and consider "Risk Factors"
beginning on page 5.
OTC Bulletin Board
Trading Symbol CLSP.OB
(1) As of October 7, 2004. Does not include shares of common stock issuable
upon exercise of options or warrants.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information
with the Securities and Exchange Commission (the "SEC"). You may read and copy,
upon payment of a fee set by the SEC, any documents that we file with the SEC as
its public reference room at 450 Fifth Street, N.W., Washington, D.C. You may
also call the SEC at 1-800-432-0330 for more information on the public reference
rooms. Our filings are also available to the public on the Internet through the
SEC's EDGAR database. You may access the EDGAR database at the SEC's website at
www.sec.gov.
This prospectus is part of a registration statement on Form S-8 that we
have filed with the SEC to register the common stock offered hereby under the
Act. As permitted by SEC rules, this prospectus does not contain all of the
information contained in the registration statement and accompanying exhibits
and schedules that we file with the SEC. You may refer to the registration
statement, the exhibits and schedules for more information about us and our
common stock. The registration statement, exhibits and schedules are available
at the SEC's public reference rooms or through its EDGAR database on the
Internet.
3
You should rely only on the information contained in this prospectus or
any supplement to this prospectus. We have not authorized anyone to provide you
with different information.
Our common stock is quoted on the OTC Bulletin Board under the
symbol "CLSP.OB."
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC pursuant to the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") are incorporated herein
by reference:
1. Annual Report on Form 10-KSB for the fiscal year ended December 31,
2003.
2. Quarterly Report on Form 10-QSB for the period ended March 31, 2004.
3. Quarterly Report on Form 10-QSB for the period ended June 30, 2004.
4. Current Reports on Form 8-K filed on January 28 and January 30,
2004, February 27, 2004, April 19, 2004, May 13, 2004 and September 7, 2004.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this prospectus and
to be a part of this prospectus from the date of filing thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
We will provide without charge to each person to whom this prospectus
is delivered, upon written or oral request of that person, a copy of all
documents incorporated by reference into the registration statement of which
this prospectus is a part, other than exhibits to those documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such documents should be directed to Gary S. Jacob, Chief Executive
Officer, Callisto Pharmaceuticals, Inc., 420 Lexington Avenue, Suite 1609, New
York, New York 10170, telephone: (212) 297-0010.
THE COMPANY
We are a biopharmaceutical company focused on the development of drugs
to treat leukemia, multiple myeloma (an incurable blood cancer that invades and
proliferates in bone marrow), other cancers and osteolytic bone disease. Our
lead drug candidate for multiple myeloma, Atiprimod, is a small-molecule, orally
available drug with antiproliferative and antiangiogenic activity.
Atiprimod successfully completed Phase I clinical trials in rheumatoid
arthritis patients and in May 2004 we commenced a Phase I/IIa open-label
clinical trial of Atiprimod in relapsed multiple myeloma patients. These are
patients that no longer respond to chemotherapy, and are in advanced stages of
the disease. The Phase I/IIa clinical trial is being performed at two sites, the
Dana-Farber Cancer Institute (Boston) and The University of Texas M.D. Anderson
Cancer Center (Houston). On January 6, 2004, we announced that the Office of
Orphan Products Development of the United States Food and Drug Administration,
or FDA, granted orphan drug designation to Atiprimod for the treatment of
multiple myeloma.
4
On August 12, 2004, we entered into a worldwide license agreement with
The University of Texas M. D. Anderson Cancer Center pursuant to which we
licensed Annamycin, an anthracycline drug for leukemia therapy. We intend to
initiate a Phase IIb clinical trial in relapsed acute lymphocytic leukemia (ALL)
and relapsed acute myeloid leukemia (AML) patients, in the first half of 2005.
The trial will be led by co-Principal Investigators Dr. Hagop Kantarjian and Dr.
Michael Andreeff of The University of Texas M. D. Anderson Cancer Center.
Annamycin earlier completed a Phase I/IIa clinical trial in AML and ALL patients
conducted by Dr. Andreeff as Principal Investigator. Relapsed ALL and AML
patients are presently an unmet medical need.
Our principal executive office is located at 420 Lexington Avenue,
Suite 1609, New York, New York 10170 and our telephone number is (212) 297-0010.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a safe harbor for forward-looking statements made by us or on our
behalf. We and our representatives may from time to time make written or oral
statements that are "forward-looking," including statements contained in this
prospectus and other filings with the Securities and Exchange Commission,
reports to our stockholders and news releases. All statements that express
expectations, estimates, forecasts or projections are forward-looking statements
within the meaning of the Act. In addition, other written or oral statements
which constitute forward-looking statements may be made by us or on our behalf.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," "projects," "forecasts," "may," "should," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions which are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in or suggested by such forward-looking statements. We
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. Among the
important factors on which such statements are based are assumptions concerning
our ability to complete ongoing clinical trials, results of our clinical trials,
the timing of approval of our products by the United States Food and Drug
Administration, our ability to obtain additional financing, our ability to
attract and retain key employees, our ability to protect intellectual property,
and our ability to adapt to economic, political and regulatory conditions
affecting the healthcare industry.
RISK FACTORS
An investment in our shares involves a high degree of risk. Before
making an investment decision, you should carefully consider all of the risks
described in this prospectus. If any of the risks discussed in this prospectus
actually occur, our business, financial condition and results of operations
could be materially and adversely affected. If this were to happen, the price of
our shares could decline significantly and you may lose all or a part of your
investment. The risk factors described below are not the only ones that may
affect us. Additional risks and uncertainties that we do not currently know
about or that we currently deem immaterial may also adversely affect our
business, financial condition and results of operations. Our forward-looking
statements in this prospectus are subject to the following risks and
uncertainties. Our actual results could differ materially from those anticipated
by our forward-looking statements as a result of the risk factors below. See
"Forward-Looking Statements."
5
RISKS RELATED TO OUR BUSINESS
We are at an early stage of development as a company, currently have no source
of revenue and may never become profitable.
We are a development stage biopharmaceutical company. Currently, we
have no products approved for commercial sale and, to date, we have not
generated any revenue. Our ability to generate revenue depends heavily on:
o demonstration in Phase I/IIa clinical trials that our lead product
candidate, Atiprimod for the treatment of multiple myeloma, is safe
and effective;
o demonstration in Phase IIb clinical trials that Annamycin, for the
treatment of leukemia, is effective;
o successful further clinical development of Atipirmod and Annamycin;
o the successful development of our other product candidates;
o our ability to seek and obtain regulatory approvals, including with
respect to the indications we are seeking;
o the successful commercialization of our product candidates; and
o market acceptance of our products.
All of our existing product candidates will require extensive
additional clinical evaluation, regulatory review, significant marketing efforts
and substantial investment before they could provide us with any revenue. For
example, Atiprimod for the treatment of multiple myeloma entered Phase I/IIa
clinical trials in May 2004, Annamycin for the treatment of leukemia is expected
to enter Phase IIb clinical trials in the first half of 2005 and our other
product candidates are in preclinical development. As a result, if we do not
successfully develop and commercialize Atiprimod or Annamycin, we will be unable
to generate any revenue for many years, if at all. We do not anticipate that we
will generate revenue for several years, at the earliest, or that we will
achieve profitability for at least several years after generating material
revenue, if at all. If we are unable to generate revenue, we will not become
profitable, and we may be unable to continue our operations.
We have incurred significant losses since inception and anticipate that we will
incur continued losses for the foreseeable future.
As of June 30, 2004, we had an accumulated deficit of $29,555,440. We
have incurred losses in each year since our inception in 1996. We incurred a net
loss of $13,106,247 and $3,737,710 for the year ended December 31, 2003 and the
six months ended June 30, 2004, respectively. These losses, among other things,
have had and will continue to have an adverse effect on our stockholders' equity
and working capital. We expect to incur significant and increasing operating
losses for the next several years as we expand our research and development,
conduct our clinical trials of Atiprimod, initiate our clinical trials of
Annamycin, acquire or license technologies, advance our other product candidates
into clinical development, seek regulatory approval and, if we receive FDA
approval, commercialize our products. Because of the numerous risks and
uncertainties associated with our product development efforts, we are unable to
predict the extent of any future losses or when we will become profitable, if at
all. If we are unable to achieve and then maintain profitability, the market
value of our common stock will likely decline.
6
We will need to raise substantial additional capital to fund our operations, and
our failure to obtain funding when needed may force us to delay, reduce or
eliminate our product development programs or collaboration efforts.
Our operations have consumed substantial amounts of cash since
inception. We expect to continue to spend substantial amounts to:
o complete the clinical development of Atiprimod and Annamycin;
o continue the development of our other product candidates;
o finance our general and administrative expenses;
o prepare regulatory approval applications and seek approvals for
Atiprimod for the treatment of multiple myeloma, Annamycin for the
treatment of leukemia and our other product candidates;
o license or acquire additional technologies;
o launch and commercialize our product candidates, if any such product
candidates receive regulatory approval; and
o develop and implement sales, marketing and distribution
capabilities.
In 2003, our cash used in operations increased significantly over 2002
and we expect that our cash used in operations will continue to increase for the
next several years. We expect that our existing capital resources will be
sufficient to fund our operations for at least the next 12 months. We will be
required to raise additional capital to complete the development and
commercialization of our current product candidates. Our future funding
requirements will depend on many factors, including, but not limited to:
o the rate of progress and cost of our clinical trials and other
development activities;
o any future decisions we may make about the scope and prioritization
of the programs we pursue;
o the costs of filing, prosecuting, defending and enforcing any patent
claims and other intellectual property rights;
o the costs and timing of regulatory approval;
o the costs of establishing sales, marketing and distribution
capabilities;
o the effect of competing technological and market developments;
o the terms and timing of any collaborative, licensing and other
arrangements that we may establish; and
o general market conditions for offerings from biopharmaceutical
companies.
To date, our sources of cash have been primarily limited to the sale of
our equity securities. We cannot be certain that additional funding will be
available on acceptable terms, or at all. To the extent that we raise additional
funds by issuing equity securities, our stockholders may experience significant
dilution. Any debt financing, if available, may involve restrictive covenants
that impact our ability to conduct our business. If we are unable to raise
additional capital when required or on acceptable terms, we may have to
significantly delay, scale back or discontinue the development and/or
commercialization of one or more of our product candidates. We also may be
required to:
7
o seek collaborators for our product candidates at an earlier stage
than otherwise would be desirable and on terms that are less
favorable than might otherwise be available; and
o relinquish, license or otherwise dispose of rights to technologies,
product candidates or products that we would otherwise seek to
develop or commercialize ourselves on unfavorable terms.
If our agreement with AnorMED Inc. terminates, we may be unable to continue our
business.
Our business is dependent on rights we have licensed from AnorMED Inc.
Under the terms of the license agreement, we are obligated to make specified
payments. If we fail to fulfill those obligations or other material obligations,
the license agreement may be terminated. If AnorMED terminates its agreement
with us, we will have no further rights to utilize the intellectual property
covered by the terminated agreement, we would not be able to commercialize
Atiprimod and we may be forced to cease our operations, particularly if we do
not have rights to other product candidates.
Clinical trials involve a lengthy and expensive process with an uncertain
outcome, and results of earlier studies and trials may not be predictive of
future trial results.
In order to receive regulatory approval for the commercialization of
our product candidates, we must conduct, at our own expense, extensive clinical
trials to demonstrate safety and efficacy of these product candidates. Clinical
testing is expensive, can take many years to complete and its outcome is
uncertain. Failure can occur at any time during the clinical trial process.
The results of preclinical studies and early clinical trials of our
product candidates do not necessarily predict the results of later-stage
clinical trials. Product candidates in later stages of clinical trials may fail
to show the desired safety and efficacy traits despite having progressed through
initial clinical testing. The data collected from clinical trials of our product
candidates may not be sufficient to support the submission of a new drug
application or to obtain regulatory approval in the United States or elsewhere.
Because of the uncertainties associated with drug development and regulatory
approval, we cannot determine if or when we will have an approved product for
commercialization or achieve sales or profits.
Delays in clinical testing could result in increased costs to us and delay our
ability to generate revenue.
We may experience delays in clinical testing of our product candidates.
We do not know whether planned clinical trials will begin on time, will need to
be redesigned or will be completed on schedule, if at all. Clinical trials can
be delayed for a variety of reasons, including delays in obtaining regulatory
approval to commence a trial, in reaching agreement on acceptable clinical trial
terms with prospective sites, in obtaining institutional review board approval
to conduct a trial at a prospective site, in recruiting patients to participate
in a trial or in obtaining sufficient supplies of clinical trial materials. Many
factors affect patient enrollment, including the size of the patient population,
the proximity of patients to clinical sites, the eligibility criteria for the
trial, competing clinical trials and new drugs approved for the conditions we
are investigating. Prescribing physicians will also have to decide to use our
product candidates over existing drugs that have established safety and efficacy
profiles. Any delays in completing our clinical trials will increase our costs,
slow down our product development and approval process and delay our ability to
generate revenue.
We may be required to suspend or discontinue clinical trials due to unexpected
side effects or other safety risks that could preclude approval of our product
candidates.
8
Our clinical trials may be suspended at any time for a number of
reasons. For example, we may voluntarily suspend or terminate our clinical
trials if at any time we believe that they present an unacceptable risk to the
clinical trial patients. In addition, regulatory agencies may order the
temporary or permanent discontinuation of our clinical trials at any time if
they believe that the clinical trials are not being conducted in accordance with
applicable regulatory requirements or that they present an unacceptable safety
risk to the clinical trial patients.
Administering any product candidates to humans may produce undesirable
side effects. These side effects could interrupt, delay or halt clinical trials
of our product candidates and could result in the FDA or other regulatory
authorities denying further development or approval of our product candidates
for any or all targeted indications. Ultimately, some or all of our product
candidates may prove to be unsafe for human use. Moreover, we could be subject
to significant liability if any volunteer or patient suffers, or appears to
suffer, adverse health effects as a result of participating in our clinical
trials.
If we are unable to satisfy regulatory requirements, we may not be able to
commercialize our product candidates.
We need FDA approval prior to marketing our product candidates in the
United States. We commenced in May 2004 a Phase I/IIa trial of Atiprimod for the
treatment of multiple myeloma. If we fail to obtain FDA approval to market our
product candidates, we will be unable to sell our product candidates in the
United States and we will not generate any revenue.
This regulatory review and approval process, which includes evaluation
of preclinical studies and clinical trials of a product candidate as well as the
evaluation of our manufacturing process and our contract manufacturers'
facilities, is lengthy, expensive and uncertain. To receive approval, we must,
among other things, demonstrate with substantial evidence from well-controlled
clinical trials that the product candidate is both safe and effective for each
indication where approval is sought. Satisfaction of these requirements
typically takes several years and the time needed to satisfy them may vary
substantially, based on the type, complexity and novelty of the pharmaceutical
product. We cannot predict if or when we might submit for regulatory review any
of our product candidates currently under development. Any approvals we may
obtain may not cover all of the clinical indications for which we are seeking
approval. Also, an approval might contain significant limitations in the form of
narrow indications, warnings, precautions, or contra-indications with respect to
conditions of use.
The FDA has substantial discretion in the approval process and may
either refuse to file our application for substantive review or may form the
opinion after review of our data that our application is insufficient to allow
approval of our product candidates. If the FDA does not file or approve our
application, it may require that we conduct additional clinical, preclinical or
manufacturing validation studies and submit that data before it will reconsider
our application. Depending on the extent of these or any other studies, approval
of any applications that we submit may be delayed by several years, or may
require us to expend more resources than we have available. It is also possible
that additional studies, if performed and completed, may not be considered
sufficient by the FDA to make our applications approvable. If any of these
outcomes occur, we may be forced to abandon our applications for approval, which
might cause us to cease operations.
We will also be subject to a wide variety of foreign regulations
governing the development, manufacture and marketing of our products. Whether or
not FDA approval has been obtained, approval of a product by the comparable
regulatory authorities of foreign countries must still be obtained prior to
manufacturing or marketing the product in those countries. The approval process
varies from country to country and the time needed to secure approval may be
longer or shorter than that required for FDA approval. We cannot assure you that
clinical trials conducted in one country will be accepted by other countries or
that approval in one country will result in approval in any other country.
9
The commercial success of our product candidates will depend upon the degree of
market acceptance of these products among physicians, patients, health care
payors and the medical community.
Our product candidates have never been commercialized for any
indication. Even if approved for sale by the appropriate regulatory authorities,
physicians may not prescribe our product candidates, in which case we could not
generate revenue or become profitable. Market acceptance of Atiprimod for the
treatment of multiple myeloma, Annamycin for the treatment of leukemia and our
other product candidates by physicians, healthcare payors and patients will
depend on a number of factors, including:
o acceptance by physicians and patients of each such product as a safe
and effective treatment;
o cost effectiveness;
o adequate reimbursement by third parties;
o potential advantages over alternative treatments;
o relative convenience and ease of administration; and
o prevalence and severity of side effects.
If our product candidates are unable to compete effectively with marketed cancer
drugs, our commercial opportunity will be reduced or eliminated.
We face competition from established pharmaceutical and biotechnology
companies, as well as from academic institutions, government agencies and
private and public research institutions. Many of our competitors have
significantly greater financial resources and expertise in research and
development, manufacturing, preclinical testing, conducting clinical trials,
obtaining regulatory approvals and marketing approved products than we do.
Smaller or early-stage companies may also prove to be significant competitors,
particularly through collaborative arrangements with large, established
companies. Our commercial opportunity will be reduced or eliminated if our
competitors develop and commercialize cancer drugs that are safer, more
effective, have fewer side effects or are less expensive than our product
candidates. These third parties compete with us in recruiting and retaining
qualified scientific and management personnel, establishing clinical trial sites
and patient registration for clinical trials, as well as in acquiring
technologies and technology licenses complementary to our programs or
advantageous to our business.
We expect that our ability to compete effectively will depend upon our ability
to:
o successfully and rapidly complete clinical trials and submit for and
obtain all requisite regulatory approvals in a cost-effective
manner;
o maintain a proprietary position for our products and manufacturing
processes and other related product technology;
o attract and retain key personnel;
o develop relationships with physicians prescribing these products;
and
o build an adequate sales and marketing infrastructure for our product
candidates.
10
Because we will be competing against significantly larger companies
with established track records, we will have to demonstrate to physicians that,
based on experience, clinical data, side-effect profiles and other factors, our
products are preferable to existing cancer drugs. If we are unable to compete
effectively in the cancer drug market and differentiate our products from
currently marketed cancer drugs, we may never generate meaningful revenue.
We currently have no sales and marketing organization. If we are unable to
establish a direct sales force in the United States to promote our products, the
commercial opportunity for our products may be diminished.
We currently have no sales and marketing organization. If any of our
product candidates are approved by the FDA, we intend to market that product
directly to hospitals in the United States through our own sales force. We will
incur significant additional expenses and commit significant additional
management resources to establish this sales force. We may not be able to
establish these capabilities despite these additional expenditures. We will also
have to compete with other pharmaceutical and biotechnology companies to
recruit, hire and train sales and marketing personnel. If we elect to rely on
third parties to sell our product candidates in the United States, we may
receive less revenue than if we sold our products directly. In addition, we may
have little or no control over the sales efforts of those third parties. In the
event we are unable to develop our own sales force or collaborate with a third
party to sell our product candidates, we may not be able to commercialize our
product candidates which would negatively impact our ability to generate
revenue.
We may need others to market and commercialize our product candidates in
international markets.
In the future, if appropriate regulatory approvals are obtained, we
intend to commercialize our product candidates in international markets.
However, we have not decided how to commercialize our product candidates in
those markets. We may decide to build our own sales force or sell our products
through third parties. If we decide to sell our product candidates in
international markets through a third party, we may not be able to enter into
any marketing arrangements on favorable terms or at all. In addition, these
arrangements could result in lower levels of income to us than if we marketed
our product candidates entirely on our own. If we are unable to enter into a
marketing arrangement for our product candidates in international markets, we
may not be able to develop an effective international sales force to
successfully commercialize those products in international markets. If we fail
to enter into marketing arrangements for our products and are unable to develop
an effective international sales force, our ability to generate revenue would be
limited.
If the FDA does not approve our contract manufacturers' facilities, we may be
unable to develop or commercialize our product candidates.
We rely on third-party contract manufacturers to manufacture our
product candidates, and currently have no plans to develop our own manufacturing
facility. The facilities used by our contract manufacturers to manufacture our
product candidates must be approved by the FDA. If the FDA does not approve
these facilities for the manufacture of our product, we may need to fund
additional modifications to our manufacturing process, conduct additional
validation studies, or find alternative manufacturing facilities, any of which
would result in significant cost to us as well as a delay of up to several years
in obtaining approval for and manufacturing of our product candidates. In
addition, our contract manufacturers will be subject to ongoing periodic
unannounced inspection by the FDA and corresponding state agencies for
compliance with good manufacturing practices regulations, or cGMPs, and similar
foreign standards. These regulations cover all aspects of the manufacturing,
testing, quality control and record keeping relating to our product candidates.
We do not have control over our contract manufacturers' compliance with these
regulations and standards. Failure by our contract manufacturers to comply with
applicable regulations could result in sanctions being imposed on us, including
fines, injunctions, civil penalties, failure of the government to grant market
approval of drugs, delays, suspension or withdrawals of approvals, operating
restrictions and criminal prosecutions, any of which could significantly and
adversely affect our business. In addition, we have no control over our contract
manufacturers' ability to maintain adequate quality control, quality assurance
and qualified personnel. Failure by our contract manufacturers to comply with or
maintain any of these standards could adversely affect the development of our
product candidates and our business.
11
If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities and may be required to limit commercialization of our
product candidates.
We face an inherent risk of product liability lawsuits related to the
testing of our product candidates, and will face an even greater risk if we sell
our product candidates commercially. Currently, we are not aware of any
anticipated product liability claims with respect to our product candidates. In
the future, an individual may bring a liability claim against us if one of our
product candidates causes, or merely appears to have caused, an injury. If we
cannot successfully defend ourselves against the product liability claim, we may
incur substantial liabilities. Regardless of merit or eventual outcome,
liability claims may result in:
o decreased demand for our product candidates;
o injury to our reputation;
o withdrawal of clinical trial participants;
o costs of related litigation;
o substantial monetary awards to patients;
o product recalls;
o loss of revenue; and
o the inability to commercialize our product candidates.
We have "clinical trial" liability insurance with a $2,000,000 annual
aggregate limit for up to 40 patients participating in our Atiprimod clinical
trials. We intend to expand our insurance coverage to include the sale of
commercial products if marketing approval is obtained for our product
candidates. Our current insurance coverage may prove insufficient to cover any
liability claims brought against us. In addition, because of the increasing
costs of insurance coverage, we may not be able to maintain insurance coverage
at a reasonable cost or obtain insurance coverage that will be adequate to
satisfy any liability that may arise.
Even if we receive regulatory approval for our product candidates, we will be
subject to ongoing significant regulatory obligations and oversight.
If we receive regulatory approval to sell our product candidates, the
FDA and foreign regulatory authorities may, nevertheless, impose significant
restrictions on the indicated uses or marketing of such products, or impose
ongoing requirements for post-approval studies. Following any regulatory
approval of our product candidates, we will be subject to continuing regulatory
obligations, such as safety reporting requirements, and additional
post-marketing obligations, including regulatory oversight of the promotion and
marketing of our products. If we become aware of previously unknown problems
with any of our product candidates here or overseas or our contract
manufacturers' facilities, a regulatory agency may impose restrictions on our
products, our contract manufacturers or on us, including requiring us to
reformulate our products, conduct additional clinical trials, make changes in
the labeling of our products, implement changes to or obtain re-approvals of our
contract manufacturers' facilities or withdraw the product from the market. In
addition, we may experience a significant drop in the sales of the affected
products, our reputation in the marketplace may suffer and we may become the
target of lawsuits, including class action suits. Moreover, if we fail to comply
with applicable regulatory requirements, we may be subject to fines, suspension
or withdrawal of regulatory approvals, product recalls, seizure of products,
operating restrictions and criminal prosecution. Any of these events could harm
or prevent sales of the affected products or could substantially increase the
costs and expenses of commercializing and marketing these products.
12
We rely on third parties to conduct our clinical trials. If these third parties
do not successfully carry out their contractual duties or meet expected
deadlines, we may not be able to seek or obtain regulatory approval for or
commercialize our product candidates.
We have agreements with third-party contract research organizations, or
CROs, to provide monitors and to manage data for our clinical programs. We and
our CROs are required to comply with current Good Clinical Practices, or GCPs,
regulations and guidelines enforced by the FDA for all of our products in
clinical development. The FDA enforces GCPs through periodic inspections of
trial sponsors, principal investigators and trial sites. In the future, if we or
our CROs fail to comply with applicable GCPs, the clinical data generated in our
clinical trials may be deemed unreliable and the FDA may require us to perform
additional clinical trials before approving our marketing applications. We
cannot assure you that, upon inspection, the FDA will determine that any of our
clinical trials for products in clinical development comply with GCPs. In
addition, our clinical trials must be conducted with product produced under cGMP
regulations, and will require a large number of test subjects. Our failure to
comply with these regulations may require us to repeat clinical trials, which
would delay the regulatory approval process.
If any of our relationships with these third-party CROs terminate, we
may not be able to enter into arrangements with alternative CROs. If CROs do not
successfully carry out their contractual duties or obligations or meet expected
deadlines, if they need to be replaced, or if the quality or accuracy of the
clinical data they obtain is compromised due to the failure to adhere to our
clinical protocols, regulatory requirements or for other reasons, our clinical
trials may be extended, delayed or terminated, and we may not be able to obtain
regulatory approval for or successfully commercialize our product candidates. As
a result, our financial results and the commercial prospects for our product
candidates would be harmed, our costs could increase, and our ability to
generate revenue could be delayed.
If we fail to attract and keep senior management and key scientific personnel,
we may be unable to successfully develop our product candidates, conduct our
clinical trials and commercialize our product candidates.
Our success depends in part on our continued ability to attract, retain
and motivate highly qualified management, clinical and scientific personnel and
on our ability to develop and maintain important relationships with leading
academic institutions, clinicians and scientists. We are highly dependent upon
our senior management and scientific staff, particularly Gary S. Jacob, our
Chief Executive Officer, and Donald Picker, our Executive Vice President, R&D.
The loss of services of Dr. Jacob, Dr. Picker or one or more of our other
members of senior management could delay or prevent the successful completion of
our planned clinical trials or the commercialization of our product candidates.
The competition for qualified personnel in the biotechnology and
pharmaceuticals field is intense. We will need to hire additional personnel as
we expand our clinical development and commercial activities. We may not be able
to attract and retain quality personnel on acceptable terms given the
competition for such personnel among biotechnology, pharmaceutical and other
companies. We do not carry "key person" insurance covering any members of our
senior management.
13
If we fail to acquire and develop other products or product candidates, we may
be unable to grow our business.
To date, we have in-licensed or acquired the rights to each of our
product candidates. As part of our growth strategy, we intend to license or
acquire additional products and product candidates for development and
commercialization. Because we have limited internal research capabilities, we
are dependent upon pharmaceutical and biotechnology companies and other
researchers to sell or license products to us. The success of this strategy
depends upon our ability to identify, select and acquire the right
pharmaceutical product candidates and products.
Any product candidate we license or acquire may require additional
development efforts prior to commercial sale, including extensive clinical
testing and approval by the FDA and applicable foreign regulatory authorities.
All product candidates are prone to the risks of failure inherent in
pharmaceutical product development, including the possibility that the product
candidate will not be shown to be sufficiently safe and effective for approval
by regulatory authorities. In addition, we cannot assure you that any products
that we license or acquire that are approved will be manufactured or produced
economically, successfully commercialized or widely accepted in the marketplace.
Proposing, negotiating and implementing an economically viable product
acquisition or license is a lengthy and complex process. Other companies,
including those with substantially greater financial, marketing and sales
resources, may compete with us for the acquisition or license of product
candidates and approved products. We may not be able to acquire or license the
rights to additional product candidates and approved products on terms that we
find acceptable, or at all.
We may undertake acquisitions in the future, and any difficulties from
integrating these acquisitions could damage our ability to attain or maintain
profitability.
We may acquire additional businesses, products or product candidates
that complement or augment our existing business. Integrating any newly acquired
business or products could be expensive and time-consuming. We may not be able
to integrate any acquired business or products successfully or operate any
acquired business profitably. Moreover, we many need to raise additional funds
through public or private debt or equity financing to make acquisitions, which
may result in dilution to stockholders and the incurrence of indebtedness that
may include restrictive covenants.
We will need to increase the size of our organization, and we may experience
difficulties in managing growth.
We are a small company with 5 employees as of October 7, 2004. To
continue our clinical trials and commercialize our product candidates, we will
need to expand our employee base for managerial, operational, financial and
other resources. Future growth will impose significant added responsibilities on
members of management, including the need to identify, recruit, maintain and
integrate additional employees. Our future financial performance and our ability
to commercialize our product candidates and to compete effectively will depend,
in part, on our ability to manage any future growth effectively. To that end, we
must be able to:
o manage our development efforts effectively;
o manage our clinical trials effectively;
o integrate additional management, administrative, manufacturing and
sales and marketing personnel;
o maintain sufficient administrative, accounting and management
information systems and controls; and
o hire and train additional qualified personnel.
14
We may not be able to accomplish these tasks, and our failure to
accomplish any of them could harm our financial results.
Reimbursement may not be available for our product candidates, which could
diminish our sales.
Market acceptance and sales of our product candidates may depend on
reimbursement policies and health care reform measures. The levels at which
government authorities and third-party payors, such as private health insurers
and health maintenance organizations, reimburse patients for the price they pay
for our products could affect whether we are able to commercialize these
products. We cannot be sure that reimbursement will be available for any of
these products. Also, we cannot be sure that reimbursement amounts will not
reduce the demand for, or the price of, our products. We have not commenced
efforts to have our product candidates reimbursed by government or third party
payors. If reimbursement is not available or is available only to limited
levels, we may not be able to commercialize our products.
In recent years, officials have made numerous proposals to change the
health care system in the United States. These proposals include measures that
would limit or prohibit payments for certain medical treatments or subject the
pricing of drugs to government control. In addition, in many foreign countries,
particularly the countries of the European Union, the pricing of prescription
drugs is subject to government control. If our products are or become subject to
government regulation that limits or prohibits payment for our products, or that
subject the price of our products to governmental control, we may not be able to
generate revenue, attain profitability or commercialize our products.
As a result of legislative proposals and the trend towards managed
health care in the United States, third-party payors are increasingly attempting
to contain health care costs by limiting both coverage and the level of
reimbursement of new drugs. They may also refuse to provide any coverage of uses
of approved products for medical indications other than those for which the FDA
has granted market approvals. As a result, significant uncertainty exists as to
whether and how much third-party payors will reimburse patients for their use of
newly-approved drugs, which in turn will put pressure on the pricing of drugs.
Legislative or regulatory reform of the healthcare system may affect our ability
to sell our products profitably.
In both the United States and certain foreign jurisdictions, there have
been a number of legislative and regulatory proposals to change the healthcare
system in ways that could impact upon our ability to sell our products
profitably. In recent years, new legislation has been proposed in the United
States at the federal and state levels that would effect major changes in the
healthcare system, either nationally or at the state level.
These proposals have included prescription drug benefit proposals for
Medicare beneficiaries introduced in Congress. Legislation creating a
prescription drug benefit and making certain changes in Medicaid reimbursement
has recently been enacted by Congress and signed by the President. Given this
legislation's recent enactment, it is still too early to determine its impact on
the pharmaceutical industry and our business. Further federal and state
proposals are likely. The potential for adoption of these proposals affects or
will affect our ability to raise capital, obtain additional collaborators and
market our products. We expect to experience pricing pressures in connection
with the sale of our products due to the trend toward managed health care, the
increasing influence of health maintenance organizations and additional
legislative proposals. Our results of operations could be adversely affected by
future healthcare reforms.
15
RISKS RELATED TO OUR INTELLECTUAL PROPERTY
It is difficult and costly to protect our proprietary rights, and we may not be
able to ensure their protection.
Our commercial success will depend in part on obtaining and maintaining
patent protection and trade secret protection of our product candidates, and the
methods used to manufacture them, as well as successfully defending these
patents against third-party challenges. We will only be able to protect our
product candidates from unauthorized making, using, selling, offering to sell or
importation by third parties to the extent that we have rights under valid and
enforceable patents or trade secrets that cover these activities.
As of October 7, 2004, we own 4 issued United States patents and have
licensed rights to 11 issued United States patents and 91 issued foreign
patents, and to 4 pending United States patent applications and 41 pending
foreign patent applications. We do not and have not had any control over the
filing or prosecution of these patents or patent applications. We may file
additional patent applications and extensions.
The patent positions of pharmaceutical and biotechnology companies can
be highly uncertain and involve complex legal and factual questions for which
important legal principles remain unresolved. No consistent policy regarding the
breadth of claims allowed in biotechnology patents has emerged to date in the
United States. The biotechnology patent situation outside the United States is
even more uncertain. Changes in either the patent laws or in interpretations of
patent laws in the United States and other countries may diminish the value of
our intellectual property. Accordingly, we cannot predict the breadth of claims
that may be allowed or enforced in our licensed patents or in third-party
patents.
The degree of future protection for our proprietary rights is uncertain
because legal means afford only limited protection and may not adequately
protect our rights or permit us to gain or keep our competitive advantage. For
example:
o others may be able to make compounds that are competitive with our
product candidates but that are not covered by the claims of our
licensed patents, or for which we are not licensed under our license
agreements;
o we or our licensors might not have been the first to make the
inventions covered by our pending patent application or the pending
patent applications and issued patents of our licensors;
o we or our licensors might not have been the first to file patent
applications for these inventions;
o others may independently develop similar or alternative technologies
or duplicate any of our technologies;
o it is possible that our pending patent application or one or more of
the pending patent applications of our licensors will not result in
issued patents;
o the issued patents of our licensors may not provide us with any
competitive advantages, or may be held invalid or unenforceable as a
result of legal challenges by third parties;
o we may not develop additional proprietary technologies that are
patentable; or
o the patents of others may have an adverse effect on our business.
We also may rely on trade secrets to protect our technology, especially
where we do not believe patent protection is appropriate or obtainable. However,
trade secrets are difficult to protect. While we use reasonable efforts to
protect our trade secrets, our employees, consultants, contractors, outside
scientific collaborators and other advisors may unintentionally or willfully
disclose our information to competitors. Enforcing a claim that a third party
illegally obtained and is using our trade secrets is expensive and time
consuming, and the outcome is unpredictable. In addition, courts outside the
United States are sometimes less willing to protect trade secrets. Moreover, our
competitors may independently develop equivalent knowledge, methods and
know-how.
16
We may incur substantial costs as a result of litigation or other proceedings
relating to patent and other intellectual property rights and we may be unable
to protect our rights to, or use, our technology.
If we choose to go to court to stop someone else from using the
inventions claimed in our licensed patents, that individual or company has the
right to ask the court to rule that these patents are invalid and/or should not
be enforced against that third party. These lawsuits are expensive and would
consume time and other resources even if we were successful in stopping the
infringement of these patents. In addition, there is a risk that the court will
decide that these patents are not valid and that we do not have the right to
stop the other party from using the inventions. There is also the risk that,
even if the validity of these patents is upheld, the court will refuse to stop
the other party on the ground that such other party's activities do not infringe
our rights to these patents.
Furthermore, a third party may claim that we are using inventions
covered by the third party's patent rights and may go to court to stop us from
engaging in our normal operations and activities, including making or selling
our product candidates. These lawsuits are costly and could affect our results
of operations and divert the attention of managerial and technical personnel.
There is a risk that a court would decide that we are infringing the third
party's patents and would order us to stop the activities covered by the
patents. In addition, there is a risk that a court will order us to pay the
other party damages for having violated the other party's patents. The
biotechnology industry has produced a proliferation of patents, and it is not
always clear to industry participants, including us, which patents cover various
types of products or methods of use. The coverage of patents is subject to
interpretation by the courts, and the interpretation is not always uniform. If
we are sued for patent infringement, we would need to demonstrate that our
products or methods of use either do not infringe the patent claims of the
relevant patent and/or that the patent claims are invalid, and we may not be
able to do this. Proving invalidity, in particular, is difficult since it
requires a showing of clear and convincing evidence to overcome the presumption
of validity enjoyed by issued patents.
Because some patent applications in the United States may be maintained
in secrecy until the patents are issued, because patent applications in the
United States and many foreign jurisdictions are typically not published until
eighteen months after filing, and because publications in the scientific
literature often lag behind actual discoveries, we cannot be certain that others
have not filed patent applications for technology covered by our licensors'
issued patents or our pending applications or our licensors' pending
applications or that we or our licensors were the first to invent the
technology. Our competitors may have filed, and may in the future file, patent
applications covering technology similar to ours. Any such patent application
may have priority over our or our licensors' patent applications and could
further require us to obtain rights to issued patents covering such
technologies. If another party has filed a United States patent application on
inventions similar to ours, we may have to participate in an interference
proceeding declared by the United States Patent and Trademark Office to
determine priority of invention in the United States. The costs of these
proceedings could be substantial, and it is possible that such efforts would be
unsuccessful, resulting in a loss of our United States patent position with
respect to such inventions.
Some of our competitors may be able to sustain the costs of complex
patent litigation more effectively than we can because they have substantially
greater resources. In addition, any uncertainties resulting from the initiation
and continuation of any litigation could have a material adverse effect on our
ability to raise the funds necessary to continue our operations.
17
RISKS RELATED TO OUR COMMON STOCK
Market volatility may affect our stock price and the value of your investment.
The market prices for securities of biopharmaceutical companies in
general have been highly volatile and may continue to be highly volatile in the
future. The following factors, in addition to other risk factors described in
this section, may have a significant impact on the market price of our common
stock:
o announcements of technological innovations or new products by us or
our competitors;
o announcement of FDA approval or non-approval of our product
candidates or delays in the FDA review process;
o actions taken by regulatory agencies with respect to our product
candidates, clinical trials, manufacturing process or sales and
marketing activities;
o regulatory developments in the United States and foreign countries;
o the success of our development efforts and clinical trials;
o the success of our efforts to acquire or in-license additional
products or product candidates;
o any intellectual property infringement action, or any other
litigation, involving us;
o announcements concerning our competitors, or the biotechnology or
biopharmaceutical industries in general;
o actual or anticipated fluctuations in our operating results;
o changes in financial estimates or recommendations by securities
analysts;
o sales of large blocks of our common stock;
o sales of our common stock by our executive officers, directors and
significant stockholders; and
o the loss of any of our key scientific or management personnel.
The occurrence of one or more of these factors may cause our stock
price to decline, and you may not be able to resell your shares at or above the
price you paid for your shares. In addition, the stock markets in general, and
the markets for biotechnology and biopharmaceutical stocks in particular, have
experienced extreme volatility that has often been unrelated to the operating
performance of particular companies. These broad market fluctuations may
adversely affect the trading price of our common stock.
We are at risk of securities class action litigation.
In the past, securities class action litigation has often been brought
against a company following a decline in the market price of its securities.
This risk is especially relevant for us because biotechnology and
biopharmaceutical companies have experienced significant stock price volatility
in recent years. If we faced such litigation, it could result in substantial
costs and a diversion of management's attention and resources, which could harm
our business.
18
The ownership interests of our officers, directors and largest stockholders
could conflict with the interests of our other stockholders.
As of October 7, 2004, our officers, directors and holders of 5% or
more of our outstanding common stock beneficially own approximately 26.9% of our
common stock. As a result, these stockholders, acting together, will be able to
significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combination transactions. The interests of this group of stockholders
may not always coincide with our interests or the interests of other
stockholders.
Our common stock may be deemed penny stock with a limited trading market.
Our common stock is currently listed for trading in the OTC Bulletin
Board which is generally considered to be a less efficient market than markets
such as NASDAQ or other national exchanges, and which may cause difficulty in
conducting trades and difficulty in obtaining future financing. Further, our
securities are subject to the "penny stock rules" adopted pursuant to Section
15(g) of the Securities Exchange Act of 1934, as amended, or Exchange Act. The
penny stock rules apply to non-NASDAQ companies whose common stock trades at
less than $5.00 per share or which have tangible net worth of less than
$5,000,000 ($2,000,000 if the company has been operating for three or more
years). Such rules require, among other things, that brokers who trade "penny
stock" to persons other than "established customers" complete certain
documentation, make suitability inquiries of investors and provide investors
with certain information concerning trading in the security, including a risk
disclosure document and quote information under certain circumstances. Many
brokers have decided not to trade "penny stock" because of the requirements of
the penny stock rules and, as a result, the number of broker-dealers willing to
act as market makers in such securities is limited. In the event that we remain
subject to the "penny stock rules" for any significant period, there may develop
an adverse impact on the market, if any, for our securities. Because our
securities are subject to the "penny stock rules," investors will find it more
difficult to dispose of our securities. Further, for companies whose securities
are traded in the OTC Bulletin Board, it is more difficult: (i) to obtain
accurate quotations, (ii) to obtain coverage for significant news events because
major wire services, such as the Dow Jones News Service, generally do not
publish press releases about such companies, and (iii) to obtain needed capital.
We have not paid cash dividends in the past and do not expect to pay cash
dividends in the future. Any return on investment may be limited to the value of
our stock.
We have never paid cash dividends on our stock and do not anticipate
paying cash dividends on our stock in the foreseeable future. The payment of
cash dividends on our stock will depend on our earnings, financial condition and
other business and economic factors affecting us at such time as the board of
directors may consider relevant. If we do not pay cash dividends, our stock may
be less valuable because a return on your investment will only occur if our
stock price appreciates.
A sale of a substantial number of shares of our common stock may cause the price
of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the
public market, including shares issued upon the exercise of outstanding options
or warrants, the market price of our common stock could fall. These sales also
may make it more difficult for us to sell equity or equity-related securities in
the future at a time and price that we deem reasonable or appropriate.
Approximately 21.6 million shares of our restricted common stock is eligible for
sale pursuant to Rule 144. In addition, the 3,100,000 shares of common stock
issuable pursuant to stock options to be registered will be freely tradable upon
effectiveness of the registration statement of which this prospectus is a part.
19
USE OF PROCEEDS
The shares which may be sold under this prospectus will be sold for the
respective accounts of each of the selling stockholders. Accordingly, we will
not realize any proceeds from the sale of the shares, except that we will derive
proceeds if all of the options currently outstanding are exercised for cash.
However, all of such options contain certain provisions for cashless exercise.
If exercised for cash, such funds will be available to us for working capital
and general corporate purposes. No assurance can be given, however, as to when
of if any or all of the options will be exercised. All expenses of the
registration of the shares will be paid for by Callisto. See "Selling
Stockholders" and "Plan of Distribution."
SELLING STOCKHOLDERS
The following table sets forth (i) the name and relationship to
Callisto and its affilitates of each selling stockholder, (ii) the number of
outstanding shares of common stock beneficially owned by each selling
stockholder prior to this offering; (iii) the number of shares of common stock
each selling stockholder may acquire pursuant to the exercise of a previously
granted option or options, all of which shares may be sold pursuant to this
prospectus; and (iv) the number of shares of common stock beneficially owned by
each selling stockholder and (if one percent or more) the percentage of
outstanding shares of common stock to be beneficially owned by each selling
stockholder assuming the exercise of all options granted and the sale of all
shares acquired upon exercise of such options. See "Plan of Distribution."
Shares Beneficially Owned Shares Beneficially Owned
Selling Stockholder Prior to the Offering Shares Being Offered After the Offering
------------------- ------------------------- -------------------- -------------------------
Number of
Shares Percentage (1)
--------- --------------
Gabriele M. Cerrone 2,924,237 (2) 925,000 2,049,237 7.0
Chairman of the Board
Gary S. Jacob 258,297 (3) 775,000 108,297 *
Chief Executive Officer and Chief
Scientific Officer
Donald H. Picker
Executive Vice President, R&D 180,741 (4) 725,000 97,408 *
Kunwar Shailubhai
Senior Vice President,
Drug Discovery, Synergy
Pharmaceuticals Inc. 75,000 (5) 125,000 -0-
Bernard Denoyer
Vice President, Finance 30,000 (6) 100,000 -0-
Christoph Bruening 368,199 (7) 75,000 343,199 1.2
Director
Iain G. Ross 25,000 (8) 75,000 -0-
Director
Edwin Snape 939,402 (9) 75,000 914,402 3.1
Director
Albert Henry 1,407,164 (10) 75,000 1,382,164 4.7
Director
John P. Brancaccio -0- 75,000 -0-
Director
Stephen Carter -0- 75,000 -0-
Director
* less than 1%.
20
(1) Applicable percentage ownership as of October 7, 2004 is based upon
29,175,102 shares of common stock outstanding. Beneficial ownership is
determined in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, as amended. Under Rule 13d-3, shares issuable within 60 days upon
exercise of outstanding options, warrants, rights or conversion privileges
("Purchase Rights") are deemed outstanding for the purpose of calculating
the number and percentage owned by the holder of such Purchase Rights, but
not deemed outstanding for the purpose of calculating the percentage owned
by any other person. "Beneficial ownership" under Rule 13d-3 includes all
shares over which a person has sole or shared dispositive or voting power.
(2) Consists of 875,000 shares of common stock issuable upon exercise of stock
options held by Mr. Cerrone and 2,049,237 shares held by Panetta Partners,
Ltd., of which Mr. Cerrone is the sole general partner and in such capacity
only exercises voting and dispositive control.
(3) Includes 150,000 shares of common stock issuable upon exercise of stock
options.
(4) Includes 83,333 shares of common stock issuable upon exercise of stock
options.
(5) Consists of 75,000 shares of common stock issuable upon exercise of stock
options.
(6) Consists of 30,000 shares of common stock issuable upon exercise of stock
options.
(7) Includes 25,000 shares of common stock issuable upon exercise of stock
options.
(8) Consists of 25,000 shares of common stock issuable upon exercise of stock
options.
(9) Includes 25,000 shares of common stock issuable upon exercise of stock
options held by Mr. Snape. 714,402 shares are held by NEGF II, L.P. and
200,000 shares are held by New England Partners Capital, L.P. Mr. Snape is
a principal of NEGF II, L.P. and New England Partners Capital, L.P.
(10) Includes 25,000 shares of common stock issuable upon exercise of stock
options held by Mr. Henry. The remaining 1,382,164 shares are held by Henry
Venture II Limited. Mr. Henry is the Chairman of Henry Venture II Limited.
21
PLAN OF DISTRIBUTION
In this section of the prospectus, the term "selling security holder"
means and includes: (1) the persons identified in the table above as the
Selling Stockholders; and (2) any of their donees, pledgees, distributees,
transferees or other successors in interest who may (a) receive any of the
shares of our common stock offered hereby after the date of this prospectus and
(b) offer or sell those shares hereunder.
The shares of our common stock offered by this prospectus may be sold
from time to time directly by the selling security holders. Alternatively, the
selling security holders may from time to time offer such shares through
underwriters, brokers, dealers, agents or other intermediaries. The selling
security holders as of the date of this prospectus have advised us that there
were no underwriting or distribution arrangements entered into with respect to
the common stock offered hereby. The distribution of the common stock by the
selling security holders may be effected: in one or more transactions that may
take place on the OTC Bulletin Board (including one or more block transactions)
through customary brokerage channels, either through brokers acting as agents
for the selling security holders, or through market makers, dealers or
underwriters acting as principals who may resell these shares on the OTC
Bulletin Board; in privately-negotiated sales; by a combination of such methods;
or by other means. These transactions may be effected at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at other negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the selling security
holders in connection with sales of our common stock.
The selling security holders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares of our
common stock in the course of hedging the positions they assume with the selling
security holders. The selling security holders also may sell shares short and
redeliver the shares to close out such short positions. The selling security
holders may enter into option or other transactions with broker-dealers which
require the delivery to the broker-dealer of shares of our common stock. The
broker-dealer may then resell or otherwise transfer such shares of common stock
pursuant to this prospectus.
The selling security holders also may lend or pledge shares of our
common stock to a broker-dealer. The broker-dealer may sell the shares of common
stock so lent, or upon a default the broker-dealer may sell the pledged shares
of common stock pursuant to this prospectus. Any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this prospectus. The selling security holders have
advised us that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of their
securities. There is no underwriter or coordinating broker acting in connection
with the proposed sale of shares of common stock the selling security holders.
Although the shares of common stock covered by this prospectus are not
currently being underwritten, the selling security holders or their
underwriters, brokers, dealers or other agents or other intermediaries, if any,
that may participate with the selling security holders in any offering or
distribution of common stock may be deemed "underwriters" within the meaning of
the Act and any profits realized or commissions received by them may be deemed
underwriting compensation thereunder.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of shares of the common stock offered hereby
may not simultaneously engage in market making activities with respect to the
common stock for a period of up to five days preceding such distribution. The
selling security holders will be subject to the applicable provisions of the
Exchange Act and the rules and regulations promulgated thereunder, including
without limitation Regulation M, which provisions may limit the timing of
purchases and sales by the selling security holders.
22
In order to comply with certain state securities or blue sky laws and
regulations, if applicable, the common stock offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers. In certain
states, the common stock may not be sold unless they are registered or qualified
for sale in such state, or unless an exemption from registration or
qualification is available and is obtained.
We will bear all costs, expenses and fees in connection with the
registration of the common stock offered hereby. However, the selling security
holders will bear any brokerage or underwriting commissions and similar selling
expenses, if any, attributable to the sale of the shares of common stock offered
pursuant to this prospectus.
There can be no assurance that the selling securityholders will sell
any or all of the securities offered by them hereby.
LEGAL MATTERS
The legality of the common stock to be offered hereby has been passed
upon by Sills Cummis Epstein & Gross, P.C., Newark, New Jersey.
EXPERTS
The financial statements incorporated by reference in this Reoffer
Prospectus have been audited by BDO Seidman, LLP, independent registered public
accountants, to the extent and for the periods set forth in their reports
incorporated herein by reference, and are incorporated herein in reliance upon
such reports given upon the authority of said firm as experts in auditing and
accounting.
23
NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFERING MADE
HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT 3,100,000 SHARES
BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OTHER CALLISTO PHARMACEUTICALS, INC.
PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER COMMON STOCK
SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.
--------------------------------------------------------------------------------
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TABLE OF CONTENTS P R O S P E C T U S
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Prospectus Summary .....................3
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Where You Can Find More Information ....3
-----------------------------------------
Documents Incorporated By Reference ....4
-----------------------------------------
The Company ............................4
-----------------------------------------
Forward Looking Statements .............5
-----------------------------------------
Risk Factors ...........................5 OCTOBER 8, 2004
-----------------------------------------
Use of Proceeds .......................20
-----------------------------------------
Selling Stockholders ..................20
-----------------------------------------
Plan of Distribution ..................22
-----------------------------------------
Legal Matters .........................23
-----------------------------------------
Experts ...............................23
-----------------------------------------
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3 INCORPORATION OF DOCUMENTS BY REFERENCE
Included in Part I of this registration statement.
ITEM 4 DESCRIPTION OF SECURITIES
The description of the common stock contained in our Registration
Statement (File No. 333-115471) on Form SB-2/A filed with the Commission on
August 5, 2004 and declared effective by the Commission on August 12, 2004 is
hereby incorporated by reference.
ITEM 5 INTERESTS OF NAMED EXPERTS AND COUNSEL
N/A
ITEM 6 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Callisto Pharmaceuticals, Inc.'s Certificate of Incorporation provides
that to the fullest extent permitted by the Delaware General Corporation Law, a
director of the company shall not be personally liable to the company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Under current Delaware law, liability of a director may not be limited
(i) for any breach of the director's duty of loyalty to the company or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, and (iii) for any
transaction from which the director derives an improper personal benefit. The
effect of the provision of the company's Certificate of Incorporation is to
eliminate the rights of the company and its stockholders (through stockholders'
derivative suits on behalf of the company) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (iii) above. This provision does not
limit or eliminate the rights of the company or any stockholder to seek
nonmonetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. In addition, the company's Certificate of
Incorporation provides that the company shall indemnify to the fullest extent
permitted by law its directors, officers and employees and any other persons to
which Delaware law permits a corporation to provide indemnification against
losses incurred by any such person by reason of the fact that such person was
acting in such capacity.
We have an insurance policy that insures our directors and officers,
within the limits and subject to the limitations of the policy, against certain
expenses in connection with the defense of actions, suits or proceedings, and
certain liabilities that might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been
directors or officers.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling Callisto pursuant to the
foregoing provisions, Callisto has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable.
ITEM 7 EXEMPTION FROM REGISTRATION CLAIMED
All shares of common stock registered hereunder for reoffer or resale,
have been or will be issued upon exercise of options granted pursuant to the
Registrant's 1996 Incentive and Non-Qualified Stock Option Plan, and its
Non-Plan Executive and Director Options. The options are non-transferable and
the underlying shares were and will be issued in transactions not involving a
public offering. Upon exercise of an option, the optionee is required to execute
an undertaking not to resell such shares except pursuant to an effective
registration statement or other exemption under the Act, a restrictive legend is
placed on the certificates for the shares of common stock purchased and transfer
stops are placed against such certificates. Such shares may only be reoffered
and sold pursuant to registration under the Act or pursuant to an applicable
exemption under the Act. As a result, such offers and sales are exempt from the
registration requirements of the Act pursuant to the provisions of Section 4(2)
of the Act.
INDEX TO EXHIBITS
Exhibit Description
------- -----------
4.1 1996 Incentive and Non-Qualified Stock Option Plan (1)
4.2 Form of Stock Option Agreement for 1996 Incentive and Non-Qualified
Stock Option Plan
4.3 Form of Non-Plan Stock Option Agreement
5.1 Opinion of Sills Cummis Epstein & Gross, P.C.
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Sills Cummis Epstein & Gross, P.C. (included in Exhibit 5.1)
24.1 Power of Attorney (Included on Signature Page).
(1) Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K filed on April 30, 2003.
ITEM 9: UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement;
(iii) include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) shall 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 section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability pursuant to 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 offered 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.
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.
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on this 8th day of
October, 2004.
CALLISTO PHARMACEUTICALS, INC.
By: /s/ Gary S. Jacob
-----------------
Gary S. Jacob
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gabriele M. Cerrone and Gary S. Jacob,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorney-in-fact
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Gary S. Jacob Chief Executive Officer October 8, 2004
--------------------------- (Principal Executive Officer)
Gary S. Jacob
/s/ Bernard F. Denoyer Vice President, Finance October 8, 2004
--------------------------- (Principal Financial Officer)
Bernard F. Denoyer
/s/ Gabriele M. Cerrone Chairman of the Board October 8, 2004
---------------------------
Gabriele M. Cerrone
/s/ Iain G. Ross Director October 8, 2004
---------------------------
Iain G. Ross
/s/ Edwin Snape Director October 8, 2004
---------------------------
Edwin Snape
--------------------------- Director October __, 2004
Albert J. Henry
/s/ Stephen Carter Director October 8, 2004
---------------------------
Stephen Carter
/s/ Christoph Bruening Director October 8, 2004
---------------------------
Christoph Bruening
/s/ John P. Brancaccio Director October 8, 2004
---------------------------
John P. Brancaccio
INDEX TO EXHIBITS
Exhibit Description
------- -----------
4.1 1996 Incentive and Non-Qualified Stock Option Plan (1)
4.2 Form of Stock Option Agreement for 1996 Incentive and Non-Qualified
Stock Option Plan
4.3 Form of Non-Plan Stock Option Agreement
5.1 Opinion of Sills Cummis Epstein & Gross, P.C.
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Sills Cummis Epstein & Gross, P.C. (included in Exhibit 5.1)
24.1 Power of Attorney (Included on Signature Page).
(1) Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K filed on April 30, 2003.