Unassociated Document
As
filed
with the Securities and Exchange Commission on June 13, 2008.
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
S-8
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
ACURA
PHARMACEUTICALS, INC.
(Exact
Name of Registrant as Specified in Its Charter)
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New
York
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11-0853640
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(State
or Other Jurisdiction of Incorporation or Organization)
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(IRS
Employer Identification No.)
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616
N.
North Court, Suite 120, Palatine, Illinois 60067
(Address
of Principal Executive Offices)
Acura
Pharmaceuticals, Inc. 2005 Restricted Stock Unit Award Plan
(Full
Title of the Plan)
Peter
A.
Clemens
Senior
Vice President and Chief Financial Officer
Acura
Pharmaceuticals, Inc.
616
N.
North Court, Suite 120, Palatine, Illinois 60067
(Name
and
Address Of Agent For Service of Process)
________________________________
With
a
Copy to:
John
P.
Reilly, Esq.
LeClairRyan
Two
Penn
Plaza East, Newark, New Jersey 07105
(973)
491-3600
________________________________
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer þ
(Do
not check if a small reporting company)
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Smaller
reporting company o
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CALCULATION
OF REGISTRATION FEE
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Title of
Securities
To
Be
Registered
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Amount
To
Be
Registered (1)
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Proposed
Maximum
Offering
Price
Per
Share
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Proposed
Maximum
Aggregate
Offering
Price
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Amount
of
Registration
Fee
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Common
Stock $.01 par value per share, issuable for Restricted Stock
Units
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500,000
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$
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9.04
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$
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4,520,000.00
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$
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177.64
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(2)
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(1)
The
aggregate amount of securities registered hereunder is 500,000 shares of Common
Stock underlying Restricted Stock Units to be granted under the 2005 Restricted
Stock Unit Award Plan, as amended. Pursuant to Rule 416 promulgated under the
Securities Act of 1933, as amended, this Registration Statement covers such
additional shares of Common Stock to be offered or issued to prevent dilution
as
a result of future stock splits, stock dividends or similar transactions. We
previously registered 3,000,000 shares underlying Restricted Stock Units granted
under the 2005 Restricted Stock Unit Award Plan (after giving effect to a 1
for
10 reverse stock split effected December 5, 2007) on Form S-8 (File No.
333-133172) filed with the Commission on April 10, 2006.
(2)
The
fee with respect to these shares has been calculated pursuant to paragraphs
(h)
and (c) of Rule 457 upon the basis of $9.04, the average of the high and low
price per share of the Registrant's Common Stock on June 9, 2008, a date within
five (5) business days prior to the date of filing of this Registration
Statement, as reported by the Nasdaq Capital Market, and is based on the rate
of
$39.30 per million.
EXPLANATORY
STATEMENT
We
are
filing this Registration Statement to register an additional 500,000 shares
of
our Common Stock for issuance pursuant to the Acura Pharmaceuticals, Inc. 2005
Restricted Stock Unit Award Plan, as amended (the "Plan"). We previously
registered 3,000,000 shares (after giving effect to a 1 for 10 reverse stock
split effected December 5, 2007) on Form S-8 on April 10, 2006 (File No.
333-133172).
This
Registration Statement contains a reoffer prospectus to be used by certain
of
our officers, directors and employees and other Selling Stockholders with
respect to the control securities acquired by them pursuant to the Registrant’s
employee benefit plans – namely
our 1995
Stock Option and Restricted Stock Purchase Plan, our 1998 Stock Option Plan,
our
2008 Stock Option Plan and our 2005 Restricted Stock Unit Award Plan. Pursuant
to Rule 429 of the Securities Act of 1933, as amended, this Registration
Statement shall act as a Post-Effective Amendment to the Registration Statements
on Form S-8 identified by the following Registration Numbers: 33-98396 (pursuant
to which we previously registered shares underlying our 1995 Stock Option and
Restricted Stock Purchase Plan), 333-63288 (pursuant to which we previously
registered 8,100,000 shares underlying our 1998 Stock Option Plan), 333-123615
(pursuant to which we previously registered 11,900,000 shares underlying our
1998 Stock Option Plan), 333-133172 (pursuant to which we previously registered
3,000,000 shares under our 2005 Restricted Stock Unit Award Plan) and 333-151620
(pursuant to which we registered 6,000,000 shares underlying our 2008 Stock
Option Plan).
PART
I
Reoffer
Prospectus
This
reoffer prospectus relates to the offering and sale from time to time for the
account of certain of our directors, executive officers and employees identified
in this prospectus and other selling stockholders to be identified (each a
“Selling Stockholder” and collectively the “Selling Stockholders”) of up to an
aggregate of 5,197,250 shares of common stock, par value $.01 per share, of
Acura Pharmaceuticals, Inc. The shares of common stock offered by this
prospectus include 22,500 shares underlying options, which options were issued
pursuant to our 1995 Stock Option and Restricted Stock Purchase Plan, 1,844,000
shares underlying options, which options were issued pursuant to our 1998 Stock
Option Plan, 23,250 shares previously acquired upon exercise of options under
the 1998 Stock Option Plan, 2,477,500 shares of common stock underlying
outstanding Restricted Stock Unit awards granted under our 2005 Restricted
Stock
Unit Award Plan, 830,000 shares underlying options, which options were issued
pursuant to our 2008 Stock Option Plan.
Except
for the aggregate exercise price of the options exercised by the Selling
Stockholders, and $0.01 per share for each Restricted Stock Unit we will not
receive any of the proceeds from the sale of the common stock being offered
by
this reoffer prospectus. All expenses of registration incurred in connection
with the offering being made by this reoffer prospectus are being borne by
us,
but any brokerage commissions and other expenses incurred by a Selling
Stockholder will be borne by such Selling Stockholder.
The
Selling Stockholders have advised us that the resale of their shares may be
effected from time to time through public or private transactions, directly
or
through brokers or otherwise, and at market prices prevailing at the time of
sale or at prices otherwise negotiated. The Selling Stockholders may sell the
shares of common stock covered by this reoffer prospectus in a number of
different ways and at varying prices. For additional information on the methods
of sale, you should refer to the section entitled “Plan of Distribution”
beginning on page 22.
The
common stock is traded in the NASDAQ Capital Market under the symbol “ACUR.” On
June 5, 2008, the last sale price for the common stock as reported on the NASDAQ
Capital Market was $8.99 per share.
See
“Risk Factors” commencing on page 3 for certain information that should be
considered by prospective investors.
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 REOFFER
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date
of this reoffer prospectus is June 13, 2008.
EXPLANATORY
NOTE
This
Prospectus contains the form of reoffer prospectus to be used by certain of
our
officers, directors and employees with respect to the control securities
acquired or to be acquired by them pursuant to our employee benefit
plans.
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Page
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Information
Contained in This Prospectus
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2
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Special
Note Regarding Forward Looking Statements
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3
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Risk
Factors
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3
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About
Acura Pharmaceuticals, Inc.
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16
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Use
of Proceeds
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19
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Selling
Stockholders
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19
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Plan
of Distribution
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22
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Legal
Matters
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24
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Experts
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24
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Incorporation
of Certain Information By Reference
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24
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Where
You Can Find More Information
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25
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You
should rely only on the information provided or incorporated by reference in
this prospectus or any prospectus supplement. Neither we nor the Selling
Stockholders have authorized anyone to provide you with additional or different
information. The Selling Stockholders are not making an offer of these
securities in any jurisdiction where the offer is not permitted. You should
assume that the information in this prospectus and any prospectus supplement
is
accurate only as of the date on the front of the document and that information
incorporated by reference in this prospectus or any prospectus supplement is
accurate only as of the date of the document incorporated by reference. In
this
prospectus and any prospectus supplement, unless otherwise indicated, “Acura,”
“we,” “us” and “our” refer to Acura Pharmaceuticals, Inc. and its subsidiary,
and do not refer to the Selling Stockholders. When we refer to “you” or “yours,”
we mean the persons to whom offers are made hereunder. Aversion® and Acura®
Pharmaceuticals are registered trademarks in the United States.
We
refer
to the U.S. Food and Drug Administration as the FDA.
Certain
statements in this prospectus and in documents that we incorporate by reference
into this prospectus constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. The most significant of such factors
include, but are not limited to, our ability and the ability of King
Pharmaceuticals Research and Development, Inc. (“King”) and other pharmaceutical
companies, if any, to whom we may license our Aversion® Technology, to obtain
necessary regulatory approvals and commercialize products utilizing the
Aversion® Technology, the ability to avoid infringement of patents, trademarks
and other proprietary rights of third parties, and the ability to fulfill the
U.S. Food and Drug Administration’s (“FDA”) requirements for approving our
product candidates for commercial manufacturing and distribution in the United
States, including, without limitation, the adequacy of the results of the
laboratory and clinical studies completed to date and the results of other
laboratory and clinical studies, to support FDA approval of our product
candidates, the adequacy of the development program for our product candidates,
changes in regulatory requirements, adverse safety findings relating to our
product candidates, the risk that the FDA may not agree with our analysis of
our
clinical studies and may evaluate the results of these studies by different
methods or conclude that the results of the studies are not statistically
significant, clinically meaningful or that there were human errors in the
conduct of the studies or otherwise, the risk that further studies of our
product candidates are not positive or otherwise do not support FDA approval
or
commercially viable product labeling, and the uncertainties inherent in
scientific research, drug development, clinical trials and the regulatory
approval process. Other important factors that may also affect future results
include, but are not limited to: our ability to attract and retain highly
skilled personnel; our ability to secure and protect its patents, trademarks
and
proprietary rights; litigation or regulatory action that could require us to
pay
significant damages or change the way we conduct our business; our ability
to
compete successfully against current and future competitors; our dependence
on
third-party suppliers of raw materials; our ability to secure U.S. Drug
Enforcement Administration ("DEA") quotas and source controlled substances
that
constitute the active ingredients of our products in development; difficulties
or delays in clinical trials for our product candidate or in the commercial
manufacture and supply of our products; and other risks and uncertainties
detailed in this prospectus supplement. When used in this prospectus supplement,
the words "estimate," "project," "anticipate," "expect," "intend," "believe,"
and similar expressions are intended to identify forward-looking
statements.
In
light
of these risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this prospectus and in documents that we incorporate
by reference into this prospectus may not occur and actual results could differ
materially and adversely from those anticipated or implied in the
forward-looking statements. Accordingly, readers are cautioned not to place
undue reliance on such forward-looking statements.
RISK
FACTORS
Our
future operating results may vary substantially from anticipated results due
to
a number of factors, many of which are beyond our control. The following
discussion highlights some of these factors and the possible impact of these
factors on future results of operations. If any of the following factors
actually occur, our business, financial condition or results of operations
could
be materially harmed. In that case, the value of our common stock could decline
substantially.
Risks
Relating to Our Business and Industry
We
have a History of Operating Losses and May Not Achieve Profitability Sufficient
to Generate a Positive Return on Shareholders’ Investment.
We
had
operating income of $12,132,000 and net income of $7,449,000 for the three
months ended March 31, 2008 and a net operating loss of $ 1,974,000 and a net
loss of $ 9,159,000 for the three months ended March 31, 2007. We had a net
loss
of $4.3 million for the year ended December 31, 2007 and net losses of $6.0
million and $12.1 million for calendar years 2006, and 2005, respectively.
At
March 31, 2008, our accumulated deficit was approximately $314.4 million. Our
consolidated financial statements for the calendar years 2006, 2005 and 2004
were prepared on a “going concern” basis. Our future profitability will depend
on several factors, including: (i) our receipt of milestone payments and
royalties relating to products developed and commercialized under our license
agreement (“King Agreement”) with King Pharmaceuticals Research and Development,
Inc. (“King”), and (ii) the successful commercialization by King and other
future licensees (if any) of products incorporating our Aversion® Technology
without infringing the patents and other intellectual property rights of third
parties. We cannot assure you that we will ever have a product approved for
commercialization by the FDA or that we or our licensees will bring any product
to market.
We
recognized revenue of approximately $17.1 million in the three months ended
March 31, 2008 and $6.6 million in the quarter ended December 31, 2007 from
payments received under the King Agreement. However, we have not yet generated
any revenues from product sales. Even if we succeed in commercializing one
or
more of our product candidates, we expect to continue to use cash resources
in
our operations for the foreseeable future. We anticipate that our expenses
may
increase in the foreseeable future as a result of continued development of
our
product candidates, maintaining, defending and expanding the scope of our
intellectual property, and the hiring of additional personnel.
We
will
need to generate royalty revenues from product sales to achieve and maintain
profitability. If we cannot successfully develop, obtain regulatory approval
for
and commercialize our product candidates licensed to King under the King
Agreement or other product candidates under similar license agreements
anticipated to be negotiated and executed with other pharmaceutical company
partners, of which no assurance can be given, we will not be able to generate
such royalty revenues or achieve future profitability. Our failure to achieve
or
maintain profitability would have a material adverse impact on the market price
of our common stock.
We
Must Rely on Current Cash Reserves, Technology Licensing Fees and Third Party
Financing to Fund Operations
Pending
the receipt of milestone payments and royalties, if any, under the King
Agreement or under similar license agreements anticipated to be negotiated
and
executed with other pharmaceutical company partners, of which no assurance
can
be given, we must rely on our current cash reserves and third-party financing
to
fund operations and product development activities. No assurance can be given
that current cash reserves will be sufficient to fund the continued operations
and development of our product candidates until such time as we generate
additional revenue from the King Agreement or similar license agreements
anticipated to be negotiated and executed with the other pharmaceutical company
partners. Moreover, no assurance can be given that we will be successful in
raising additional financing or, if funding is obtained, that such funding
will
be sufficient to fund operations until product candidates incorporating our
Aversion® Technology may be commercialized.
Our
Product Candidates Are Based on Technology That Could Ultimately Prove
Ineffective
We
are
committing a majority of our resources to the development of Acurox™ (oxycodone
HCl and niacin) Tablets and other product candidates incorporating our Aversion®
Technology. Additional clinical and non-clinical testing will be required to
continue development of Acurox™ Tablets and for the development, preparation and
submission of a 505(b)(2) New Drug Application (“NDA”) with the FDA. There can
be no assurance that Acurox™ Tablets or any other product candidate developed
using Aversion® Technology will achieve the primary end points in the required
clinical studies or perform as intended in other pre-clinical and clinical
studies leading to commercially viable product candidates, product labeling,
or
leading to a NDA submission. If a NDA is submitted to the FDA for Acurox™
Tablets or any other product candidates, there can be no assurances that the
FDA
will accept such submission for filing and subsequently approve such NDA with
commercially viable product labeling or to ultimately approve such product
candidates for commercial distribution. Our failure to successfully develop
and
achieve final FDA approval of a product candidate utilizing Aversion® Technology
will have a material adverse effect on our financial condition.
If
Pre-Clinical or Clinical Testing For Our Product Candidates Are Unsuccessful
or
Delayed, We Will Be Unable to Meet Our Anticipated Development and
Commercialization Timelines
To
obtain
FDA approval to commercially market any of our product candidates, we or our
licensees must submit to the FDA a NDA demonstrating, among other things, that
the product candidate is safe and effective for its intended use. This
demonstration requires significant pre-clinical and clinical testing. As we
do
not possess the resources or employ all the personnel necessary to conduct
such
testing, we rely on contract research organizations (“CROs”) for the majority of
this testing with our product candidates. As a result, we have less control
over
our development program than if we performed the testing entirely on our own.
Third parties may not perform their responsibilities on our anticipated
schedule. Delays in our development programs could significantly increase our
product development costs and delay product commercialization. In addition,
many
of the factors that may cause, or lead to a delay in the development program,
may also ultimately lead to denial of regulatory approval of a product
candidate.
The
commencement of clinical trials with our product candidates may be delayed
for
several reasons, including but not limited to delays in demonstrating sufficient
pre-clinical safety required to obtain regulatory approval to commence a
clinical trial, reaching agreements on acceptable terms with prospective
licensees, manufacturing and quality assurance release of a sufficient supply
of
a product candidate for use in our clinical trials and/or obtaining
institutional review board approval to conduct a clinical trial at a prospective
clinical site. Once a clinical trial has begun, it may be delayed, suspended
or
terminated by us or regulatory authorities due to several factors, including
ongoing discussions with regulatory authorities regarding the scope or design
of
our clinical trials, failure to conduct clinical trials in accordance with
regulatory requirements, lower than anticipated recruitment or retention rate
of
patients in clinical trials, inspection of the clinical trial operations or
trial sites by regulatory authorities, the imposition of a clinical hold by
FDA,
lack of adequate funding to continue clinical trials, and/or negative or
unanticipated results of clinical trials.
Clinical
trials required by the FDA for commercial approval, may not demonstrate safety
or efficacy of our product candidates. Success in pre-clinical testing and
early
clinical trials does not ensure that later clinical trials will be successful.
Results of later clinical trials may not replicate the results of prior clinical
trials and pre-clinical testing. Even if the results of our pivotal phase III
clinical trials are positive, we and our licensees may have to commit
substantial time and additional resources to conduct further pre-clinical and
clinical studies before we or our licensees can submit NDAs or obtain regulatory
approval for our product candidates.
Clinical
trials may be expensive and difficult to design and implement, in part because
they are subject to rigorous regulatory requirements. Further, if participating
subjects or patients in clinical studies suffer drug-related adverse reactions
during the course of such trials, or if we, our licensees or the FDA believes
that participating patients are being exposed to unacceptable health risks,
we
or our licensees may suspend the clinical trials. Failure can occur at any
stage
of the trials, and we or our licensees could encounter problems causing the
abandonment of clinical trials or the need to conduct additional clinical
studies, relating to a product candidate.
Even
if
our clinical trials are completed as planned, their results may not support
commercially viable product label claims. The clinical trial process may fail
to
demonstrate that our product candidates are safe and effective for their
intended use. Such failure would cause us or our licensees to abandon a product
candidate and may delay the development of other product
candidates.
We
or Our Licensees May Not Obtain Required FDA Approval; the FDA Approval Process
is Time-Consuming and Expensive
The
development, testing, manufacturing, marketing and sale of pharmaceutical
products are subject to extensive federal, state and local regulation in the
United States and other countries. Satisfaction of all regulatory requirements
typically takes many years, is dependent upon the type, complexity and novelty
of the product candidate, and requires the expenditure of substantial resources
for research, development and testing. Substantially all of our operations
are
subject to compliance with FDA regulations. Failure to adhere to applicable
FDA
regulations by us or our licensees would have a material adverse effect on
our
operations and financial condition. In addition, in the event we are successful
in developing product candidates for sale in other countries, we would become
subject to regulation in such countries. Such foreign regulations and product
approval requirements are expected to be time consuming and
expensive.
We
or our
licensees may encounter delays or rejections during any stage of the regulatory
approval process based upon the failure of clinical or laboratory data to
demonstrate compliance with, or upon the failure of the product candidates
to
meet, the FDA’s requirements for safety, efficacy and quality; and those
requirements may become more stringent due to changes in regulatory agency
policy or the adoption of new regulations. After submission of an NDA, or a
505(b)(2) NDA the FDA may refuse to file the application, deny approval of
the
application, require additional testing or data and/or require post-marketing
testing and surveillance to monitor the safety or efficacy of a product. The
FDA
commonly takes one to two years to grant final approval for a NDA, or 505(b)(2)
NDA. Further, the terms of approval of any NDA including the product labeling
may be more restrictive than we or our licensees desire and could affect the
marketability of products incorporating our Aversion® Technology.
Even
if
we comply with all FDA regulatory requirements we or our licensees may never
obtain regulatory approval for any of our product candidates. If we or our
licensees fail to obtain regulatory approval for any of our product candidates,
we will have fewer saleable products and correspondingly lower revenues. Even
if
regulatory approval of our products is received, such approval may involve
limitations on the indicated uses or promotional claims we or our licensees
may
make for our products.
The
FDA
also has the authority to revoke or suspend approvals of previously approved
products for cause, to debar companies and individuals from participating in
the
drug-approval process, to request recalls of allegedly violative products,
to
seize allegedly violative products, to obtain injunctions to close manufacturing
plants allegedly not operating in conformity with current Good Manufacturing
Practices (cGMP) and to stop shipments of allegedly violative products. In
the
event the FDA takes any such action relating to our products, (if any are
approved by FDA) would have a material adverse effect on our operations and
financial condition.
We
Must Maintain FDA Approval to Manufacture Clinical Supplies of Our Product
Candidates at Our Facility; Failure to Maintain Compliance with FDA Requirements
May Prevent or Delay the Manufacture of Our Product Candidates and Costs of
Manufacture May Be Higher Than Expected
We
have
constructed and installed the equipment necessary to manufacture clinical trial
supplies of our Aversion® Technology product candidates in tablet formulations
at our Culver, Indiana facility. To be used in clinical trials, all of our
product candidates must be manufactured in conformity with current Good
Manufacturing Practice (cGMP) regulations as interpreted and enforced by the
FDA. All such product candidates must be manufactured, packaged, and labeled
and
stored in accordance with cGMPs. Modifications, enhancements or changes in
manufacturing sites of marketed products are, in many circumstances, subject
to
FDA approval, which may be subject to a lengthy application process or which
we
may be unable to obtain. Our Culver, Indiana facility, and those of any
third-party manufacturers that we or our licensees may use, are periodically
subject to inspection by the FDA and other governmental agencies, and operations
at these facilities could be interrupted or halted if such inspections are
unsatisfactory. Failure to comply with FDA or other governmental regulations
can
result in fines, unanticipated compliance expenditures, recall or seizure of
products, total or partial suspension of production or distribution, suspension
of FDA review of our product candidates, termination of ongoing research,
disqualification of data for submission to regulatory authorities, enforcement
actions, injunctions and criminal prosecution. We do not have the facilities,
equipment or personnel to manufacture commercial quantities of our product
candidates and therefore must rely on our licensees or other qualified companies
with appropriate facilities and equipment to contract manufacture commercial
quantities of products utilizing our Aversion® Technology.
We
Develop and Formulate Our Products, and Manufacture Laboratory and Clinical
Supplies, at a Single Location. Any Disruption at this Facility Could Adversely
Affect Our Business and Results of Operations.
We
rely
on our Culver, Indiana facility to conduct the development and formulation
of
our product candidates and the manufacture of laboratory and clinical supplies
of our product candidates. If the Culver, Indiana facility were damaged or
destroyed, it would be difficult to replace and could require substantial
lead-time to repair or replace. If this facility were affected by a disaster,
we
would be forced to rely on third-party contract research organizations and
manufacturers. Although we believe we possess adequate insurance for damage
to
our property and for the disruption of our business from casualties, such
insurance may not be sufficient to cover all of our potential losses and may
not
continue to be available to us on acceptable terms, or at all. Any disruptions
or delays at our Culver, Indiana facility could impair our ability to develop
our product candidates incorporating the Aversion® Technology, which could
adversely affect our business and results of operations.
Our
Operations are Subject to Environmental, Health and Safety, and other Laws
and
Regulations, with which Compliance is Costly and which Exposes us to Penalties
for Non-Compliance
Our
business, properties and product candidates are subject to federal, state and
local laws and regulations relating to the protection of the environment,
natural resources and worker health and safety and the use, management, storage
and disposal of hazardous substances, waste and other regulated materials.
Because we own and operate real property, various environmental laws also may
impose liability on us for the costs of cleaning up and responding to hazardous
substances that may have been released on our property, including releases
unknown to us. These environmental laws and regulations also could require
us to
pay for environmental remediation and response costs at third-party locations
where we dispose of or recycle hazardous substances. The costs of complying
with
these various environmental requirements, as they now exist or may be altered
in
the future, could adversely affect our financial condition and results of
operations.
If
Our Licensees Do Not Satisfy Their Obligations, We Will Be Unable to Develop
Our
Licensed Product Candidates
On
October 30, 2007, we entered
into an Agreement with King Pharmaceuticals Research and Development Inc.
(“King”). The closing of the King Agreement was completed on December 7, 2007
and on that date we received from King the upfront $30 million non-refundable
cash payment specified in the King Agreement. Our
future revenue, if any, will be derived from milestone payments and royalties
under the King Agreement and under similar license agreements anticipated to
be
potentially negotiated and executed with other pharmaceutical company partners.
No assurance can be given that we will receive the milestone and royalty
payments provided for in the King Agreement, or that we will be successful
in
entering into similar agreements with other pharmaceutical companies to develop
and commercialize products incorporating the Aversion® Technology.
As
part
of such license agreements, we will not have day-to-day control over the
activities of our licensees with respect to any product candidate. If a licensee
fails to fulfill its obligations under an agreement with us, we may be unable
to
assume the development of the product covered by that agreement or to enter
into
alternative arrangements with another third-party. In addition, we may encounter
delays in the commercialization of the product candidate that is the subject
of
a license agreement. Accordingly, our ability to receive any revenue from the
product candidates covered by such agreements will be dependent on the efforts
of our licensee. We could be involved in disputes with a licensee, which could
lead to delays in or termination of, our development and commercialization
programs and result in time consuming and expensive litigation or arbitration.
In addition, any such dispute could diminish our licensee's commitment to us
and
reduce the resources they devote to developing and commercializing our products.
If any licensee terminates or breaches its agreement, or otherwise fails to
complete its obligations in a timely manner, our chances of successfully
developing or commercializing our product candidates would be materially
adversely effected. Additionally, due to the nature of the market for our
product candidates, it may be necessary for us to license all or a significant
portion of our product candidates to a single company thereby eliminating our
opportunity to commercialize other product candidates with other
licensees.
If
We Fail to Maintain our Strategic Alliance with King, We May Have to Reduce
or
Delay our Product Candidate Development
Our
plan
for developing, manufacturing and commercializing Acurox™ Tablets and other
opioid analgesic product candidates incorporating our Aversion® Technology
currently requires us to successfully maintain our strategic alliance with
King
to advance our programs and provide funding to support our expenditures on
Acurox™ Tablets and other opioid analgesic product candidates. If we are not
able to maintain our existing strategic alliance with King, we may have to
limit
the size or scope of, or delay or abandon the development of, Acurox™ Tablets
and other opioid analgesic product candidates or undertake and fund development
of these product candidates ourselves. If we were required to fund drug
development efforts with respect to Acurox™ Tablets and other opioid analgesic
product candidates on our own, we may need to obtain additional capital, which
may not be available on acceptable terms, or at all.
If
King Is Not Successful in Commercializing Acurox™ Tablets and other Licensed
Product Candidates Incorporating the Aversion ®Technology our Revenues and our
Business Will Suffer
Our
ability to commercialize Acurox™ Tablets and other product candidates licensed
under the King Agreement and generate royalties from sales of such products
will
depend on King’s abilities in assisting us in developing such products and in
obtaining and maintaining regulatory approval and achieving market acceptance
of
such products once commercialized. King may not proceed with the
commercialization of Acurox™ Tablets and other product candidates licensed under
the King Agreement with the same degree of urgency as we would because of other
priorities they face. If King is not successful in commercializing Acurox™
Tablets for a variety of reasons, including but not limited to, competition
from
other pharmaceutical companies, or if King fails to perform as we expect, our
potential for future revenue from products developed under the King Agreement,
if any, could be dramatically reduced and our business and our financial
condition would suffer.
The
Market May Not Be Receptive to Products Incorporating Our Aversion®
Technology
The
commercial success of products incorporating our Aversion® Technology approved
for marketing by the FDA and other regulatory authorities will depend on
acceptance by health care providers and others that such products are clinically
useful, cost-effective and safe. There can be no assurance given, even if we
or
our licensees succeed in the development of products incorporating our Aversion®
Technology and receive FDA approval for such products, that products
incorporating the Aversion® Technology would be accepted by health care
providers and others. Factors that may materially affect market acceptance
of
products incorporating our Aversion® Technology include but are not limited to:
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·
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the
relative advantages and disadvantages of our Aversion® Technology compared
to competitive products;
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·
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the
relative timing to commercial launch of products utilizing our Aversion®
Technology compared to competitive products;
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·
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the
relative safety and efficacy of products incorporating our Aversion®
Technology compared to competitive products; and
|
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·
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the
willingness of third party payors to reimburse for or otherwise pay
for
products incorporating our Aversion®
Technology.
|
Our
product candidates, if successfully developed and commercially launched, will
compete with both currently marketed and new products marketed by other
companies. Health care providers may not accept or utilize any of our product
candidates. Physicians and other prescribers may not be inclined to prescribe
the products utilizing our Aversion® Technology unless our products bring clear
and demonstrable advantages over other products currently marketed for the
same
indications. If our products do not achieve market acceptance, we may not be
able to generate significant revenues or become profitable.
If
We, Our Licensees or Others Identify Side Affects Relating to any of Our
Products Once on the Market, We May Be Required to Withdraw Our Products from
the Market, which would Hinder or Preclude Our Ability to Generate Revenues
As
part
of our and our licensees post-market regulatory responsibilities for our
products, we or our licensees are required to report all serious injuries or
deaths involving our products. If we, our licensees or others identify side
effects after any of our products are on the market:
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·
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Regulatory
authorities may withdraw their approvals of such products;
|
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·
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We
or our licensees may be required to reformulate our products;
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·
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We
or our licensees may have to recall the affected products from the
market
and may not be able to introduce them onto the market;
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Our
reputation in the marketplace may suffer; and
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We
may become the target of lawsuits, including class actions suits.
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Any
of
these events could harm or prevent sales of the affected products and could
materially adversely affect our business and financial condition.
In
the Event That We or Our Licensees Are Successful in Bringing Any Products
to
Market, Our Revenues May Be Adversely Affected If We Fail to Obtain Acceptable
Prices or Adequate Reimbursement for Our Products From Third-Party
Payors
The
ability of our licensees to successfully commercialize our products may depend
in part on the availability of reimbursement for our products from government
health administration authorities, private health insurers, and other
third-party payors and administrators, including Medicaid and Medicare. We
cannot predict the availability of reimbursement for newly-approved products
incorporating our Aversion® Technology. Third-party payors and administrators,
including state Medicaid programs and Medicare, are challenging the prices
charged for pharmaceutical products. Government and other third-party payors
increasingly are limiting both coverage and the level of reimbursement for
new
drugs. Third-party insurance coverage may not be available to patients for
any
of our products. The continuing efforts of government and third-party payors
to
contain or reduce the costs of health care may limit our commercial opportunity.
If government and other third-party payors do not provide adequate coverage
and
reimbursement for any product incorporating our Aversion® Technology, health
care providers may not prescribe them or patients may ask their health care
providers to prescribe competing products with more favorable reimbursement.
In
some foreign markets, pricing and profitability of pharmaceutical products
are
subject to government control. In the United States, we expect there may be
federal and state proposals for similar controls. In addition, we expect that
increasing emphasis on managed care in the United States will continue to put
pressure on the pricing of pharmaceutical products. Cost control initiatives
could decrease the price that we or our licensees charge for any of our products
in the future. Further, cost control initiatives could impair our ability or
the
ability of our licensees to commercialize our products and our ability to earn
revenues from commercialization.
Consolidation
in the Healthcare Industry could lead to Demands for Price Concessions or to
the
Exclusion of Some Suppliers from Certain of Our Markets, which could have an
Averse Effect on Our Business, Financial Condition or Results of Operations.
Because
healthcare costs have risen significantly over the past decade, numerous
initiatives and reforms initiated by legislatures, regulators and third-party
payors to curb these costs have resulted in a consolidation trend in the
healthcare industry to create new companies with greater market power. As the
healthcare industry consolidates, competition to provide products to industry
participants has become and will continue to become more intense. This in turn
has resulted and will likely continue to result in greater pricing pressures
and
the exclusion of certain suppliers from important market segments as group
purchasing organizations, independent delivery networks and large single
accounts continue to use their market power to consolidate purchasing decisions.
We expect that market demand, government regulation, third-party reimbursement
policies and societal pressures will continue to change the worldwide healthcare
industry, resulting in further business consolidations, which may reduce
competition, exert further downward pressure on the prices of our product
candidates and may adversely impact our business, financial condition or results
of operations.
Our
Success Depends on Our Ability to Protect Our Intellectual
Property
Our
success depends substantially on our ability to obtain and maintain patent
protection for our Aversion®
Technology, in the United States and in other countries, and to enforce these
patents. The patent positions of pharmaceutical firms, including us, are
generally uncertain and involve complex legal and factual questions.
Notwithstanding our receipt of U.S. Patent No. 7,201,920 from the USPTO relating
to the Aversion® Technology, there is no assurance that any of our patent claims
in our other pending non-provisional and provisional patent applications for
our
Aversion® Technology will issue or if issued, that any such patent claims will
be valid and enforceable against third-party infringement or that our products
will not infringe any third-party patent or intellectual property. Moreover,
any
patent claims relating to the Aversion® Technology may not be sufficiently broad
to protect the products incorporating the Aversion® Technology. In addition,
issued patent claims may be challenged, invalidated or circumvented. Our patent
claims may not afford us protection against competitors with similar technology
or permit the commercialization of our products without infringing third-party
patents or other intellectual property rights.
Our
success also depends on our not infringing patents issued to competitors or
others. We may become aware of patents and patent applications belonging to
competitors and others that could require us to alter our technologies. Such
alterations could be time consuming and costly. We may not be able to obtain
a
license to any technology owned by or licensed to a third party that we or
our
licensees require to manufacture or market one or more products incorporating
our Aversion® Technology. Even if we can obtain a license, the financial and
other terms may be disadvantageous.
Our
success also depends on our maintaining the confidentiality of our trade secrets
and know-how. We seek to protect such information by entering into
confidentiality agreements with employees, potential licensees, raw material
suppliers, potential investors and consultants. These agreements may be breached
by such parties. We may not be able to obtain an adequate, or perhaps, any
remedy to such a breach. In addition, our trade secrets may otherwise become
known or be independently developed by our competitors. Our inability to protect
our intellectual property or to commercialize our products without infringing
third-party patents or other intellectual property rights would have a material
adverse affect on our operations and financial condition.
We
May Become Involved in Patent Litigation or Other Intellectual Property
Proceedings Relating to Our Aversion® Technology or Product Candidates Which
Could Result in Liability for Damages or Delay or Stop Our Development and
Commercialization Efforts
The
pharmaceutical industry has been characterized by significant litigation and
other proceedings regarding patents, patent applications and other intellectual
property rights. The situations in which we may become parties to such
litigation or proceedings may include:
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·
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litigation
or other proceedings we may initiate against third parties to enforce
our
patent rights or other intellectual property rights;
|
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·
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litigation
or other proceedings we may initiate against third parties to seek
to
invalidate the patents held by such third parties or to obtain a
judgment
that our product candidates do not infringe such third parties’ patents;
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if
our competitors file patent applications that claim technology also
claimed by us, we may participate in interference or opposition
proceedings to determine the priority of invention; and
|
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·
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if
third parties initiate litigation claiming that our product candidates
infringe their patent or other intellectual property rights, we will
need
to defend against such proceedings.
|
Our
failure to avoid infringing third-party patents and intellectual property rights
in the commercialization of products utilizing the Aversion® Technology will
have a material adverse affect on our operations and financial
condition.
The
costs
of resolving any patent litigation or other intellectual property proceeding,
even if resolved in our favor, could be substantial. Most of our competitors
will be able to sustain the cost of such litigation and proceedings more
effectively than we can because of their substantially greater resources.
Uncertainties resulting from the initiation and continuation of patent
litigation or other intellectual property proceedings could have a material
adverse effect on our ability to compete in the marketplace. Patent litigation
and other intellectual property proceedings may also consume significant
management time.
Our
Aversion® Technology may be found to infringe upon claims of patents owned by
others. If we determine or if we are found to be infringing on a patent held
by
another, we or our licensees might have to seek a license to make, use, and
sell
the patented technologies. In that case, we or our licensees might not be able
to obtain such license on acceptable terms, or at all. The failure to obtain
a
license to any technology that may be required would materially harm our
business, financial condition and results of operations. If a legal action
is
brought against us, we could incur substantial defense costs, and any such
action might not be resolved in our favor. If such a dispute is resolved against
us, we may have to pay the other party large sums of money and our use of our
Aversion® Technology and the testing, manufacturing, marketing or sale of one or
more of our products could be restricted or prohibited. Even prior to resolution
of such a dispute, use of our Aversion® Technology and the testing,
manufacturing, marketing or sale of one or more of our products could be
restricted or prohibited.
Moreover,
other parties could have blocking patent rights to products made using the
Aversion®
Technology. We are aware of certain United States and international pending
patent applications owned by third parties claiming abuse deterrent
technologies, including at least one pending patent application which, if issued
in its present form, may encompass our lead product candidate. If such patent
applications result in issued patents, with claims encompassing our Aversion®
Technology or products, we or our licensees may need to obtain a license to
such
patents, should one be available, or alternatively, alter the Aversion®
Technology so as to avoid infringing such third-party patents. If we or our
licensees are unable to obtain a license on commercially reasonable terms,
we or
our licensees could be restricted or prevented from commercializing products
utilizing the Aversion® Technology. Additionally, any alterations to the
Aversion® Technology in view of pending third-party patent applications could be
time consuming and costly and may not result in technologies or products that
are non-infringing or commercially viable. We cannot assure that our products
and/or actions in developing products incorporating our Aversion® Technology
will not infringe third-party patents.
We
May Be Exposed to Product Liability Claims and May Not Be Able to Obtain
Adequate Product Liability Insurance
Our
business exposes us to potential product liability risks, which are inherent
in
the testing, manufacturing, marketing and sale of pharmaceutical products.
Product liability claims might be made by patients, health care providers or
pharmaceutical companies or others that sell or consume our products. These
claims may be made even with respect to those products that possess regulatory
approval for commercial sale.
We
are
currently covered by clinical trial product liability insurance on a claims-made
basis. This coverage may not be adequate to cover any product liability claims.
Product liability coverage is expensive. In the future, we may not be able
to
maintain or obtain such product liability insurance at a reasonable cost or
in
sufficient amounts to protect us against losses due to liability claims. Any
claims that are not covered by product liability insurance could have a material
adverse effect on our business, financial condition and results of
operations.
The
pharmaceutical industry is characterized by frequent litigation. Those companies
with significant financial resources will be better able to bring and defend
any
such litigation. No assurance can be given that we would not become involved
in
such litigation. Such litigation may have material adverse consequences to
our
financial condition and results of operations.
We
Face Significant Competition Which May Result in Others Developing or
Commercializing Products Before or More Successfully Than We
Do
The
pharmaceutical industry is highly competitive and is affected by new
technologies, governmental regulations, health care legislation, availability
of
financing, litigation and other factors. If our product candidates receive
FDA
approval, they will compete with a number of existing and future drugs and
therapies developed, manufactured and marketed by others. Existing or future
competing products may provide greater therapeutic convenience, clinical or
other benefits for a specific indication than our products, or may offer
comparable performance at lower costs. If our products are unable to capture
and
maintain market share, we or our licensees will not achieve significant product
revenues and our financial condition and results of operations will be
materially adversely affected.
We
will
compete for market share against fully integrated pharmaceutical companies
or
other companies that collaborate with larger pharmaceutical companies, academic
institutions, government agencies and other public and private research
organizations. Many of these competitors have products already approved,
marketed or in development. In addition, many of these competitors, either
alone
or together with their collaborative partners, operate larger research and
development programs, have substantially greater financial resources, experience
in developing products, obtaining FDA and other regulatory approvals,
formulating and manufacturing drugs, and commercializing drugs than we
do.
We
are
concentrating substantially all of our efforts on developing product candidates
incorporating our Aversion® Technology. The commercial success of products using
our Aversion® Technology will depend, in large part, on the intensity of
competition and the relative timing and sequence of new product approvals from
other companies developing, marketing, selling and distributing products that
compete with the products incorporating our Aversion® Technology. Alternative
technologies and products are being developed to improve or replace the use
of
opioid analgesics. In the event that such alternatives to opioid analgesics
are
widely adopted, then the market for products incorporating our Aversion®
Technology may be substantially decreased subsequently reducing our ability
to
generate future profits.
Key
Personnel Are Critical to Our Business, and Our Success Depends on Our Ability
to Retain Them
We
are
highly dependent on our management and scientific team, including Andrew D.
Reddick, our President and Chief Executive Officer, Robert B. Jones, our Senior
Vice President and Chief Operating Officer, and Ron J. Spivey, Ph.D. our Senior
Vice President and Chief Scientific Officer. We may not be able to attract
and
retain personnel on acceptable terms given the intense competition for such
personnel among biotechnology, pharmaceutical and healthcare companies,
universities and non-profit research institutions. While we have employment
agreements with certain employees, all of our employees are at-will employees
who may terminate their employment at any time. We do not have key personnel
insurance on any of our officers or employees. Mr. Reddick is currently on
a
leave of absence to address health issues. The loss of any of our key personnel,
or the inability to attract and retain such personnel, may significantly delay
or prevent the achievement of our product and technology development and
business objectives and could materially adversely affect our business,
financial condition and results of operations.
The
U.S. Drug Enforcement Administration (“DEA”) Limits the Availability of the
Active Ingredients Used in Our Product Candidates and, as a Result, Our Quota
May Not Be Sufficient to Complete Clinical Trials or May Result in Development
Delays
The
DEA
regulates certain finished drug products and active pharmaceutical ingredients.
Certain opioid active pharmaceutical ingredients in our current product
candidates are classified by the DEA as Schedule II substances under the
Controlled Substances Act of 1970. Consequently, their manufacture, research,
shipment, storage, sale and use are subject to a high degree of regulation.
Furthermore, the amount of Schedule II substances we can obtain for our clinical
trials is limited by the DEA and our quota may not be sufficient to complete
clinical trials. There is a risk that DEA regulations may interfere with the
supply of the products used in our clinical trials.
Risks
Related to Our Common Stock
Volatility
in Stock Prices of other Companies may Contribute to Volatility in our Stock
Price
The
market price of our common stock, like the market price for securities of
pharmaceutical, biopharmaceutical and biotechnology companies, has historically
been highly volatile. The stock market from time to time experiences significant
price and volume fluctuations that are unrelated to the operating performance
of
particular companies. Factors, such as fluctuations in our operating results,
future sales of our common stock, announcements of technological innovations
or
new therapeutic products by us or our competitors, announcements regarding
collaborative agreements, laboratory or clinical trial results, government
regulation, developments in patent or other proprietary rights, public concern
as to the safety of drugs developed by us or others, changes in reimbursement
policies, comments made by securities analysts and general market conditions
may
have a significant effect on the market price of our common stock. In the past,
following periods of volatility in the market price of a company’s securities,
securities class action litigation has often been instituted. A securities
class
action suit against us could result in substantial costs, potential liabilities
and the diversion of management’s attention and resources and result in a
material adverse affect on our financial condition and results of
operations.
Our
Stock Price has been Volatile and There may not be an Active, Liquid Trading
Market for our Common Stock.
Our
stock
price has experienced significant price and volume fluctuations and may continue
to experience volatility in the future. Factors that have a significant impact
on the price of our common stock, in addition to the other issues described
in
the Report, include results of or delays in our pre-clinical and clinical
studies, the success of our license agreement with King, announcements of
technological innovations or new commercial products by us or others,
developments in patents and other proprietary rights by us or others, future
sales of our common stock by existing stockholders, regulatory developments
or
changes in regulatory guidance, the departure of our officers, directors or
key
employees, and period-to-period fluctuations in our financial results. Also,
you
may not be able to sell your shares at the best market price if trading in
our
stock in not active or if the volume is low. There is no guarantee that an
active trading market for our common stock will be maintained on the NASDAQ
Capital Market.
The
National Association of Securities Dealers, Inc., or NASD, and the Securities
and Exchange Commission, or SEC, have adopted certain new rules. If we were
unable to continue to comply with the new rules, we could be delisted from
trading on the NASDAQ Capital Market and thereafter trading in our common stock,
if any, would be conducted through the Over-the-Counter Bulletin Board of the
NASD. As a consequence of such delisting, an investor would likely find it
more
difficult to dispose of, or to obtain quotations as to the price of, our common
stock. Delisting of our common stock from the NASDAQ Capital Market could also
result in lower prices per share of our common stock than would otherwise
prevail.
Our
Quarterly Results of Operations Will Fluctuate, and These Fluctuations Could
Cause Our Stock Price to Decline
Our
quarterly operating results are likely to fluctuate in the future. These
fluctuations could cause our stock price to decline. The nature of our business
involves variable factors, such as the timing of the research, development
and
regulatory submissions of our product candidates that could cause our operating
results to fluctuate. As a result, in some future quarters our clinical,
financial or operating results may not meet the expectations of securities
analysts and investors which could result in a decline in the price of our
stock.
We
Do Not Anticipate Paying Dividends on Our Common Stock in the Foreseeable
Future
We
have
not declared and paid cash dividends on our common stock in the past and we
do
not anticipate paying any cash dividends in the foreseeable future. We intend
to
retain all of our earnings for the foreseeable future to finance the operation
and expansion of our business. As a result, you may only receive a return on
your investment in our common stock if the market price of our common stock
increases.
GCE
Holdings LLC Can Control All Matters Requiring Approval By
Shareholders
GCE
Holdings LLC beneficially owns approximately 78% of our outstanding common
stock
as of May 15, 2008 (calculated in accordance with Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended). As a result, GCE Holdings
LLC,
in view of its ownership percentage of our common stock, will be able to control
all matters requiring approval by our shareholders, including the approval
or
rejection of mergers, sales or licenses of all or substantially all of our
assets, or other business combination transactions. The interests of GCE
Holdings LLC may not always coincide with the interests of our other
shareholders and as such we may take action in advance of its interests to
the
detriment of our other shareholders. Accordingly, you may not be able to
influence any action we take or consider taking, even if it requires a
shareholder holder vote.
We
are currently a “Controlled Company” within the Meaning of the NASDAQ Capital
Market Listing Requirements and, as a Result, are Exempt from Certain Corporate
Governance Requirements
Because
GCE Holdings LLC controls more than 50% of the voting power of our common stock,
we are currently considered to be a “controlled company” for purposes of a
NASDAQ Capital Market listing requirements. As such, we are permitted, and
have
elected, to opt out of the NASDAQ Capital Market listing requirements that
would
otherwise require our board of directors to have a majority of independent
directors, our board nominations to be selected, or recommended for the board’s
selection either by a nominating committee comprised entirely of independent
directors or by a majority of independent directors, and our compensation
committed to be comprised entirely of independent directors. Accordingly, you
may not have the same protections afforded to stockholders of companies that
are
subject to all of the NASDAQ Capital Market corporate governance requirements.
Any
Future Sale of a Substantial Number of Shares included in our Current
Registration Statement Could Depress the Trading Price of our Stock, Lower
our
Value and Make It More Difficult for us to Raise Capital
In
accordance with the terms of the Securities Purchase Agreement dated August
20,
2007 between us and the investors named therein, we filed a registration
statement with the SEC to register the shares included in our Units issued
pursuant to the Securities Purchase Agreement, including shares underlying
warrants included in the Units. In addition, pursuant to the exercise of
previously granted piggyback registration rights, each of GCE Holdings, LLC,
Galen Partners III, L.P., Galen Partners International III, L.P., Galen Employee
Fund III, L.P., Care Capital Investments II, LP, Care Capital Offshore
Investments II, LP and Essex Woodlands Health Ventures V, L.P. have exercised
their piggyback registration rights to include an aggregate of approximately
26,584,000 shares
(on a post-reverse stock split basis) in such registration statement. As a
result, approximately 34,243,000 shares (representing approximately 66% of
our
shares outstanding on a fully-diluted basis - including all derivative
securities, whether or not currently exercisable on a post-reverse stock split
basis) were included in the registration statement for resale by Selling
Stockholders. Such registration statement was declared effective by the SEC
on
November 20, 2007. If some or all of such shares included in such registration
statement are sold by our affiliates and others it will likely have the effect
of depressing the trading price of our common stock. In addition, such sales
could lower our value and make it more difficult for us to raise capital.
In
addition, pursuant to the terms of an Amended and Restated Registration Rights
Agreement dated February 6, 2004 among us, GCE Holdings LLC and other security
holders we have granted such parties demand and piggyback rights to register
their shares of our common stock for resale under the Securities Act of 1933.
The exercise of such rights and sale of all or a portion of the shares by such
shareholders will likely have the effect of depressing the trading price of
our
common stock.
We
are a
specialty pharmaceutical company engaged in research, development and
manufacture of innovative Aversion® (abuse deterrent) Technology and related
product candidates. Product candidates developed with our Aversion® Technology
and containing opioid analgesic active ingredients are intended to effectively
treat pain and also discourage the most common methods of pharmaceutical product
misuse and abuse including; (i) intravenous injection of dissolved tablets
or
capsules, (ii) nasal snorting of crushed tablets or capsules and (iii)
intentional swallowing of excessive numbers of tablets or capsules. Acurox™
Tablets, our lead product candidate utilizing Aversion® Technology, is being
developed pursuant to an active investigational new drug application (“IND”) on
file with the U.S. Food and Drug Administration (“FDA”). Aversion® Technology is
our patented platform technology for developing next-generation pharmaceutical
products containing potentially abuseable drugs including oxycodone,
hydrocodone, oxymorphone, hydromorphone, morphine, codeine, tramadol,
propoxyphene, and many others. Additional Aversion® Technology patents are
pending encompassing a wide range of abuseable drugs including stimulants,
tranquilizers and sedatives. Aversion® Technology is applicable to orally
administered tablets and capsules. In addition to the active ingredient,
Aversion® Technology utilizes certain patented compositions of pharmaceutical
product inactive excipients and active ingredients intended to discourage or
deter pharmaceutical product abuse.
We
conduct internal research, development, laboratory, manufacturing and
warehousing activities for Aversion® Technology at our Culver, Indiana facility.
The 28,000 square foot facility is registered by the U.S. Drug Enforcement
Administration (“DEA”) to perform research, development and manufacture of
certain Schedule II - V finished dosage form products. In addition to internal
capabilities and activities, we engage numerous contract research organizations
(“CROs”) with expertise in regulatory affairs, clinical trial design and
monitoring, clinical data management, biostatistics, medical writing, laboratory
testing and related services. Such CROs perform development services for Acurox™
Tablets and other Aversion® product candidates under our direction.
Acurox™
(oxycodone HCI and niacin) Tablets, our lead product candidate with Aversion®
Technology, is an orally administered immediate release tablet containing
oxycodone HCI as its sole active analgesic ingredient and a sub therapeutic
amount of niacin. Acurox™ Tablets are intended to effectively treat moderate to
moderately severe pain while also discouraging the three most common methods
of
abuse and misuse. On April 24, 2008, we announced the completion of patient
enrollment in our pivotal phase III clinical study for Acurox™ Tablets (referred
to by us as Study AP-ADF-105) titled “A Phase III, Randomized, Double-blind,
Placebo-controlled, Multicenter, Repeat-dose Study of the Safety and Efficacy
of
Acurox™ (oxycodone HCI and niacin) Tablets versus Placebo for the Treatment of
Acute, Moderate to Severe Postoperative Pain Following Bunionectomy Surgery
in
Adult Patients”. This short term phase III study involved approximately
400 patients
with moderate to severe pain following bunionectomy surgery and was conducted
pursuant to a Special Protocol Assessment (SPA) agreed to with the FDA. The
FDA
has confirmed to us in writing that the proposed NDA for Acurox™ Tablets will
qualify for a Section 505(b)(2) submission. We expect to submit our 505(b)(2)
NDA for Acurox™ Tablets to the FDA in the second half of 2008. We intend to seek
a priority review of the 505(b)(2) NDA for Acurox™ tablets, although there can
be no assurance that the FDA will grant a priority review.
Our
goal
is to become a leading specialty pharmaceutical company focused on addressing
the growing societal problem of prescription drug abuse by developing a broad
portfolio of pharmaceutical products with abuse deterrent features. Specifically
we intend to:
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Capitalize
on our Experience and Expertise in the Research and Development of
Abuse
Deterrent Pharmaceutical Products.
Our approach is to utilize existing active pharmaceutical ingredients
with
proven safety and efficacy profiles that have known potential for
abuse,
and develop new products utilizing our proprietary Aversion® (“abuse
deterrent”) Technology. We believe that in most cases the FDA’s 505(b)(2)
NDA approval process may be used with these product candidates. While
there can be no assurance, we believe the use of the 505(b)(2) NDA
approval process may allow for more efficient and timely approvals
as
compared to standard NDA filings. The 505(b)(2) NDA regulatory pathway
is
being utilized in the development of Acurox™ Tablets, our lead product
candidate utilizing Aversion® Technology. In addition to Acurox™ Tablets,
as of the date of this Prospectus we are engaged in the development
of
several additional product candidates incorporating Aversion® Technology,
including hydrocodone bitartrate with acetaminophen tablets (marketed
generically and by others under the brand names Vicodin®, Lortab®, and
Lorcet®), hydromorphone HCl tablets (marketed generically and by Abbott
Laboratories under the brand name Dilaudid®) and oxycodone HCl with
acetaminophen (marketed generically and by others under the brand
names of
Percocet®, Tylox®, Endocet ®, and Roxicet®). Our oxycodone HCI with
acetaminophen product is being developed pursuant to an IND on file
with
the FDA.
|
| |
-
|
Maximize
Commercial Value of our Product Candidates Through Out-Licensing
to
Strategically Focused Pharmaceutical Partners. On
October 30, 2007, we and King Pharmaceuticals Research and Development,
Inc. (“King”), a wholly-owned subsidiary of King Pharmaceuticals, Inc.,
entered into a License, Development and Commercialization Agreement
(the
“King Agreement”) to develop and commercialize in the United States,
Canada and Mexico (the "King Territory") opioid analgesic products
utilizing Aversion® Technology including Acurox™ Tablets. We believe
opportunities exist to enter into similar agreements with other commercial
partners for these same opioid products outside the King Territory
and in
the United States and worldwide for developing additional Aversion®
Technology product candidates for other abuseable drugs including
tranquilizers, stimulants and sedatives. By partnering with strategically
focused companies with expertise and infrastructure in commercialization
of pharmaceuticals, we are able to leverage our expertise, intellectual
property rights and Aversion® Technology without the need to build costly
sales and manufacturing infrastructure. We anticipate that our future
revenue, if any, will be derived from milestone and royalty payments
related to the commercialization of products utilizing our Aversion®
Technology.
|
| |
-
|
Expand
the Aversion® Technology Intellectual Property Portfolio.
We
believe our patent granted by the United States Patent and Trademark
Office ("USPTO") in April 2007 for Aversion® Technology, and the Notice of
Allowance issued by the USPTO for our second patent for the Aversion®
Technology provides protection in the U.S. against potential generic
product competition through the year 2023 and is a key element for
the
appeal of our product candidates to King for opioid product candidates
and
other potential commercial partners for non-opioid product candidates.
We
have filed additional patent applications with the USPTO which, if
issued,
will compliment and broaden the scope of our granted patent claims.
In
addition, we have filed corresponding Aversion® Technology patent
applications internationally. All of the Aversion® Technology intellectual
property, including all pending and issued patents was developed
internally by the Company and as of the date of this Report we believe
no
enabling licenses from others will be required.
|
| |
-
|
Remain
focused on Research, Development and Achieving Proof of Concept for
Product Candidates Incorporating the Aversion®
Technology while Minimizing Internal Fixed Costs through Outsourcing
High
Fixed Cost Elements of the Development Process. We
maintain a streamlined corporate infrastructure focused on:
|
| |
·
|
selection,
formulation development, laboratory evaluation, manufacture, quality
assurance and stability testing of certain finished dosage form product
candidates;
|
| |
·
|
development
and prosecution of our patent applications; and
|
| |
·
|
negotiation
and execution of license and development agreements with strategically
focused pharmaceutical partners. While we expect to expand our internal
staff to enable us to more rapidly develop multiple product candidates,
as
of the date of this Report we have only 14 employees, 9 of whom are
engaged in the research, development and manufacture of product candidates
utilizing the Aversion® Technology. We contract with CROs with expertise
in regulatory affairs, clinical trial design and monitoring, clinical
data
management, biostatistics, medical writing, laboratory testing and
related
services. Such CROs perform development services for Acurox™ Tablets and
other Aversion® product candidates under our direction. By outsourcing the
high fixed cost elements of our product development process, we believe
that we substantially reduce fixed overhead and capital investment
and
thereby reduce our business risk.
|
On
October 30, 2007, we and King entered into the King Agreement to develop and
commercialize in the King Territory certain opioid analgesic products utilizing
our proprietary Aversion® Technology including Acurox™ Tablets. The Agreement
provides King with an exclusive license in the King Territory for Acurox™
Tablets and another undisclosed opioid product candidate utilizing Aversion®
Technology. In addition, the King Agreement provides King with an option to
license in the King Territory all future opioid analgesic products developed
utilizing Acura's Aversion® Technology. On May 23, 2008, King exercised its
option to license a third immediate-release opioid analgesic product utilizing
our Aversion Technology. King paid us an option exercise fee of the $3.0
million.
Under
the
terms of the King Agreement, King made an upfront cash payment to us of $30
million which was received in December, 2007. Depending on the achievement
of
certain development and regulatory milestones, King could also make additional
cash payments to us of up to $28 million relating to Acurox™ Tablets and similar
amounts with respect to each subsequent Aversion® Technology product developed
under the Agreement. King will reimburse us for all research and development
expenses incurred beginning from September 19, 2007 for Acurox™ Tablets and all
research and development expenses related to future products after King's
exercise of its option to an exclusive license for each future product. King
will record net sales of all products and for sales occurring following the
one
year anniversary of the first commercial sale of a licensed product, King will
pay us a royalty at one of 6 rates ranging from 5% to 25% based on the level
of
combined annual net sales for all products subject to the Agreement. King will
also make a one-time cash payment to us of $50 million in the first year in
which the combined annual net sales of all products exceed $750 million.
We
are
publicly traded New York corporation. Our shares are traded on the Nasdaq
Capital Market under the symbol “ACUR”.
USE
OF PROCEEDS
Except
for the aggregate exercise price of the options exercised by the Selling
Stockholders in connection with the sale of the shares offered by this reoffer
prospectus and the payment of $0.01 par value per share of common stock upon
the
distribution of shares in exchange for restricted stock units, we will not
receive any of the proceeds from such sales of common stock. All such proceeds
will be received by the Selling Stockholders. See “Selling Stockholders.”
SELLING
STOCKHOLDERS
We
will
issue any unissued shares of the common stock being offered by this reoffer
prospectus upon the (i) exercise of options to purchase common stock issued
to
the Selling Stockholders pursuant to our 1995 Stock Option and Restricted Stock
Purchase Plan, our 1998 Stock Option Plan and our 2008 Stock Option Plan, and
(ii) distribution of shares of common stock in satisfaction of restriction
stock
units issued to the Stockholders pursuant to our 2005 Restricted Stock Unit
Award Plan.
The
following table sets forth certain information regarding the ownership of our
common stock by the Selling Stockholders as of the date of this Reoffer
Prospectus, and the number of shares of our common stock being currently being
offered by each Selling Stockholder pursuant to this reoffer prospectus.
The
inclusion in the table of the individuals named therein shall not be deemed
to
be an admission that any such individuals are "affiliates". The address of
each
Selling Stockholder is c/o Acura Pharmaceuticals, Inc., 616 N. North Court,
Suite 120 Palatine, Illinois 60067.
|
Name
of Selling
Stockholder
|
|
Position
in our
Company
|
|
Number of shares
beneficially
owned prior to the
offering
(1)
|
|
Number of
shares being
offered
|
|
Number
of shares beneficially owned after
the
Offering
|
|
Percentage
Ownership After Offering
|
|
|
Andrew
D. Reddick
|
|
|
President
and Chief Executive Officer
|
|
|
1,950,000
|
(2)
|
|
1,950,000
|
(2)
|
|
-0-
|
|
|
0
|
%
|
|
Ron
J. Spivey
|
|
|
Senior
Vice President and Chief Scientific Officer
|
|
|
1,520,000
|
(3)
|
|
1,520,000
|
(3)
|
|
-0-
|
|
|
0
|
%
|
|
Robert
B. Jones
|
|
|
Senior
Vice President and Chief Operating Officer
|
|
|
240,000
|
(4)
|
|
240,000
|
(4)
|
|
0
|
|
|
0
|
%
|
|
Peter
A. Clemens
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
615,080
|
(5)
|
|
610,000
|
(5)
|
|
5,080
|
|
|
<1
|
%
|
|
Robert
A. Seiser
|
|
|
Vice
President, Corporate Controller and Treasurer
|
|
|
285,000
|
(6)
|
|
285,000
|
(6)
|
|
0
|
|
|
0
|
%
|
|
James
F. Emigh
|
|
|
Vice
President of Marketing and Administration
|
|
|
262,000
|
(7)
|
|
257,500
|
(7)
|
|
4,500
|
|
|
<1
|
% |
|
Bruce
F. Wesson
|
|
|
Director
|
|
|
15,000
|
(8) (9) (10)
|
|
15,000
|
(8)(9)(10)
|
|
0
|
|
|
0
|
%
|
|
Richard
J. Markham
|
|
|
Director
|
|
|
15,000
|
(8)(9)(11)
|
|
15,000
|
(8)(9)(11)
|
|
0
|
|
|
0
|
%
|
|
Immanuel
Thangaraj
|
|
|
Director
|
|
|
15,000
|
(8)(9)(12)
|
|
15,000
|
(8) (9) (12)
|
|
0
|
|
|
0
|
%
|
|
George
K. Ross
|
|
|
Director
|
|
|
15,000
|
(9)
|
|
15,000
|
(9)
|
|
0
|
|
|
0
|
%
|
|
William
G. Skelly
|
|
|
Director
|
|
|
136,750
|
(9)(13)
|
|
135,750
|
(9)(13)
|
|
1,000
|
|
|
0
|
%
|
|
William
A. Sumner
|
|
|
Director
|
|
|
139,000
|
(9)(14)
|
|
139,000
|
(9) (14)
|
|
0
|
|
|
0
|
%
|
(1) Includes
Restricted Stock Units (”RSUs”) even though holders of such units have no
rights
as
a stockholder, including no dividend or voting rights, with respect to the
shares underlying the RSUs until the shares are issued by us pursuant to the
terms of our 2005 Restricted Stock Unit Award Plan (the “RSU Plan”).
The
amounts for each selling stockholder assume full vesting and exercise of all
outstanding options to purchase common stock held by that Selling
Stockholder.
(2) Includes
875,000 shares subject to currently exercisable stock options issued under
the
1998 Stock Option Plan and 825,000 RSUs granted to Mr. Reddick under the RSU
Plan, all of which are fully vested.
Also
includes 250,000 subject to stock options issued under the 2008
Stock
Option Plan of which 20,833 will have become exercisable within 60 days of
the
date of
this Reoffer Prospectus
and of
which the remaining options vest at the rate of 10,417 per month (commencing
August 23, 2008) through May 23, 2010.
(3) Includes
700,000 shares subject to currently exercisable stock options issued under
the
1998 Stock Option Plan and 660,000 RSUs granted to Dr. Spivey under the RSU
Plan, all of which are fully vested. Also
includes 160,000 subject to stock options issued under the 2008
Stock
Option Plan of which 13,333 will have become exercisable within 60 days of
the
date of
this Reoffer Prospectus and
of
which the remaining options vest at the rate of 6,667 per month (commencing
August 23, 2008) through May 23, 2010.
(4) Includes
30,000 shares subject to stock options issued under the 1998 Stock Option Plan
(4,500 of shall have vested within 60 days of the
date of
this Reoffer Prospectus,
with
the remainder vesting at the rate of 1,500 per month on the last day of each
month (commencing August 31, 2008) and 50,000 RSUs granted to Mr. Jones under
the RSU Plan (7,500 of which shall be vested within 60 days of the
date of
this Reoffer Prospectus,
with
the remainder vesting on the last day of each month (commencing August 31,
2008). Also
includes 160,000 shares subject to stock options issued under the
2008
Stock
Option Plan of which 13,333 will have become exercisable within 60 days of
the
date of
this Reoffer Prospectus
and of
which the remaining options vest at the rate of 6,667 per month (commencing
August 23, 2008) through May 23, 2010.
(5) Includes
70,000 shares subject to stock options currently exercisable. Includes 440,000
RSUs granted to Mr. Clemens, all of which are fully vested. Shares owned (but
not offered) include 4,780 shares held by minor children. Also
includes 100,000 shares subject to stock options issued under the
2008
Stock
Option Plan of which 8,333 will have become exercisable within 60 days of
the
date of
this Reoffer Prospectus
and of
which the remaining options vest at the rate of 4,167 per month (commencing
August 23, 2008) through May 23, 2010.
(6) Includes
40,000 shares subject to currently exercisable stock options. Includes 165,000
RSUs granted to Mr. Seiser, all of which are fully vested. Also
includes 80,000 shares subject to stock options issued under the
2008
Stock
Option Plan of which 6,667 will have become exercisable within 60 days of
the
date of
this Reoffer Prospectus
and of
which the remaining options vest at the rate of 3,333 per month (commencing
August 23, 2008) through May 23, 2010.
(7) Includes
40,000 shares subject to currently exercisable stock options. Also includes
137,500 RSUs granted to Mr. Emigh, all of which are fully vested. Also
includes 80,000 shares subject to stock options issued under the
2008
Stock
Option Plan of which 6,667 will have become exercisable within 60 days of
the
date of
this Reoffer Prospectus
and of
which the remaining options vest at the rate of 3,333 per month (commencing
August 23, 2008) through May 23, 2010.
(8) GCE
Holdings LLC, a Delaware limited liability company, was the assignee of all
of
the our preferred stock (prior to its conversion into common stock) and bridge
loans entered into in 2005, 2006 and 2007 (prior to their conversion into common
stock and warrants) formerly held by each of Galen Partners III, L.P., Galen
Partners International III, L.P., Galen Employee Fund III, L.P. (collectively,
“Galen”), Care Capital Investments II, LP, Care Capital Offshore Investments II,
LP (collectively, “Care Capital”) and Essex Woodlands Health Ventures Fund V,
L.P. (“Essex”). Galen, Care Capital and Essex own approximately 39.8%, 30.6% and
29.6%, respectively, of the membership interests in GCE Holdings LLC. The
following natural persons exercise voting, investment and dispositive rights
over our securities held of record by GCE Holdings LLC: (i) Galen Partners
III,
L.P., Galen Partners International III, L.P. and Galen Employee Fund III, L.P.:
Bruce F. Wesson, L. John Wilkenson, David W. Jahns, and Zubeen Shroff; (ii)
Care
Capital Investments II, LP and Care Capital Offshore Investments II, LP: Jan
Leschly, Richard Markham, Argeris Karabelas and David Ramsay; and (iii) Essex
Woodlands Health Ventures Fund V, L.P.: Immanuel Thangaraj, James L. Currie
and
Martin P. Sutter. Pursuant to a Voting Agreement among us, GCE Holdings LLC
and
certain other shareholders, GCE Holdings LLC has the right to designate three
of
the seven members of the Company’s Board of Directors. The Board designees of
GCE Holdings LLC are Immanuel Thangaraj, Richard Markham and Bruce Wesson.
GCE
Holdings beneficially owns 34,464,956 shares including 1,786,481 shares
underlying warrants, exercisable at $3.40 per share.
(9) Includes
15,000 shares subject to stock options issued under the 1998 Stock Option Plan,
of which 7,500 shares shall have vested within 60 days of the
date of
this Reoffer Prospectus.
The
remaining options vest with respect to 3,750 underlying shares on September
30,
2007 and December 31, 2007, respectively.
(10) Mr.
Wesson’s holdings do not include securities held by GCE or (i) 183,886 shares;
(ii) 470,184 shares underlying warrants; or (iii) 15,000 shares underlying
options, held by Galen.
(11) Mr.
Markham’s holdings do not include amounts held by GCE or (i) 111,689 shares; or
(ii) 15,000 shares underlying warrants, held by Care Capital.
(12) Mr.
Thangaraj’s holdings do not include GCE’s holdings or (i) 136,178 shares; (ii)
34,500 shares underlying warrants; or (iii) 10,000 shares underlying options,
held by Essex.
(13) In
addition to options described in footnote (9), Mr. Skelly’s holdings include
shares underlying 17,500 currently exercisable stock options and 100,000 RSUs,
all of which are fully vested. Also includes 3,250 shares acquired on exercise
of stock options issued under the 1998 Stock Option Plan.
(14) In
addition, to options described in footnote (9), Mr. Sumner’s holdings include
shares underlying 4,000 currently exercisable stock options and 100,000 fully
vested RSUs. Also includes 20,000 shares acquired on exercise of stock options
issued under the 1998 Stock Option Plan. Such shares are pledged to secure
a
margin loan on our stock.
PLAN
OF DISTRIBUTION
The
Selling Stockholders may, from time to time, sell any or all of their shares
of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
| |
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| |
●
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| |
●
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| |
●
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| |
●
|
privately
negotiated transactions;
|
| |
●
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
| |
●
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
| |
●
|
a
combination of any such methods of sale;
and
|
| |
●
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Any profits on the
resale of shares of common stock by a broker-dealer acting as principal might
be
deemed to be underwriting discounts or commissions under the Securities Act.
Discounts, concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by a selling stockholder.
The
Selling Stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares if liabilities
are imposed on that person under the Securities Act.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed a supplement to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
supplementing or amending the list of Selling Stockholders to include the
pledgee, transferee or other successors in interest as Selling Stockholders
under this prospectus.
The
Selling Stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed a supplement to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 supplementing or
amending the list of Selling Stockholders to include the pledgee, transferee
or
other successors in interest as Selling Stockholders under this
prospectus.
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event,
any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We
will
pay all fees and expenses incident to the registration of the shares of common
stock. We may indemnify the Selling Stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities
Act.
The
Selling Stockholders 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 shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder. If we are notified by
any
selling stockholder that any material arrangement has been entered into with
a
broker-dealer for the sale of shares of common stock, if required, we will
file
a supplement to this prospectus. If the Selling Stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The
anti-manipulation rules of Regulation M under the Securities Exchange Act
of 1934 may apply to sales of our common stock and activities of the Selling
Stockholders.
LEGAL
MATTERS
The
legality of the common stock to be offered hereby has been passed upon for
us by
LeClairRyan, a Virginia professional corporation.
The
consolidated financial statements incorporated by reference in this Prospectus
have been audited by BDO Seidman, LLP, an independent registered public
accounting firm, to the extent and for the periods set forth in their report
incorporated herein by reference, and are incorporated herein in reliance upon
such report given upon the authority of said firm as experts in auditing and
accounting.
The
SEC
allows us to “incorporate by reference” information that we file with them,
which means that we can disclose important information to you by referring
you
to those documents. The information incorporated by reference is an important
part of this reoffer prospectus, and information that we file later with the
SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and, until the termination of this
offering, any future filings we will make with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
| |
·
|
Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2007,
filed with the Commission on March 5,
2008.
|
| |
·
|
Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008
filed
with the Commission on April 30,
2008.
|
| |
·
|
Our
Current Reports on Form 8-K filed with the Commission on January
28, 2008,
January 31, 2008, February 7, 2008 and March 5, 2008, March 24, 2008,
April 24, 2008, April 30, 2008, May 27, 2008, June 2, 2008 and June
4,
2008.
|
| |
·
|
The
description of our common stock contained in Form 8-A filed with
the
Commission
|
Documents
incorporated by reference in this prospectus, filed after the date of any other
document incorporated by reference may contain information that updates,
modifies or is contrary to information in such earlier document. This prospectus
may contain information that updates, modifies or is contrary to information
in
one or more of the documents incorporated by reference in this prospectus.
Reports we file with the SEC after the date of this prospectus may also contain
information that updates, modifies or is contrary to information in this
prospectus or in documents incorporated by reference in this prospectus.
Investors should review these reports as they may disclose a change in our
business, prospects, financial condition or other affairs after the date of
this
prospectus.
Upon
your
written or oral request, we will provide at no cost to you a copy of any and
all
of the information that is incorporated by reference in this prospectus.
Requests
for such documents should be directed to:
Acura
Pharmaceuticals, Inc.
Attn:
Investor Relations
616
N.
North Court, Suite 120
Palatine,
Illinois 60067
(847)
705-7709
We
have
filed with the Securities and Exchange Commission a registration statement
on
Form S-8, of which this prospectus is a part, under the Securities Act with
respect to the shares of common stock offered hereby. This prospectus does
not
contain all of the information included in the registration statement.
Statements in this prospectus concerning the provisions of any document are
not
necessarily complete. You should refer to the copies of these documents filed
as
exhibits to the registration statement or otherwise filed by us with the SEC
for
a more complete understanding of the matter involved. Each statement concerning
these documents is qualified in its entirety by such reference.
We
are
subject to the informational requirements of the Securities and Exchange Act
of
1934, as amended, and, accordingly, file reports, proxy statements and other
information with the SEC. The SEC maintains a web site at http://www.sec.gov
that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. Copies of our
reports, proxy statements and other information also may be inspected and copied
at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington,
D.C. 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
5,197,250
SHARES OF COMMON STOCK
ACURA
PHARMACEUTICALS, INC.
Common
Stock
PROSPECTUS
June
13, 2008
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
ITEM
1. PLAN INFORMATION
Not
required to be filed with this Registration Statement.
ITEM
2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not
required to be filed with this Registration Statement.
ITEM
3. DOCUMENTS INCORPORATED BY REFERENCE
We
hereby
incorporate by reference into this Registration Statement the following
documents filed with the Securities and Exchange Commission (the "Commission"):
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1.
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Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2007,
filed with the Commission on March 5,
2008.
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2.
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008
filed
with the Commission on April 30,
2008.
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3.
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Our
Current Reports on Form 8-K filed with the Commission on January
28, 2008,
January 31, 2008, February 7, 2008 and March 5, 2008, March 24, 2008,
April 24, 2008, May 27, 2008, June 2, 2008 and June 4,
2008.
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4.
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The
description of our common stock contained in Form 8-A filed with
the
Commission under the Securities Exchange Act of 1934, as amended
(the
"Exchange Act").
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In
addition, all documents and reports subsequently filed by us pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof
and prior to the filing of a Post-Effective Amendment which indicates that
all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference and to be
a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superceded for purposes of this Registration
Statement to the extent that a statement contained herein or in any subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supercedes that statement. Any such statement so modified or
superceded shall not constitute a part of this Registration Statement, except
as
so modified or superseded.
ITEM
4. DESCRIPTION OF SECURITIES
Not
applicable.
ITEM
5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not
Applicable.
ITEM
6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section
722 of the New York Business Corporation Law (the "BCL") provides that a
corporation may indemnify directors and officers as well as other employees
and
individuals against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorney's fees, in connection with actions or proceedings,
whether civil or criminal (other than an action by or in the right of the
corporation, referred to as a "derivative action"), if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
A
similar standard is applicable in the case of derivative actions, except that
indemnification only extends to amounts paid in settlement and reasonable
expenses (including attorney's fees) incurred in connection with the defense
or
settlement of such actions, and the statute does not apply in respect of a
threatened action, or a pending action that is settled or otherwise disposed
of,
and requires court approval before there can be any indemnification where the
person seeking indemnification has been found liable to the corporation. Section
721 of the BCL provides that Article 7 of the BCL is not exclusive of other
indemnification that may be granted by a corporation's certificate of
incorporation or by-laws. Article Ninth of the Registrant's Restated Certificate
of Incorporation and Article IV, Section 6 of the Registrant's Restated By-Laws
require the Registrant to indemnify its officers and directors to the fullest
extent permitted under the BCL.
Set
forth
below is Article Ninth of the Registrant's Restated Certificate of
Incorporation:
NINTH:
The Corporation shall, to the fullest extent possible permitted by Sections
721
through 726 of the Business Corporation Law of New York, indemnify any and
all
directors and officers whom it shall have the power to indemnify under said
sections from and against any and all of the expenses, liabilities or other
matters referred to in or covered by such sections of the Business Corporation
Law, and the indemnification provided for herein shall not be deemed exclusive
of any other rights to which the person so indemnified may be entitled under
any
By-Law, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in his/her official capacity and as to action in another
capacity by holding such office, and shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such person.
Set
forth
below is Article IV, Section 6 of the Registrant's Restated
By-Laws:
SECTION
6. Indemnification.
It is
expressly provided that any and every person made a party to any action, suit,
or proceeding by or in the right of the corporation to procure a judgment in
its
favor by reason of the fact that he, his testator or intestate, is or was a
director or officer of this corporation or of any corporation which be served
as
such at the request of this corporation, may be indemnified by the corporation
to the full extent permitted by law, against any and all reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action or in connection with any appeal
therein, except in relation to matters as to which it shall be adjudged in
such
action, suit or proceeding that such officer or director has breached his duty
to the corporation.
It
is
further expressly provided that any and every person made a party to any action,
suit, or proceeding other than one by or in the right of the corporation to
procure a judgment in its favor, whether civil or criminal, including an action
by or in the right of any other corporation of any type or kind, domestic or
foreign, which any director or officer of the corporation served in any capacity
at the request of the corporation, by reason of the fact that he, his testator
or interstate, was a director or officer of the corporation, or served such
other corporation in any capacity, may be indemnified by the corporation, to
the
full extent permitted by law, against judgments, fines, amounts paid in
settlement, and reasonable expenses, including attorneys' fees, actually and
necessarily incurred as a result of such action, suit or proceeding, or any
appeal therein, if such person acted in good faith for a purpose which he
reasonably believed to be in the best interests of the corporation and, in
criminal actions or proceedings, in addition, had no reasonable cause to believe
that his conduct was unlawful.
The
Registrant maintains a director and officer liability insurance policy that,
subject to the terms and conditions of the policy, provides coverage up to
$20,000,000 in the aggregate (subject to a $200,000 retention for securities
claims and $200,000 for other claims) arising from any wrongful act (as defined
by the policy) committed by a director or officer in his or her capacity as
a
director or officer of the Registrant. The policy reimburses the Registrant
for
amounts spent in lawful indemnification of a director or officer or amounts
provided by the Registrant to indemnify its directors and officers as required
or permitted by law.
ITEM
7. EXEMPTION FROM REGISTRATION CLAIMED
Not
applicable.
ITEM
8. EXHIBITS
See
Index
of Exhibits on Page 34.
ITEM
9. UNDERTAKINGS
(a) The
undersigned Registrant hereby undertakes:
(1) To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
provided,
however,
that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement
is on Form S-3, Form S-8 or Form F-3, and the information required to be
included in a post-effective amendment by these paragraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That,
for
the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To
remove
from registration by means of a post-effective amendment any of the securities
being registered that remain unsold at the termination of the offering.
(b) The
undersigned Registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act, each filing of the Registrant’s Annual
Report pursuant to section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan’s annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other 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 Securities 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 of 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
Exton, State of Pennsylvania, on June 13, 2008.
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ACURA
PHARMACEUTICALS, INC.
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By:
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/s/
Andrew D. Reddick
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Andrew
D. Reddick
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President
and Chief Executive Officer
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(Principal
Executive Officer)
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POWER
OF ATTORNEY
KNOW
ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Robert B. Jones and Peter A. Clemens, or either of
them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and his name, place and stead, in
any
and all capacities, to sign any or 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, each acting alone, full power and authority to do and perform each
and
every act and deed requisite and necessary to be done in connection with the
above premises, and fully for all intents and purposes as he might or could
do
in person, hereby ratifying and conforming all that said attorney-in-fact and
agents, each acting alone, 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 below by the following persons on behalf of the Registrant
and
in the capacities and on the dates indicated.
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Signatures
|
|
Title
|
|
Date
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|
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|
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/s/
Andrew D. Reddick
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President,
Chief Executive Officer and
Director
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June
13, 2008
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Andrew
D. Reddick
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/s/
Richard Markham
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Director
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June
13, 2008
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Richard
Markham
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/s/
William G. Skelly
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Director
|
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June
13, 2008
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William
G. Skelly
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|
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/s/
Bruce F. Wesson
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Director
|
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June
13, 2008
|
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Bruce
F. Wesson
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|
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|
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|
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|
|
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/s/
William Sumner
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Director
|
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June
13, 2008
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William
Sumner
|
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|
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|
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| /s/
Immanuel
Thangaraj |
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Director
|
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June
13, 2008
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Immanuel
Thangaraj
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/s/
George Ross
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Director
|
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June
13, 2008
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George
Ross
|
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Senior
Vice President and
|
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June
13, 2008
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(Principal Financial and Accounting Officer)
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INDEX
OF EXHIBITS
|
|
|
Description
|
| |
|
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3.1
|
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Restated
Certificate of Incorporation of the Registrant (incorporated by reference
to Appendix C to the Registrant's Proxy Statement filed on July 6,
2004).
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3.2
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Certificate
of Amendment Reverse Splitting Common Stock and restating but not
changing
text of part of Article III of Restated Certificate of Incorporation
(incorporated by Reference to Exhibit 3.1 to the Form 8-K filed December
4, 2007)
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| |
|
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3.3
|
|
Restated
Bylaws of the Registrant (incorporated by reference to Exhibit 3.1
to the
Form 8-K filed on October 12, 2007)
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5.1
|
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Opinion
of LeClairRyan as to the legality of the Common Stock of the Registrant
covered by this Registration Statement
|
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|
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10.1
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Acura
Pharmaceuticals, Inc. 2005 Restricted Stock Unit Award Plan, as
amended
|
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|
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23.1
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Consent
of BDO Seidman, LLP
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Consent
of LeClairRyan (included in Exhibit 5.1)
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24.1
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Power
of Attorney (included on the signature page
hereto)
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