SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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[_] Definitive Proxy Statement
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NEOTHERAPEUTICS, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[NEOTHERAPEUTICS LOGO APPEARS HERE]
Dear Stockholder:
You should have received your Proxy Statement dated August 9, 2002,
regarding the Special Meeting of the Stockholders (the "Special Meeting") of
NeoTherapeutics, Inc. (the "Company") to be held at 157 Technology Drive,
Irvine, California 92618, on Thursday, September 5, 2002, beginning at 9:00 a.m.
local time. Attached is a Supplement to the Proxy Statement which is intended to
inform you of recent developments which have arisen since the date of the Proxy
Statement concerning the Company. Whether or not you plan to attend the Special
Meeting and whether or not you have already submitted a proxy card, please
carefully read the contents of the accompanying Supplement.
Our Board of Directors feels that it is extremely important to the future
of the Company that both of the resolutions discussed in the Proxy Statement be
approved by our stockholders. Our need to obtain financing is urgent and the
passage of both of the proposals will set the stage for future financings. Not
only will additional shares become available for sale through the reverse stock
split, but if we are able to maintain the resulting initial increase in the
price of our common stock, we hope to remain eligible to have our common stock
listed on the Nasdaq Stock Market.
The Board of Directors recommends that you vote "FOR" approval of the
amendment to our Certificate of Incorporation to effect the reverse stock split
and "FOR" approval of future financings of up to $10 million both of which are
discussed in more detail in the Proxy Statement.
It is important that your shares be represented, therefore, even if you
presently plan to attend the Special Meeting, PLEASE COMPLETE, SIGN, AND DATE
AND PROMPTLY RETURN THE PROXY CARD INCLUDED WITH THE PROXY STATEMENT. If you do
attend the Special Meeting and wish to vote in person, you may withdraw your
proxy at that time. If you need another proxy card to be sent to you, please
contact John McManus at (949) 743-9247.
I look forward to seeing you at the Special Meeting.
Very truly yours,
/s/ Rajesh Shrotriya
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Rajesh C. Shrotriya, M.D.
Chairman of the Board, Chief Executive
Officer and President
August 23, 2002
Irvine, California
NeoTherapeutics, Inc.
157 Technology Drive
Irvine, California 92618
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SUPPLEMENT TO PROXY STATEMENT
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This Proxy Supplement supplements the Proxy Statement dated August 9, 2002,
regarding the Special Meeting of Stockholders (the "Special Meeting") of
NeoTherapeutics, Inc. (the "Company") to be held on Thursday, September 5, 2002,
beginning at 9:00 a.m. local time, at the Company's corporate headquarters
located at 157 Technology Drive, Irvine, California 92618, and at any
postponements or adjournments thereof. This Proxy Supplement is first being
mailed to the Company's stockholders on or about August 26, 2002.
This Proxy Supplement is being furnished to you in connection with the
solicitation of proxies by and on behalf of the Board of Directors of the
Company to provide you with additional information regarding recent developments
at the Company and should be read in conjunction with the Proxy Statement.
Defined terms used in this Proxy Supplement and not otherwise specifically
defined herein have the meaning given to them in the Proxy Statement.
MAJOR STRATEGIC RESTRUCTURING AND NEW LEADERSHIP
On August 16, 2002, the Board of Directors of the Company announced the
appointment of Rajesh C. Shrotriya, M.D. as Chairman of the Board and Chief
Executive Officer of the Company effective immediately. Dr. Shrotriya succeeded
Alvin J. Glasky, Ph.D., who has retired. Dr. Glasky will continue to serve the
Company as a member of the Board of Directors. Since joining the Company in
September 2000, Dr. Shrotriya has served as the Company's President and Chief
Operating Officer.
Dr. Shrotriya's pharmaceutical industry experience spans over 29 years,
during which time he has been awarded several patents and has authored or
co-authored over 35 scientific publications. Earlier in his career, Dr.
Shrotriya spent 18 years at Bristol-Myers Squibb Company, most recently as
Executive Director, Worldwide Central Nervous System Clinical Research, where
among his other responsibilities, he directed clinical research in anxiety,
depression, analgesics and Alzheimer's disease. He has also served as a Medical
Advisor to Hoechst Pharmaceuticals and as an attending physician and member of
the faculty at St. Joseph Hospital in Stamford, CT. In addition, he received a
certificate for Advanced Biomedical Research Management from Harvard University.
Prior to joining the Company, Dr. Shrotriya was Executive Vice President
and Chief Scientific Officer of SuperGen, Inc. where he was credited with much
of the company's growth and clinical and commercial success. He was also
responsible for strategic alliances involving several late-stage drugs and
setting regulatory strategy in consultation with the FDA. Earlier, Dr. Shrotriya
was Vice President and Chief Medical Officer of MGI Pharma, Inc. At MGI, he was
responsible for setting and implementing overall strategy for the clinical
development of compounds in the fields of oncology, rheumatology and others as
well as evaluating licensing opportunities and providing technical support and
direction to marketing and sales.
On August 21, 2002, the Company announced the immediate retirement of
Samuel Gulko, as a Director, Senior Vice President Finance, Chief Financial
Officer, Secretary and Treasurer of the Company. The Company may continue to
seek his advice as a consultant as it goes forward. Following Mr. Gulko's
departure, financing and financial planning will be managed by John McManus and
Michael Volk, C.P.A., Controller. John McManus, who just recently rejoined the
Company, played a key role in the Company's efforts to raise money from
long-term oriented, fundamental investors when he was with the Company
previously, and he will lead the efforts to shore up the Company's financial
condition. Michael Volk has served as the Company's Controller for the past year
and has managed the Company's SEC compliance. He previously spent seven years
with Ernst & Young, working his way to the level of audit manager at the firm.
On August 22, 2002, the Company announced an additional reorganization
intended to reduce the Company's expected monthly expenses, or burn rate, to
less than $500,000. As part of the reorganization, the Company plans to
consolidate its activities into the parent company, eliminate operations at all
subsidiaries and focus its research efforts. In addition, the Company has
eliminated 23 of its approximately 44 full-time equivalent positions. The
Company believes that the changes will result in significant savings and will
allow the Company to focus on the development of its phase 3 anti-cancer drug,
satraplatin, and the negotiation of alliance agreements for the development of
its neurology products.
NASDAQ NATIONAL MARKET CONTINUED LISTING REQUIREMENTS COMPLIANCE
On August 16, 2002, the Company announced that Nasdaq has notified the
Company that it is not in compliance with Nasdaq's requirement to maintain a
minimum market value of publicly held shares of $5,000,000 for continued listing
on the Nasdaq National Market.
The Company has until November 11, 2002, to regain compliance with Nasdaq's
minimum market value requirement. Under Nasdaq rules, the Company may
demonstrate compliance by maintaining a minimum market value of publicly held
shares of $5,000,000 or greater for a minimum of 10 consecutive trading days by
that date. If the Company is unable to demonstrate compliance by that date, the
Company may appeal a determination that it be delisted from the Nasdaq National
Market, or it may decide to file an application to be transferred to the Nasdaq
SmallCap Market prior to November 11, 2002. However, the Company would have to
satisfy the continued listing requirements for that market, which include a
minimum market value of publicly held shares of $1,000,000. In addition to the
minimum market value of publicly held shares requirement, the Company must
maintain compliance with certain other quantitative standards for continued
listing on the Nasdaq National Market. The Company is currently not in
compliance with some of these standards. As is discussed in the Proxy Statement,
the Company previously received notice from Nasdaq on June 12, 2002, that it is
not in compliance with Nasdaq's minimum bid price per share requirement of
$1.00. The Company has yet to regain compliance with that requirement, and has
until September 10, 2002, to do so.
As of August 22, 2002, the Company had achieved a minimum market value of
publicly held shares of $5,000,000 for 3 consecutive trading days. However,
there can be no assurance that this minimum value will be maintained for 10
consecutive trading days or, if this requirement is satisfied, that the
Company's Common Stock will not be delisted by the Nasdaq National Market for
other reasons. Even if approved, the Reverse Stock Split itself will have no
effect on the market value of the Company's publicly held shares, although any
subsequent changes in the market price of the Company's Common Stock would
affect the market value of the Company's publicly held shares.
If the Company fails to meet Nasdaq's minimum market value requirement in
the time period required (or otherwise fails to meet any other continued listing
requirement and fails to regain compliance within the time period required), the
Company's stock will be subject to delisting. There can be no assurances that
the Company will regain compliance with the requirements for continued inclusion
or that the Company will continue to be listed on the Nasdaq National Market
even if the Reverse Stock Split Proposal is approved by the stockholders of the
Company. If the Company's stock is delisted from the Nasdaq National Market, the
Company would likely seek to list its Common Stock on the Nasdaq SmallCap
Market, if possible, or for quotation on the American Stock Exchange or a
regional stock exchange, if available. However, listing or quotation on such a
market or exchange could reduce the market liquidity for the Company's Common
Stock. If the Company's Common Stock is not listed or quoted on another market
or exchange, trading of the Company's Common Stock could be conducted in the
over-the-counter market on an electronic bulletin board established for unlisted
securities such as the Pink Sheets or the OTC Bulletin Board. As a result, an
investor would find it more difficult to dispose of, or obtain accurate
quotations for the price of, the Company's Common Stock.
If the Company's Common Stock is delisted from the Nasdaq National Market,
the Company fails to obtain listing or quotation on another market or exchange,
and the trading price remains below $5.00 per share, trading in the Company's
Common Stock might also become subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a "penny stock" (generally, any equity security not listed on a
national securities exchange or quoted on Nasdaq that has a market price of less
than $5.00 per share, subject to certain exceptions). Many brokerage firms are
reluctant to recommend low-priced stocks to their clients. Moreover, various
regulations and policies restrict the ability of stockholders to borrow against
or "margin" low-priced stocks and declines in the stock price below certain
levels may trigger unexpected margin calls. Additionally, because brokers'
commissions on low-priced stocks generally represent a higher percentage of the
stock price than commissions on higher priced stocks, the current share price of
the Common Stock can result in an individual stockholder paying transaction
costs that represent a higher percentage of total share value than would be the
case if the Company's share price were higher. This factor may also limit the
willingness of institutions to purchase the Company's Common Stock. Finally, the
additional burdens imposed upon broker-dealers by these requirements could
discourage broker-dealers from facilitating trades in the Company's Common
Stock, which could severely limit the market liquidity of the stock and the
ability of investors to trade the Company's Common Stock.
ADDITIONAL INFORMATION
If you need another copy of the Proxy Statement or a proxy card, you may
call Carol Gruetter, Shareholder Services and Corporate Secretary, at (949)
743-9236, to request that it be mailed to you. If your shares are held in
"street name" (that is, through a broker or other nominee), and you wish to
change your vote, please consult your broker or nominee to determine how to
change your vote. Our Proxy Statement is also available to the public at the
SEC's web site at http://www.sec.gov.