-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K8Pm6nJEm4t+TjxJU4bcfN7qilqtLTZvCi7YGKSEf/6fzO7pPVrRQdbNmWQOnEDP 9MTQ73TvOa9QQrYQp2/sgw== 0001193125-05-015471.txt : 20050131 0001193125-05-015471.hdr.sgml : 20050131 20050131172601 ACCESSION NUMBER: 0001193125-05-015471 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 20050131 DATE AS OF CHANGE: 20050131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORION ACQUISITION CORP II CENTRAL INDEX KEY: 0001011835 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 133863260 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-122431 FILM NUMBER: 05562965 BUSINESS ADDRESS: STREET 1: 401 WILSHIRE BOULEVARD STREET 2: SUITE 1020 CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: 310-526-5000 MAIL ADDRESS: STREET 1: 401 WILSHIRE BOULEVARD STREET 2: SUITE 1020 CITY: SANTA MONICA STATE: CA ZIP: 90401 SB-2 1 dsb2.htm FORM SB-2 Form SB-2
Table of Contents

As filed with the Securities and Exchange Commission on January 31, 2005

Registration No. 333-            


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


Orion Acquisition Corp. II

(name of small business issuer in its charter)

Delaware   2834   13-3863260
(state of incorporation)  

(primary standard industrial

classification code number)

  (I.R.S. employer identification no.)

501 Second Street, Suite 211

San Francisco, California 94107

(415) 543-3470

(address of principal place of business or intended principal place of business)

C. Patrick Machado

Senior Vice President and Chief Financial Officer

Orion Acquisition Corp. II

501 Second Street, Suite 211

San Francisco, California 94107

(415) 543-3470

(name, address and telephone number of agent for service)

Copies to:

Michael W. Hall, Esq.

Bradley A. Bugdanowitz, Esq.

Latham & Watkins LLP

135 Commonwealth Drive

Menlo Park, California 94025

(650) 328-4600


Approximate date of proposed sale to the public:    As soon as practicable after the effective date of this registration statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box:  x

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box:  ¨


CALCULATION OF REGISTRATION FEE

 


Title of Each Class of

Securities to be Registered

  Amount
Registered
    Proposed Maximum
Offering Price Per
Share(2)
  Proposed Maximum
Aggregate Offering
Price
  Amount of
Registration Fee

Common Stock, par value $0.01 per share

  15,006,124 (1)   $ 3.25   $ 48,769,903   $ 5,741

Common Stock, par value $0.01 per share, issuable upon exercise of warrants

  1,049,991 (3)   $ 3.25   $ 3,412,470   $ 402

(1) Represents the shares of common stock which may be sold by selling stockholders. Pursuant to Rule 416 under the Securities Act, this registration statement also covers such number of additional shares of common stock to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(2) Estimated solely for purposes of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities Act based on the average of the high ask and low bid prices, respectively, of the common stock as reported on the OTC Bulletin Board on January 25, 2005, which was $3.25 per share.
(3) Represents shares of common stock issuable upon the exercise of currently outstanding warrants. Pursuant to Rule 416 under the Securities Act, this registration statement also covers such number of additional shares of common stock to prevent dilution resulting from stock splits, stock dividends or similar transactions.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.

 



Table of Contents

Prospectus

 


 

ORION ACQUISITION CORP. II

 

Up to 16,056,115 Shares

Common Stock, par value $0.01 per share

 


 

This prospectus relates to the sale by selling stockholders of up to 15,006,124 shares of our common stock and the sale by us of shares of up to 1,049,991 our common stock issuable upon the exercise of outstanding warrants.

 

We will not receive any proceeds in this offering from the sale of the shares of common stock held by the selling stockholders. We may receive proceeds in this offering to the extent that holders of warrants elect to exercise such warrants and to pay cash in connection with such exercise for the shares of common stock issuable thereunder.

 

Pursuant to certain registration rights agreements entered into by and among us and certain selling stockholders, subject to certain exceptions, we have agreed to pay all expenses of the company and all reasonable expenses of the selling stockholders (excluding transfer taxes and underwriters’ discounts, commissions and the like of the selling stockholders), in each case incurred in connection with the registration of the shares of common stock covered by this prospectus.

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “MTMR.” On January 25, 2005, the average of the high ask and low bid prices, respectively, of our common stock as reported on the OTC Bulletin Board was $3.25 per share.

 


 

Investing in our common stock involves a high degree of risk. Please carefully consider the “ Risk Factors” beginning on page 4 of this prospectus.

 


 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SHARES OF COMMON STOCK OR PASSED ON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 


 

The date of this prospectus is                         , 2005


Table of Contents

TABLE OF CONTENTS

 

     Page

ABOUT THIS PROSPECTUS

   ii

EXPLANATORY NOTE

   iii

SUMMARY

   1

RISK FACTORS

   4

FORWARD-LOOKING STATEMENTS

   14

USE OF PROCEEDS

   15

DIVIDEND POLICY

   15

DETERMINATION OF OFFERING PRICE

   15

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

   16

BUSINESS

   17

MANAGEMENT

   32

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   34

DESCRIPTION OF TRANSACTIONS

   36

DESCRIPTION OF CAPITAL STOCK

   38

PRINCIPAL AND SELLING STOCKHOLDERS

   41

MARKET FOR COMMON STOCK AND RELATED MATTERS

   45

PLAN OF DISTRIBUTION

   46

LEGAL MATTERS

   48

EXPERTS

   48

WHERE YOU CAN FIND MORE INFORMATION

   48

PROVISION FOR INDEMNIFICATION

   49

CONSOLIDATED FINANCIAL STATEMENTS OF ORION ACQUISITION CORP. II

   F-1

Financial Statements Index

   F-1

Report of Singer Lewak Greenbaum & Goldstein LLP, Independent Registered Public Accounting Firm of Orion Acquisition Corp. II

   F-2

Consolidated Balance Sheet as of December 31, 2004

   F-3

Consolidated Statements of Operations for the year ended December 31, 2004, for the period from inception (September 4, 2003) to December 31, 2003, and for the period from inception (September 4, 2003) to December 31, 2004

   F-4

Consolidated Statements of Stockholders’ Equity for the period from inception (September 4, 2003) to December 31, 2004

   F-5

Consolidated Statements of Cash Flows for the year ended December 31, 2004, for the period from inception (September 4, 2003) to December 31, 2003, and for the period from inception (September 4, 2003) to December 31, 2004

   F-6

Notes to Consolidated Financial Statements

   F-7

 

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ABOUT THIS PROSPECTUS

 

You should rely only on the information contained in this prospectus or to which we have referred you in this prospectus. We have not authorized anyone to provide you with information that is different. This prospectus may only be used where it is legal to sell the common stock covered by this prospectus. The information in this prospectus may only be accurate as of the date of this prospectus.

 


 

Medivation is a trademark in the U.S. This prospectus includes product names, trade names and trademarks of other companies. All other product names, trade names and trademarks appearing in this prospectus are the property of their respective holders. Aricept®, Exelon®, Reminyl® and Namenda® are registered trademarks of Pfizer Inc. and Eisai Co., Ltd., Novartis AG, Johnson & Johnson and Forest Laboratories, Inc., respectively; and, without limitation, any product name, trade name, or trademark in this prospectus followed immediately with the ® or  symbol is meant to indicate that the company has no product name, trade name, or trademark or other intellectual property rights with respect to such word.

 

ii


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EXPLANATORY NOTE

 

As used in this prospectus:

 

    “Class B Warrants” refers to the Class B Warrants issued by Orion in its initial public offering in 1996;

 

    “the financing” refers to the private placement by Orion of an aggregate of 7,741,935 shares of common stock on December 17, 2004, to certain accredited investors;

 

    “Medivation” refers to Medivation, Inc. on or prior to December 17, 2004, the effective date of the merger;

 

    “the merger” refers to the merger effective on December 17, 2004, by and among Orion, merger sub and Medivation, pursuant to which Medivation became a wholly owned subsidiary of Orion;

 

    “merger sub” refers to the wholly owned subsidiary of Orion that was merged with and into Medivation in connection with the merger;

 

    “Orion” refers to Orion Acquisition Corp. II on or prior to December 17, 2004, the effective date of the merger;

 

    “preferred stock” refers to the Series A Preferred Stock and the Series B Preferred Stock, collectively, of the company;

 

    “the transactions” refers to the financing and the merger, collectively;

 

    “warrants” refers to the warrants of the company exercisable for shares of our common stock, including the Class B Warrants; and

 

    “We,” “our,” “us” and “the company” refer to Orion and Medivation, collectively, on a consolidated basis after giving effect to the transactions.

 


 

Unless otherwise noted in this prospectus, all information in this prospectus assumes:

 

    the sale by each selling stockholder of all shares of common stock covered by this prospectus;

 

    the conversion in full of outstanding shares of our Series A Preferred Stock into shares of common stock of the company, at the conversion rate of 1,000 shares of common stock for each share of our Series A Preferred Stock;

 

    the conversion in full of outstanding shares of our Series B Preferred Stock into shares of common stock of the company, at the conversion rate of 20 shares of common stock for each share of our Series B Preferred Stock;

 

    the exercise in full of outstanding options and warrants exercisable for shares of our common stock; and

 

    an aggregate of 18,006,178 shares of our common stock to be outstanding, which we sometimes refer to in this prospectus as the “fully-diluted” number of shares of common stock, and which represents the sum of the following:

 

    9,581,141 shares of our common stock outstanding as of January 28, 2005;

 

    1,049,991 shares of our common stock issuable upon exercise of our warrants outstanding as of January 28, 2005;

 

    110,000 shares of our common stock issuable upon conversion of our Series A Preferred Stock outstanding as of January 28, 2005;

 

    6,638,490 shares of common stock issuable upon conversion of our Series B Preferred Stock outstanding as of January 28, 2005; and

 

    626,556 shares of our common stock issuable upon exercise of our options outstanding as of January 28, 2005.

 

iii


Table of Contents

SUMMARY

 

The following summary provides an overview of certain information about our company and the offering and may not contain all the information that may be important to you. This summary is qualified in its entirety by and should be read together with the information contained in other parts of this prospectus. You should carefully read this entire prospectus before making a decision about whether to invest in our common stock.

 

The Company

 

We are a life sciences company based in San Francisco, California. Our business strategy is to identify and acquire development stage medical technologies, including both pharmaceuticals and medical devices, that have promising scientific, clinical and commercial prospects and strong intellectual property positions, and to develop those technologies through a largely outsourced model to achieve value-enhancing milestone events. If we successfully reach such milestone events, we will then consider selling or partnering a given program to a larger pharmaceutical or medical device company or, alternatively, to continue development ourselves to achieve the next milestone event. We believe that our competitive advantages are our ability to identify and acquire medical technologies with favorable risk/reward ratios, our focus on rapid development, and our use of largely outsourced development functions, which allows us to minimize infrastructure and fixed costs and maximize flexibility.

 

We have acquired and are currently developing two technologies, both of which are small molecule drugs targeted at Alzheimer’s disease. Our lead product candidate, Dimebon, is scheduled to enter a randomized, double-blind, placebo-controlled Phase II efficacy study in Alzheimer’s disease patients in Russia in the second or third quarter of 2005. Our second product candidate, NT0904, is in the preclinical research phase. We are also evaluating other medical technologies for potential acquisition, and will continue to do so. We will consider medical technologies based on their scientific, clinical and commercial potential, and intellectual property position, and will not limit ourselves to neurology or any other specific field of medicine.

 

The company is the product of the merger between Medivation and merger sub, a wholly owned subsidiary of Orion, which was completed as part of the transactions, including the merger and the financing, on December 17, 2004. Prior to the merger, Orion had not engaged in any substantive commercial operations, and Medivation was a privately held life sciences company. Orion was incorporated in Delaware in October 1995 for the purpose of acquiring an operating business by purchase, merger, combination or otherwise. Medivation was incorporated in Delaware in September 2003.

 

The Transactions

 

On December 17, 2004, Orion entered into an agreement and plan of merger by and among Orion, merger sub and Medivation, providing for the merger of merger sub with and into Medivation, and pursuant to which Medivation became the surviving corporation and a wholly owned subsidiary of Orion. Pursuant to the merger agreement, each outstanding share of common stock of Medivation was converted into 0.122935 shares of the Series B Preferred Stock of the company. In addition, in connection with the transactions, Orion entered into purchase agreements with respect to the private placement by Orion of an aggregate of 7,741,935 shares of common stock to certain accredited investors at a price of $1.55 per share.

 

At the next annual meeting of the holders of our common stock, we will propose for approval an amendment to our amended and restated certificate of incorporation to change the name of the company to “Medivation, Inc.”

 

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Summary Consolidated Financial Data

 

The summary consolidated financial data set forth below is a summary derived from our consolidated financial statements and notes thereto, and should be read in conjunction with our consolidated financial statements and notes thereto and the information contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case appearing elsewhere in this prospectus.

 

Statement of Operations Data

 

     Year ending
December 31, 2004


   

Inception
(September 4, 2003)

to December 31,
2003


   

Inception
(September 4, 2003)

to December 31,
2004


 

Total operating expenses:

   $ 2,784,851     $ 392,137     $ 3,176,988  

Total other expense:

     87,896       8,512       96,208  

Net loss:

   $ (2,874,147 )   $ (401,449 )   $ (3,275,595 )

 

Balance Sheet and Other Data

 

     As of
December 31, 2004


Cash and cash equivalents:

   $ 10,671,707

Total assets:

     11,116,543

Accounts payable:

     375,435

Total stockholders’ equity:

     10,090,273

 

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Table of Contents

The Offering

 

Shares of common stock offered by the selling stockholders

15,006,124

 

Shares of common stock offered by us to holders of warrants upon exercise thereof

1,049,991

 

Shares of common stock to be outstanding after this offering

18,006,141*

 

Use of proceeds

We will not receive any proceeds in this offering from the sale of the shares of common stock held by the selling stockholders. We may receive proceeds in this offering to the extent that holders of warrants elect to exercise such warrants and to pay cash in connection with such exercise for the shares of common stock issuable thereunder. If applicable, we intend to use such proceeds for general corporate purposes, including working capital and other general and administrative expenses.

 

Risk factors

Investing in our common stock involves a high degree of risk. Please carefully consider the “Risk Factors” beginning on page 4 of this prospectus.

 

OTC Bulletin Board symbol

“MTMR.”


* The number of shares of common stock to be outstanding after this offering represents the sum of: (a) 9,581,141 shares of our common stock outstanding as of January 28, 2005; (b) 1,049,991 shares of our common stock issuable upon exercise of our warrants outstanding as of January 28, 2005; (c) 110,000 shares of our common stock issuable upon conversion of our Series A Preferred Stock outstanding as of January 28, 2005; (d) 6,638,490 shares of our common stock issuable upon conversion of our Series B Preferred Stock outstanding as of January 28, 2005; and (e) 626,556 shares of our common stock issuable upon exercise of our options outstanding as of January 28, 2005.

 

Corporate Information

 

We are headquartered at 501 Second Street, Suite 211, San Francisco, California 94107, and our phone number is (415) 543-3470. We are a Delaware corporation that was incorporated in October 1995.

 

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RISK FACTORS

 

You should carefully consider the following risks in addition to the other information set forth in this prospectus before making an investment in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

 

Risks Related to our Business

 

We have incurred net losses since inception and expect to continue to incur substantial net losses for the foreseeable future.

 

We are a development stage company and have never recognized any revenue from the sale of products or any other source. We have not completed development of any of our product candidates, and do not expect that any of our present or future product candidates will be commercially available for a number of years, if at all. We have incurred losses since inception and expect to continue to incur substantial and increasing losses for the foreseeable future as we increase our spending to finance our Phase II clinical trial of Dimebon, the animal studies of Dimebon in the U.S. required to support an investigational new drug application to the U.S. Food and Drug Administration, our other research and development activities, and the costs associated with being a public company. Our operating losses have had, and will continue to have, an adverse impact on our working capital, total assets and stockholders’ equity. We do not know whether or when we will generate revenue or become profitable because of the significant uncertainties with respect to our ability to generate revenue from any of our current or future product candidates. If we do not realize sufficient revenue levels to achieve profitability, our business could be harmed.

 

Our business will not succeed if we fail to raise substantial additional capital.

 

To date, we have financed all of our operations through borrowings and the sale of our equity securities. We believe that our existing cash will be sufficient to fund our currently planned operations through completion of our Phase II clinical study of Dimebon in Alzheimer’s disease patients in Russia, which is scheduled for completion in June 2006. However, we will require significant additional capital to develop Dimebon beyond Phase II, should the Phase II results be positive, and to acquire and develop other product candidates.

 

Our future capital requirements will depend on many factors, including:

 

    the scope and results of our preclinical and clinical trials;

 

    whether we experience delays in our preclinical and clinical development programs, or slower than anticipated product development;

 

    whether we identify other product candidates that we wish to acquire, and the costs of acquiring and developing those product candidates;

 

    whether we are able to enter into collaborative partnerships with regard to any of our product development programs, and the terms of any such collaboration;

 

    the timing and requirements of, and the costs involved in, obtaining regulatory approvals for our product candidates from the FDA and comparable foreign regulatory agencies;

 

    as necessitated by our outsourced model, the availability of third parties to perform the key development tasks on our product candidates, including conducting preclinical and clinical studies and manufacturing the drugs or other product candidates to be tested in those studies, and the associated costs of those services;

 

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    the availability and cost of raw materials required to manufacture drugs and other product candidates for testing in our preclinical and clinical studies; and

 

    the costs involved in preparing, filing, prosecuting, maintaining, defending the validity of, and enforcing, patent claims and other patent-related costs, including litigation costs and the results of such litigation.

 

We may not be able to obtain additional financing when we need it on acceptable terms or at all. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our product candidates, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. Any inability to raise additional capital when we require it would seriously harm our business.

 

We may be unable to identify and acquire additional product candidates.

 

A key component of our business strategy is to diversify our product development risk by identifying, acquiring and developing additional development stage product candidates, whether drugs or medical devices. However, we may not be able to identify other promising technologies. In addition, the competition to acquire promising medical technologies is fierce, and many of our competitors are large, multinational pharmaceutical, biotechnology and medical device companies with considerably more financial, development and commercialization resources and experience than we have. Thus, even if we succeed in identifying promising technologies, we may not be able to acquire rights to them on acceptable terms or at all. If we are unable to identify and acquire new technologies, we will be unable to diversify our product risk. We believe that any such failure would have a significant negative impact on our prospects because the risk of failure of any particular development program in the pharmaceutical and medical device fields, including that of our Dimebon and NT0904 programs, is extremely high.

 

We currently own patent rights to only two product candidates.

 

We presently own patent rights to only two product candidates: Dimebon (including certain related compounds) and the NT0904 family of compounds. The patent rights covering both of these product candidates are based on inventions made at the Institute of Physiologically Active Compounds in Russia. Our patent rights to Dimebon cover the use of that drug to treat neurodegenerative diseases, including Alzheimer’s disease, and for anti-depressant and anti-aging purposes, and our patent rights to the NT0904 family include those molecules and uses thereof. In order to implement our business strategy successfully, we will need to identify, evaluate and acquire other promising development stage medical technologies on acceptable terms.

 

We rely on third parties to operate our business.

 

Our business model requires us to keep our employee count relatively low and rely largely on outside consultants to perform key product development tasks, such as conducting preclinical and clinical studies and manufacturing the product candidates to be tested in those studies. In order to execute this component of our strategy successfully, we will need to identify, engage and properly manage those activities of qualified external consultants. For example, we need to monitor the activities of our consultants closely to ensure that they are performing their tasks correctly, on time and on budget. Because all of our consultants work for other clients in addition to us, we also need to ensure that our consultants are appropriately prioritizing our projects. If we fail to manage our consultants well, we could incur material delays, cost overruns or both in our development programs, as well as other material disruptions to our business.

 

We depend on our executive officers to manage our business effectively, including both overseeing execution of development plans for our existing product candidates and identifying and acquiring promising new product candidates. The loss of any of our executive officers would harm our business.

 

Our future success depends upon the continued services of our executive officers. We are particularly dependent on the continued services of Dr. Hung, our President and Chief Executive Officer and a

 

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member of our board of directors. Dr. Hung identified the Dimebon product candidate for acquisition, and has primary responsibility for identifying and evaluating other potential product candidates. We believe that Dr. Hung’s services in this capacity would be difficult to replace. None of our executive officers is bound by an employment agreement for any specific term, and they may terminate their employment at any time. In addition, we do not have “key person” life insurance policies covering any of our executive officers. The loss of the services of any of our executive officers could delay the development of our existing product candidates, and delay or preclude the identification and acquisition of new product candidates, either of which events could harm our business, financial condition and results of operations.

 

Risks Related to our Product Development Candidates

 

The application of Dimebon to treat Alzheimer’s disease is novel and in the early stages of development.

 

Dimebon has never been approved in Russia or elsewhere for the treatment of Alzheimer’s disease, and the development of Dimebon for that indication is at an early stage. While we have received approval from the Russian Ministry of Health to proceed directly to a Phase II clinical study in that country, subject to ethics committee approval of any changes we may choose to make to our approved protocol, in the U.S. and Europe we will need to pursue a traditional drug development plan, beginning with animal studies. Dimebon will require significant additional development, preclinical studies and clinical trials, regulatory clearances and additional investment by us or our collaborators, if any, before applications for marketing approval can be submitted. We may not be able to complete these studies successfully or obtain approval to market Dimebon to treat Alzheimer’s disease or any other indication.

 

Most of the previously conducted Russian studies of Dimebon must be repeated pursuant to U.S. standards and the results of those new studies may demonstrate that Dimebon is not a safe or effective treatment for Alzheimer’s disease.

 

We have chosen to develop Dimebon as a potential treatment for Alzheimer’s disease based on the Russian studies submitted in support of Dimebon’s approval in Russia as an oral antihistamine in 1982, the later Russian studies of Dimebon in various animal models of Alzheimer’s disease described elsewhere in this prospectus under “Business—Our Dimebon Program—Preclinical Data” and the pilot 14-patient clinical study of Dimebon in Alzheimer’s disease patients described elsewhere in this prospectus under “Business—Our Dimebon Program—Clinical Data”. These studies were not performed in accordance with U.S. regulatory standards. For example, we lack sufficient documentation to establish that the Dimebon used in the Russian studies complies with the applicable manufacturing standards of the FDA. Furthermore, the Russian pilot clinical study used study endpoints different from those currently required by the FDA for approval of Alzheimer’s disease therapeutics. Thus, most of the previously conducted Russian studies will need to be repeated in order to meet FDA and European regulatory requirements to market in those jurisdictions. We do not know if any of the prior Russian results will be reproduced in the preclinical and clinical studies that we plan to perform to determine whether Dimebon is a safe and effective treatment for Alzheimer’s disease. Even if the prior results are reproduced, we do not know if the results of later stage clinical trials will be positive because product candidates in later stages of clinical trials often fail to show the desired safety and efficacy traits despite having progressed through preclinical or early-stage clinical testing. Finally, many of the animal and human studies required to prove that Dimebon is safe and effective by FDA standards have never been performed in Russia or elsewhere. Thus, we do not know if Dimebon will ever demonstrate the requisite safety or efficacy to obtain marketing approval in the U.S., Europe or any other country to treat Alzheimer’s disease or any other condition.

 

Chronic use of Dimebon has never been tested in humans.

 

The approved human use of Dimebon in Russia is as an oral antihistamine. Patients typically take oral antihistamines only for a short duration of time, generally 14 days or less. By contrast, the clinical trials required to obtain regulatory approval to sell Dimebon to treat Alzheimer’s disease will require patients to be treated with Dimebon for six months. If Dimebon were approved, use in actual Alzheimer’s disease patients could involve treatment with Dimebon for even longer periods of time. Dimebon has been tested in animals for periods of six months and longer, and found to be

 

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safe to the animals tested in those studies. To date the longest human exposure to Dimebon in a documented clinical study that we are aware of is two months. We do not know whether use of Dimebon for six months or longer will prove to be safe in humans. Safety issues may arise from such chronic exposure that did not arise from shorter-term use of the drug. Should such issues arise, they could delay or prevent our ability to obtain approval to sell Dimebon to treat Alzheimer’s disease, and give rise to potential product liability claims against us.

 

Conducting a clinical study in Russia involves risks not typically associated with U.S. studies.

 

In order to generate data that will be suitable for submission to regulatory agencies in the U.S. and Western Europe, we plan to conduct our Russian Phase II clinical study in compliance with good clinical practices. We have not yet confirmed that the clinical sites we intend to use in this study are, or have the capacity to become, good clinical practices compliant. Ensuring good clinical practices compliance of Russian clinical sites will involve risks, including risks associated with language barriers and the fact that Russian clinical investigators in general have only limited experience in conducting clinical studies to rigorous Western standards. We intend to mitigate this risk by engaging expert consultants to confirm that all sites are good clinical practices compliant, or can become good clinical practices compliant, and to monitor and audit the ongoing performance of our study at those sites to ensure that good clinical practices and all other regulatory requirements are adhered to. Failure to attain and prove good clinical practices compliance would adversely impact the value of any data generated from our planned Russian study, including its submissibility to regulatory agencies in the U.S. and Western Europe and its value to potential acquirers/corporate partners. In addition, should we be unable to identify a sufficient number of Russian sites with the capability to perform our study in compliance with good clinical practices, or should it take more time or money than currently anticipated to perform any required site training activities or to accrue a sufficient number of patients into our study, our Phase II study in Russia could be delayed, run over budget, or both.

 

We have not received U.S. government approval to export Dimebon from the U.S. to Russia for use in our planned Phase II study.

 

In order to maximize the persuasive value of the data generated in our proposed Russian Phase II study, we intend to use Dimebon tablets manufactured under current good manufacturing practices. Because there presently are no current good manufacturing practices compliant manufacturing facilities in Russia, we plan to import the Dimebon into Russia from the U.S. or other country where current good manufacturing practices manufacturing facilities exist. Under U.S. law, export of Dimebon tablets from the U.S. to Russia for use in a clinical study not being conducted under a U.S. investigational new drug application requires an export license and FDA approval, neither of which we have yet obtained. The FDA may deny or delay approval if it concludes that there are not enough existing data to support initiating the Russian study, despite any prior approval by Russian regulators. Similar approvals to import the drug into Russia may be required under Russian law. Should the FDA or the applicable Russian authorities deny or delay its approval, we would need to implement alternative strategies for exporting current good manufacturing practices Dimebon tablets to Russia, which could result in additional delays and costs.

 

If our clinical trials are delayed or unsuccessful our ability to commercialize our products will be impaired.

 

The clinical trial process is expensive, uncertain and takes many years. Neither Dimebon nor any other product candidates of ours is currently approved for sale for the treatment of Alzheimer’s disease anywhere in the world, and Dimebon may never be approved for sale for, or become commercially viable as, a treatment for Alzheimer’s disease. If we are unable to complete clinical trials of any of our current or future product candidates, or if the results of these trials are not satisfactory, we may not be able to obtain marketing approval for any products or may obtain approval for indications that are not as broad as we wanted. If this occurs, our business will be materially harmed, our ability to generate revenue will be severely impaired and you may lose part or all of your investment.

 

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Before obtaining regulatory approval for the sale of our product candidates, they must be subjected to extensive clinical trials to demonstrate their safety and efficacy for humans. The clinical trials of any product candidates that we develop for sale in the U.S. must comply with regulation by numerous federal, state and local government authorities in the U.S., principally the FDA, and by similar agencies in other countries. In the case of Dimebon and other potential drug product candidates, we will be required to obtain and maintain an effective investigational new drug application to conduct human clinical trials in the U.S. and must obtain and maintain regulatory approval before proceeding to successive phases of our clinical trials. Similar regulatory requirements apply to medical devices, and may become relevant to us should we acquire any medical device product candidates. Securing FDA approval requires the submission of extensive preclinical and clinical data and supporting information for each therapeutic indication to establish the product candidate’s safety and efficacy. Neither Dimebon nor any other product candidate of ours has begun preclinical or clinical trials in the U.S. It takes years to complete the testing of a new drug or medical device, and failure can occur at any stage of testing. For example, our testing may be delayed or halted due to any of the following:

 

    any preclinical test or clinical trial may fail to produce safety and efficacy results satisfactory to the FDA or foreign regulatory authorities;

 

    preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent regulatory approval;

 

    negative or inconclusive results from a preclinical test or clinical trial or adverse medical events during a clinical trial could cause a preclinical study or clinical trial to be repeated or a program to be terminated, even if other studies or trials relating to the program are successful;

 

    the FDA or foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that patients enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or injury;

 

    the FDA might not approve the clinical processes or facilities that we utilize, or the processes or facilities of our collaborators, including without limitation the vendors who will be manufacturing drug substance and drug product for us;

 

    any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the product not commercially viable; and

 

    we may encounter delays or rejections based on changes in FDA policies or the policies of foreign regulatory authorities during the period in which we develop a drug or the period required for review of any new drug application.

 

In addition, we may encounter delays or rejections based on our inability to enroll a sufficient number of patients to complete our clinical trials, including our planned Phase II clinical study of Dimebon in Alzheimer’s disease patients. Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility criteria for the study. Delays in planned patient enrollment may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop Dimebon or any other product candidates.

 

We may require financial, product development and clinical trial support from collaborative partners and currently have not entered into any such partnerships.

 

Our business strategy entails developing medical product candidates to achieve value-enhancing milestone events, and then determining whether to partner the program or continue development internally until the next milestone event. Based on this strategy, we intend to explore a possible collaboration with a large pharmaceutical and biotechnology company to commercialize Dimebon at some point after completion of our randomized, double-blind, placebo-controlled Phase II study in Russia, should the results of that study warrant further development. We may also be required to enter into collaborative relationships to assist with the development process prior to commercialization and to complete clinical trials of other product candidates. We have not

 

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entered into any collaborations to date. It may be difficult for us to find third parties that are willing to enter into collaborations on acceptable economic terms or at all. If we are not able to enter into collaborative relationships for our Dimebon product candidate or any other product candidate, we would be required to undertake and fund further development, clinical trials, manufacturing and marketing activities solely at our own expense. If we are unable to finance those activities, we would have to substantially reduce our development efforts and our business and prospects would be materially and adversely harmed.

 

If we enter into collaborative relationships, we will be dependent upon our partners.

 

Our business strategy may require us to secure collaborations with pharmaceutical, biotechnology or medical device companies covering later-stage clinical development and commercialization of Dimebon and any other product candidates. However, the agreements governing any collaboration are unlikely to provide us with control over the activities of our collaboration partner. For example, future collaboration partners, if any, are likely to have the right to terminate the collaboration at their option. Our partners may decide to terminate a drug development program under circumstances where we might have continued such a program. Any collaborator may be unwilling or unable to fulfill its obligations to us, including its development and commercialization responsibilities in respect of our product candidates. Our collaborators will have significant discretion in determining the efforts and level of resources that they dedicate to our collaborations. In addition, our collaborators may develop and commercialize, either alone or with others, products and services that are similar to or competitive with the products that are the subject of the collaboration with us.

 

Our success likely will depend on our collaborators’ abilities to establish the safety and efficacy of the drugs in later-stage Phase III clinical trials, obtain regulatory approvals from the FDA and other foreign regulatory agencies and commercialize products developed from our product candidates. In addition to testing and seeking regulatory approval, we likely will be dependent on our collaborators for the manufacture of clinical scale quantities of our product candidates and would be dependent on them in the future for commercial scale manufacture, distribution, sales, marketing and reimbursement. These third parties may not be successful in manufacturing our product candidates on a commercial scale or in commercializing them. If any future collaborator terminates its collaboration with us or fails to perform or satisfy its obligations to us, the development or commercialization of our product candidate would be delayed and our business and prospects would be materially and adversely affected.

 

We face intense competition in development and commercialization of Dimebon and any other future product candidates.

 

The drug and medical device development markets are intensely competitive in general, and the market for developing Alzheimer’s disease drugs is particularly competitive. There are four drugs currently marketed to treat Alzheimer’s disease, and these drugs all target at least one of the same mechanisms as does Dimebon. Companies marketing these FDA-approved Alzheimer’s disease therapeutics include some of the world’s largest and most experienced pharmaceutical companies, such as Pfizer Inc., Novartis AG and Johnson & Johnson.

 

In addition to the four currently marketed Alzheimer’s disease therapeutics, dozens of additional small molecule and recombinant protein candidates targeting many disparate mechanisms believed to play a role in the pathogenesis of Alzheimer’s disease are currently in development. General classes of agents currently in development by other companies for the treatment of Alzheimer’s disease, arranged by purported mechanism of action, include the following:

 

    Neuroprotection strategies:

 

    Antioxidants

 

    Anti-inflammatories

 

    Hormonal agents

 

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    Neurotrophic factors

 

    Anti-excitotoxicity agents

 

    AMPA receptor modulators

 

    Anti-apoptosis agents

 

    Amyloid protein ß lowering/disrupting strategies

 

    Neuroregenerative strategies

 

    Neural cell implants

 

    Downstream compensatory strategies

 

    Cholinesterase inhibitors

 

    Cholinergic agonists

 

    GABA antagonists

 

    Nutriceuticals

 

Most, if not all, of these competing drug development programs are being conducted by pharmaceutical and biotechnology companies with considerably greater financial resources, human resources and experience than ours.

 

If we are able to obtain regulatory approval to sell Dimebon or any other product to treat Alzheimer’s disease, we will face significant competition from the approved Alzheimer’s disease drugs, as well as from any of the drugs currently under development that may subsequently be approved. Bases on which we would have to compete successfully include efficacy, safety, price and cost-effectiveness. In addition, we would have to compete against these other drugs with several different categories of decision makers—including physicians, patients, government and private third-party payors, technology assessment groups and patient advocacy organizations. Even if one of our Alzheimer’s disease product candidates is approved, we cannot guarantee that we will be able to compete successfully on any of these bases. Any future product candidates that we may develop will face similar competitive pressures. If we cannot compete successfully on any of the bases described above, our business will not succeed.

 

If our product candidates are approved for sale our commercial success will depend on reimbursement from third-party payors.

 

Third-party payors, including public insurers such as Medicare and Medicaid, and private insurers, pay for a large share of health care products and services consumed in the U.S. In Europe, Canada and other major international markets, third-party payors also pay for a significant portion of health care products and services, and certain of those countries have nationalized health care systems in which the government pays for all such products and services. Even if approved by the FDA and other regulatory agencies, our products are unlikely to achieve commercial success unless they are covered widely by third-party payors and reimbursed at a rate which generates an acceptable commercial return for us and any collaborative partner. It is increasingly difficult to obtain coverage and acceptable reimbursement levels from third-party payors, and we may be unable to achieve these objectives. Achieving coverage and acceptable reimbursement levels typically involves negotiating with individual payors, and is a time-consuming and costly process. In addition, we would face competition in such negotiations from other approved drugs against which we compete, and the marketers of such other drugs are likely to be significantly larger than us and therefore enjoy significantly more negotiating leverage. Failure to achieve coverage and acceptable reimbursement levels could harm our business.

 

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We may be subject to product liability litigation, which if successful could materially and adversely harm our business and financial condition.

 

Our business exposes us to the risk of product liability claims that is inherent in the development of drugs and medical devices. If one of our product candidates harms people, or is alleged to, we may be subject to costly and damaging product liability claims brought against us by clinical trial participants, consumers, health care providers, pharmaceutical companies or others. We have product liability insurance covering our Russian Phase II clinical study of Dimebon, but do not have insurance for any of our other development activities. If we are unable to obtain insurance at an acceptable cost or otherwise protect against potential product liability claims, we may be exposed to significant litigation costs and liabilities, which may materially and adversely affect our business and financial position. If we are sued for injuries allegedly caused by any of our product candidates, our litigation costs and liability could exceed our total assets and our ability to pay. A product liability claim or a series of claims brought against us could harm our business.

 

We may become involved in costly and time-consuming litigation.

 

We may from time to time become involved in various lawsuits and legal proceedings which arise in the ordinary course of our business. Any litigation to which we are subject could require significant involvement of our senior management and may divert management’s attention from our business and operations. Litigation costs or an adverse result in any litigation that may arise from time to time may adversely impact our operating results or financial condition.

 

Risks Related to our Intellectual Property

 

We may be unable to adequately protect our proprietary technology which could adversely affect our ability to compete.

 

We rely on a combination of patent, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights, both in the U.S. and abroad. As of January 28, 2005, we owned the rights to one issued patent in the U.S., Europe and Hong Kong, covering the use of Dimebon and certain related compounds to treat neurodegenerative diseases, including Alzheimer’s disease. A corresponding patent application is pending in Canada, and a continuation application is pending in the U.S. We also own two other pending patent applications, one claiming the use of Dimebon for anti-aging purposes and the other claiming the NT0904 family of compounds. We intend to prosecute both of these patent applications in the U.S., Europe and any other jurisdictions we deem appropriate. However, issued patents or pending patent applications might not adequately protect our intellectual property rights, that any future patent applications will be approved or that any issued patents will not be challenged by third parties. Other parties may independently develop similar or competing technology or design around any patents that may be issued to us. We also enter into confidentiality agreements with our employees, consultants and suppliers and control access to and distribution of our confidential information and intellectual property. We cannot be certain that the steps we have taken will prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the U.S.

 

We could become subject to litigation regarding intellectual property rights, which could divert management attention, cause us to incur significant costs and prevent us from selling or using the challenged technology.

 

In recent years, there has been significant litigation in the U.S. and elsewhere involving pharmaceutical patents and other intellectual property rights. In particular, generic pharmaceutical manufacturers have been very aggressive in attacking the validity of patents held by proprietary pharmaceutical companies, especially if these patents are commercially significant. If Dimebon or any of our potential future product candidates succeeds, we may face challenges to our existing or future patents. For example, in the prosecution of our issued U.S. patent, the prior owners missed a filing deadline with the U.S. Patent & Trademark Office, which resulted in the patent

 

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application being deemed abandoned. The prior owners petitioned the PTO to revive the patent application alleging that missing the deadline was unintentional, and the PTO approved the petition and issued the patent. However, as with any other decision the PTO makes, this decision could be challenged in subsequent litigation in an attempt to invalidate the issued U.S. Dimebon patent and any other U.S. patent that may issue based on the same patent application.

 

In the future, we may be a party to litigation to protect our intellectual property or as a result of an alleged infringement of others’ intellectual property. These claims and any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation of our proprietary rights. These lawsuits, regardless of their success, would likely be time-consuming and expensive to litigate and resolve and would divert management time and attention. Any potential intellectual property litigation also could force us to do one or more of the following:

 

    discontinue our products that use the challenged intellectual property; or

 

    obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms, or at all.

 

If we are forced to take any of these actions, our business may be seriously harmed. Although we carry general liability insurance, our insurance does not cover potential claims of this type.

 

We may in the future initiate claims or litigation against third parties for infringement of our proprietary rights to protect these rights or to determine the scope and validity of our proprietary rights or the proprietary rights of competitors. These claims could result in costly litigation and the diversion of our technical and management personnel, and we may not prevail in making these claims.

 

We may need to obtain licenses of third-party technology that may not be available to us or may be very expensive and may prevent us from operating our business.

 

From time to time we may be required to license technology from third parties to develop our existing and future product candidates. Third-party licenses may not be available to us on commercially reasonable terms, or at all. The inability to obtain any third-party license required to develop any of our product candidates could cause us to abandon any related development efforts, which could seriously harm our business, financial condition and results of operations.

 

Risks Related to the Offering and the Common Stock

 

The number of shares of common stock eligible for sale could depress our stock price.

 

We are registering a total of 16,056,115 shares of our common stock pursuant to the registration statement of which this prospectus is a part. As of January 28, 2005, the shares covered by the registration statement will constitute approximately 89% of the fully-diluted shares of common stock of the company. In addition, as of January 28, 2005, a total of 6,638,490 shares of common stock, or approximately 37% of the fully-diluted shares of common stock of the company issued to the former stockholders of Medivation in the merger, are subject to lock-up agreements restricting their sale until the earlier of (a) completion of the planned Phase II clinical study of Dimebon in Russia; and (b) December 17, 2006. At the discretion of the company’s board of directors, the persons subject to the lock-up agreements, including Dr. Hung, our President and Chief Executive Officer, and C. Patrick Machado, our Senior Vice President and Chief Financial Officer, may be permitted to sell their shares prior to the end of this period. The possible sale of a significant number of these shares may cause the market price of our common stock to decline.

 

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Our common stock is not and may never qualify to be listed on a national securities exchange.

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “MTMR.” In connection with the financing, we have agreed to use our best efforts to list our common stock on the Nasdaq SmallCap Market. However, we do not currently meet the listing requirements for the Nasdaq SmallCap Market or any national securities exchange, and we cannot guarantee that we will be able to do so in the future. As a result, we cannot predict the extent to which a trading market will develop or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling the shares of common stock that you buy. If you purchase shares of our common stock, you may not be able to resell those shares at or above the prices offered by the selling stockholders.

 

The price of our common stock has in the past been, and may in the future be, volatile.

 

The stock market has experienced significant price and volume fluctuations, and the market prices of securities of research and development-focused life sciences companies have been highly volatile. In particular, announcing positive or negative results of our clinical trials, including our upcoming Phase II clinical trial in Russia, could have a material impact on our stock price. These fluctuations are often unrelated to the operating performance of particular companies. Our stock price may also be affected by the stock trading prices of other life sciences companies. Any inability to meet the financial, operational or other expectations of securities and industry analysts also could adversely affect our stock price.

 

We do not intend to pay dividends on our common stock.

 

We have not in the past paid, and do not expect for the foreseeable future to pay, dividends on our common stock. Instead, we anticipate that all of our earnings, if any, in the foreseeable future will be used for working capital and other general corporate purposes. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions.

 

Our principal stockholders exert substantial influence over us and may exercise their control in a manner adverse to your interests.

 

Upon the completion of the offering, certain stockholders and their affiliates may continue to own a substantial amount of our outstanding common stock. These stockholders may have the power to direct our affairs and be able to determine the outcome of certain matters submitted to stockholders for approval. Because a limited number of persons control us, transactions could be difficult or impossible to complete without the support of those persons. Subject to applicable law, it is possible that these persons will exercise control over us in a manner adverse to your interests.

 

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FORWARD-LOOKING STATEMENTS

 

This prospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and elsewhere in this prospectus. These risks are not exhaustive. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

 

 

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USE OF PROCEEDS

 

We will not receive any proceeds in this offering from the sale of the shares of common stock held by the selling stockholders. We may receive proceeds in this offering to the extent that holders of warrants elect to exercise such warrants and to pay cash in connection with such exercise for the shares of common stock issuable thereunder. If all such warrants are exercised for cash, the aggregate net proceeds to us from the sale of the shares of common stock issuable upon exercise of such warrants will be approximately $1,306,136. If applicable, we intend to use such proceeds for general corporate purposes, including working capital and other general and administrative expenses. We have not identified the amounts we plan to spend on each of these areas or the timing of expenditures. Pending specific application of the net proceeds, we plan to invest the net proceeds in short-term, investment grade, interest-bearing securities.

 

The principal purpose of the offering of the shares of common stock issuable upon the exercise of outstanding warrants is to enable us to issue such shares of common stock in compliance with applicable securities laws.

 

DIVIDEND POLICY

 

We have not in the past paid, and do not expect for the foreseeable future to pay, dividends on our common stock. Instead, we anticipate that all of our earnings, if any, in the foreseeable future will be used for working capital and other general corporate purposes. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions.

 

DETERMINATION OF OFFERING PRICE

 

We have been informed by the selling stockholders that they may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale or at negotiated prices. No independent third party has been consulted concerning the offering price for the shares or the fairness of the offering price used for the shares.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following discussion should be read in conjunction with and is qualified in its entirety by reference to our consolidated financial statements included elsewhere in this prospectus. Except for the historical information contained herein, the discussions in this section contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed below. See “Risk Factors” and “Forward-Looking Statements” for a discussion of these risks and uncertainties.

 

Our corporate strategy is to identify and acquire development stage medical technologies, including both pharmaceuticals and medical devices, that have promising scientific, clinical and commercial prospects and strong intellectual property positions, and to develop those technologies through a largely outsourced model to achieve value-enhancing milestone events. If we successfully reach such milestone events, we will then consider selling or partnering a given program to a larger pharmaceutical or medical device company or, alternatively, to continue development ourselves to achieve the next milestone event. We have acquired and are currently developing two technologies, both of which are small molecule drugs targeted at Alzheimer’s disease. Our lead product candidate, Dimebon, is scheduled to enter a randomized, double-blind, placebo-controlled Phase II efficacy study in Alzheimer’s disease patients in Russia in the second or third quarter of 2005. Our second product candidate, NT0904, is in the preclinical research phase. We are also evaluating other medical technologies for potential acquisition, and will continue to do so.

 

We have funded our operations to date solely through the sale of debt and equity securities. We have not generated any revenue from operations to date, and do not expect to generate operating revenue for several years, if ever. As of December 31, 2004, we had cash and cash equivalents of $10,671,707, accounts payable and other current liabilities to be paid in cash of $379,421, and no long term debt. Based on our business plan, we believe that our cash and cash equivalents, net of liabilities, will be sufficient to fund our operations through the scheduled completion of our Phase II efficacy study of Dimebon in Alzheimer’s disease patients in June 2006. However, we caution you that this is a forward-looking statement and is subject to significant risk and uncertainty. See “Forward-Looking Statements.”

 

The process of seeking regulatory approval to sell our product candidates is lengthy and very expensive, and cannot be completed for any of our existing product candidates by June 2006. We will therefore need to raise additional financing, whether through sales of our equity securities, collaborations or otherwise, to continue with any further development activities beyond that time. In addition, should we identify one or more new product candidates that we wish to acquire, we may need to raise additional financing sooner than June 2006 to finance the acquisition and subsequent development of any such new product candidate(s). We also may need to raise additional financing before June 2006 should we experience unforeseen delays, cost overruns or both in the development of any of our existing product candidates. We cannot be sure that we will be able to raise additional financing when needed on acceptable terms or at all. If we fail to do so, you may lose some or all of your investment.

 

Our business plan for the next twelve months consists of clinical development of Dimebon in Russia, preclinical development of Dimebon in the U.S., preclinical research on NT0904 and/or related molecules, and the identification, evaluation and potential acquisition of one or more new development stage medical product candidate(s). Based on our business plan, we expect to achieve the following development milestones on our existing two product candidates by June 2006: (a) completion of our randomized, double-blind, placebo-controlled Phase II efficacy study of Dimebon in Alzheimer’s disease patients in Russia; (b) completion of the animal studies required to support an investigational new drug application to the FDA to commence Phase I clinical testing of Dimebon in the U.S.; and (c) completion of preclinical research required to reach a decision on whether to begin preclinical development of our NT0904 family of compounds. However, we caution you that this is a forward-looking statement and is subject to significant risk and uncertainty. See “Forward-Looking Statements.”

 

We historically have conducted our business operations on a largely outsourced model, and expect to continue to do so. Thus, we do not expect to purchase or sell any plant or significant equipment, or to significantly increase our number of employees, for the foreseeable future.

 

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BUSINESS

 

The Company

 

We are a life sciences company based in San Francisco, California. Our business strategy is to identify and acquire development stage medical technologies, including both pharmaceuticals and medical devices, that have promising scientific, clinical and commercial prospects and strong intellectual property positions, and to develop those technologies through a largely outsourced model to achieve value-enhancing milestone events. If we successfully reach such milestone events, we will then consider selling or partnering a given program to a larger pharmaceutical or medical device company or, alternatively, to continue development ourselves to achieve the next milestone event. We believe that our competitive advantages are our ability to identify and acquire medical technologies with favorable risk/reward ratios, our focus on rapid development, and our use of largely outsourced development functions, which allows us to minimize infrastructure and fixed costs and maximize flexibility.

 

We have acquired and are currently developing two technologies, both of which are small molecule drugs targeted at Alzheimer’s disease. Our lead product candidate, Dimebon, is scheduled to enter a randomized, double-blind, placebo-controlled Phase II efficacy study in Alzheimer’s disease patients in Russia in the second or third quarter of 2005. Our second product candidate, NT0904, is in the preclinical research phase. We are also evaluating other medical technologies for potential acquisition, and will continue to do so. We will consider medical technologies based on their scientific, clinical and commercial potential, and intellectual property position, and will not limit ourselves to neurology or any other specific field of medicine.

 

The company is the product of the merger between Medivation and merger sub, a wholly owned subsidiary of Orion, which was completed as part of the transactions, including the merger and the financing, on December 17, 2004. Prior to the merger, Orion had not engaged in any substantive commercial operations, and Medivation was a privately held life sciences company. Orion was incorporated in Delaware in October 1995 for the purpose of acquiring an operating business by purchase, merger, combination or otherwise. Medivation was incorporated in Delaware in September 2003.

 

Consistent with our strategy of outsourcing key development functions, as of January 28, 2005, we had only three employees, all of whom are full-time, and use consultants to provide the majority of our development activities.

 

The Transactions

 

On December 17, 2004, Orion entered into an agreement and plan of merger by and among Orion, merger sub and Medivation, providing for the merger of the merger sub with and into Medivation, and pursuant to which Medivation became the surviving corporation and a wholly owned subsidiary of Orion. Pursuant to the merger agreement, each outstanding share of common stock of Medivation was converted into 0.122935 shares of the Series B Preferred Stock of the company. In addition, in connection with the transactions, Orion entered into purchase agreements with respect to the private placement by Orion of an aggregate of 7,741,935 shares of common stock to certain accredited investors at a price of $1.55 per share.

 

At the next annual meeting of the holders of our common stock, we will propose for approval an amendment to our amended and restated certificate of incorporation to change the name of the company to “Medivation, Inc.”

 

The Alzheimer’s Disease Opportunity

 

Alzheimer’s disease, the leading cause of dementia, is characterized by the progressive loss of memory, thinking (cognitive function) and the ability to perform the activities of daily living (global function). According to the Alzheimer’s Association, Alzheimer’s disease currently affects approximately 4.5 million people in the U.S., including as many as 10% of people aged 65 and older and nearly 50% of those aged 85 and older. Due to the aging baby boomer population and the increased prevalence of Alzheimer’s disease in older populations, the

 

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Alzheimer’s Association has projected that Alzheimer’s disease cases in the U.S. will rise to as many as 16 million by 2050 unless a cure or prevention is found. According to a published article in Scientific American, worldwide cases of Alzheimer’s disease are expected to reach 22 million by 2025. Alzheimer’s disease kills 100,000 people per year in the U.S. According to the Alzheimer’s Association, on average between three and 20 years pass between a patient’s initial diagnosis with Alzheimer’s disease and his or her death, with an average duration of eight years. The Alzheimer’s Association has estimated that total annual expenditures on Alzheimer’s disease in the U.S. exceed $100 billion annually, and that the average lifetime cost per Alzheimer’s disease patient is $174,000.

 

FDA-Approved Therapeutics and Purported Mechanisms of Action

 

The precise physical changes in the brain that produce Alzheimer’s disease are complex and not completely understood. However, the two best-validated drug targets for Alzheimer’s disease are cholinesterase and the N-methyl-D-aspartate receptor, or NMDA receptor. There are only four currently used drugs that the FDA has approved for the treatment of Alzheimer’s disease. Three of these drugs are believed to inhibit cholinesterase, and one is believed to inhibit the NMDA receptor. These four drugs and their respective marketers, FDA approval dates (as listed in the FDA’s on-line edition of its Orange Book) and purported mechanisms of action are set forth in the following table.

 

Drug


    

Marketed by


    

FDA Approval


    

Purported Mechanism


Aricept® (donepezil)

     Pfizer Inc./Eisai Co., Ltd.      November 25, 1996      Cholinesterase inhibition

Exelon® (rivastigmine)

     Novartis AG      April 21, 2000      Cholinesterase inhibition

Reminyl® (galantamine)

     Johnson & Johnson      February 28, 2001      Cholinesterase inhibition

Namenda® (memantine)

     Forest Laboratories, Inc.      October 16, 2003      NMDA receptor inhibition

 

Cholinesterase

 

Acetylcholine is a specialized brain chemical or neurotransmitter which is important for normal brain function. In Alzheimer’s disease, a loss of function in areas of the brain associated with memory, cognitive function and global function occurs. Levels of acetylcholine are lower than normal in the brains of patients with Alzheimer’s disease. The impairment of memory, cognitive function and global function seen in Alzheimer’s disease has been attributed, at least in part, to these lower levels of acetylcholine. Acetylcholine is normally degraded by an enzyme called cholinesterase. Inhibition of cholinesterase results in less degradation of acetylcholine and therefore an increase in acetylcholine levels. Aricept®, Exelon® and Reminyl®, which the FDA has approved for the treatment of mild-to-moderate Alzheimer’s disease, all are purported to work by inhibiting cholinesterase and thereby increasing brain levels of acetylcholine.

 

NMDA Receptor

 

Glutamate is one of the most important neurotransmitters in the human body, accounting for approximately 70% of all synapses (junctions between two cells) in the central nervous system. Glutamate as a neurotransmitter activates brain cells (neurons) by binding to a receptor on the neuron cell surface called the NMDA receptor. In normal brain function, binding of the NMDA receptor by glutamate initiates an influx of calcium into the neuron, which plays a role in normal brain function. One theory of the underlying physical changes (pathophysiology) that occur in the brains of Alzheimer’s disease patients, known as the “excitotoxicity” theory, holds that the NMDA receptor is excessively activated by glutamate. According to this theory, excessive activation of the NMDA receptor by glutamate in Alzheimer’s disease patients causes excessive quantities of calcium to enter neurons, which in turn kills or damages the neurons and causes some of the impaired brain functions seen in Alzheimer’s disease. The drug most recently approved by the FDA to treat Alzheimer’s disease, Namenda®, is purported to work by inhibiting the NMDA receptor.

 

Combination Therapy

 

Namenda combined with Aricept® is significantly more effective in treating the symptoms of Alzheimer’s disease than Aricept® alone. A study published in the Journal of the American Medical Association concluded that Namenda® combined with Aricept® is significantly more effective in treating the symptoms of Alzheimer’s

 

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disease than Aricept® alone. This study compared the use of a combination of Namenda®, an NMDA receptor inhibitor, and Aricept®, a cholinesterase inhibitor, to Aricept® alone in 404 patients with moderate-to-severe Alzheimer’s disease. After six months of dosing, patients who took the combination therapy (Namenda® plus Aricept®) had significantly better outcomes on measurements of cognition, activities of daily living, global outcome and behavior compared to patients who took Aricept® alone. This study was reported by its authors to be the first to show superiority of dual target inhibition (NMDA receptor and cholinesterase inhibition) over single target inhibition (cholinesterase inhibition only) in Alzheimer’s disease patients. This study suggests that combination therapy directed at both cholinesterase and the NMDA receptor eventually may become an important clinical approach to treating Alzheimer’s disease.

 

Market Size

 

Based on financial information publicly disclosed by the marketers of Alzheimer’s disease therapeutics, these drugs constitute more than a billion dollar market per year worldwide. Aricept®, the largest selling cholinesterase inhibitor, generated more than $1 billion in combined global sales for Pfizer Inc. and Eisai Co., Ltd. in 2002, while Exelon®, the second largest-selling cholinesterase inhibitor, generated $367 million in global sales for Novartis AG in 2003. While Forest Laboratories, Inc.’s NMDA receptor antagonist Namenda® was only approved in October 2003, by September 30, 2004, it already had achieved sales of $173 million in its first three quarters on the market.

 

The market performance of the existing Alzheimer’s disease therapeutics is particularly noteworthy given that their clinical performance to date has been modest. Specifically, none of the drugs approved by FDA to treat Alzheimer’s disease has been proven to prevent or slow the underlying process of brain deterioration (neurodegeneration) in patients with Alzheimer’s disease. Rather, these drugs have been shown only to address the symptoms of Alzheimer’s disease—primarily loss of cognitive and global function. Furthermore, in the studies submitted in support of applications for FDA approval of these drugs, none of these drugs was shown to improve both cognitive and global function in the patients studied. Thus, we believe that there is room for improvement in this large and growing pharmaceutical market, and have chosen to invest in our Dimebon and NT0904 programs based in part on that belief. However, our ability to achieve this objective is subject to a high level of risk. See “Risk Factors—Risks Related to our Product Development Candidates.”

 

Our Dimebon Program

 

Background

 

Dimebon is a Russian drug which was approved in 1982 by the Russian Ministry of Health for use as an oral antihistamine. According to the manufacturer of Dimebon sold in Russia, more than 28 million doses of the drug have been manufactured for human use in Russia since Dimebon’s approval in 1982. Dimebon has been used in Russia for the treatment of allergic conditions such as allergic rhinitis and allergic dermatitis.

 

In the early 1990s, scientists at the Institute of Physiologically Active Compounds in Chernogolovka, Russia, a scientific institute of the Russian Academy of Sciences, began screening large libraries of chemical compounds for NMDA receptor inhibition, based on data that implicated dysfunctional NMDA receptor activation in Alzheimer’s disease. The Institute of Physiologically Active Compounds researchers identified a class of molecules, called gamma carbolines, which they believed to inhibit the NMDA receptor. Based on their further research, the Institute of Physiologically Active Compounds scientists concluded that Dimebon, a gamma carboline derivative, interacted with the NMDA receptor in a manner that rendered it a suitable candidate for further development work. The Institute of Physiologically Active Compounds researchers later performed experiments showing that Dimebon also appears to inhibit cholinesterase—a drug target which became validated in 1993 when FDA approved the first purported cholinesterase inhibitor for the treatment of Alzheimer’s disease—and mitochondrial permeability transition pores—a drug target which, while not validated for the treatment of Alzheimer’s disease, has been linked to Alzheimer’s disease in the published literature.

 

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Dimebon’s Purported Mechanisms of Action

 

Dimebon appears to inhibit both of the two FDA-validated drug targets for Alzheimer’s disease—the NMDA receptor and cholinesterase. Experiments performed at the Institute of Physiologically Active Compounds in Russia compared the ability of both Dimebon and Namenda® (the NMDA receptor inhibitor approved by the FDA in 2003 to treat moderate-to-severe Alzheimer’s disease) to inhibit the NMDA receptor. These experiments showed that both Dimebon and Namenda® appeared to inhibit the NMDA receptor, but with differing affinities depending on the type of neuron involved. The range of affinities of each drug for the NMDA receptors on various types of neurons overlapped in this experiment, although in the majority of neurons tested Namenda® appeared to inhibit the NMDA receptor with higher affinity than did Dimebon. Confirmatory experiments performed by a U.S. contract laboratory repeated the Russian findings that Dimebon appears to inhibit the NMDA receptor, although with a lower affinity than does Namenda®. Low affinity of a product candidate for its target is frequently considered to be an undesirable characteristic from a drug development standpoint. However, the optimal level of affinity with which a drug must bind the NMDA receptor, and the particular types of neurons in which such binding must occur, to safely and effectively treat Alzheimer’s disease is not known.

 

Experiments performed at the Institute of Physiologically Active Compounds in Russia, and confirmed in two U.S. contract laboratories, have demonstrated that Dimebon also inhibits both of the two primary forms of cholinesterase—acetylcholinesterase and butyrylcholinesterase. Each of the cholinesterase inhibitors approved by the FDA to treat Alzheimer’s disease also inhibits both the acetyl and the butyryl forms of cholinesterase. Based on published data regarding the affinities with which the three FDA approved cholinesterase inhibitors bind their targets, Dimebon appears to inhibit butyrylcholinesterase more strongly than do two of the three FDA-approved drugs, while all three of the FDA-approved drugs inhibit acetylcholinesterase more strongly than Dimebon appears to do. The optimal level of affinity with which a drug must bind cholinesterase—whether the acetyl form, the butyrl form, or both forms—to safely and effectively treat Alzheimer’s disease is not known.

 

Dimebon also may block mitochondrial permeability transition pores, a potential new drug target for the treatment of Alzheimer’s disease. Experiments conducted at the Institute of Physiologically Active Compounds in Russia have demonstrated that Dimebon inhibits the ability of substances to flow into and out of mitochondria (structures located within cells that are responsible for generating energy). In this experiment, the Institute of Physiologically Active Compounds scientists administered APß 25-35 to a preparation of mitochondria in a test tube. APß 25-35 is a fragment of the beta amyloid peptide, which is believed to play a leading role in the pathophysiology of Alzheimer’s disease, and is known to cause mitochondria to swell, presumably by increasing the permeability of the mitochondrial walls. Dimebon was then administered to the mitochondria that had been treated with APß 25-35, and found to reduce this mitochondrial swelling, presumably by reducing the mitochondrial wall permeability caused by the APß 25-35. The scientists who conducted these experiments believe that Dimebon achieves this effect by blocking a type of pore, called mitochondrial permeability transition pores, through which substances pass into and out of mitochondria.

 

Blocking mitochondrial permeability transition pores is not a validated mechanism for treating Alzheimer’s disease. However, there is scientific basis to believe that this activity may be relevant in treating Alzheimer’s disease. One of the theories of the underlying pathophysiology of Alzheimer’s disease holds that the disease is caused in part by the death of neurons. Studies in the published literature have shown that opening mitochondrial pores can lead to neuron death by allowing excess calcium to flow between the cytoplasm (the area of the cell surrounding the mitochondria) and the mitochondria, and by allowing so-called “suicide factors” (substances which induce cells to kill themselves) to escape from the mitochondria into the cytoplasm. The Russian experiment described above suggests that Dimebon can reduce mitochondrial permeability induced by APß 25-35, whether by means of blocking mitochondrial permeability transition pores or through some other mechanism, which for the above reasons may protect neurons from dying.

 

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Preclinical Data

 

Preclinical experiments performed at the Institute of Physiologically Active Compounds in Russia have shown Dimebon to improve learning and memory in two animal models of Alzheimer’s disease.

 

The Rat Active Avoidance Test. In the first model—called the rat active avoidance test—a rat is housed in a box with two chambers separated by a wall, each with a light overhead. The floor of the box is metallic and is engineered so that a few seconds after the overhead light in a chamber is turned on, an electrical shock is transmitted to the floor beneath the light. The rat quickly learns to move to the adjacent, non-electrically charged chamber as soon as the overhead light is turned on.

 

In this model, a condition of memory and cognition impairment was generated by injecting AF64A into the brains of rats. AF64A is a neurotoxin that, when injected into rat brains, appears to impair the rats’ cognition and memory. In this study, 75 rats were divided into four groups. The first group of animals was the control group, and received injections of saline only, while the second, third and fourth groups were injected with the neurotoxin. On the second day after these injections, and for each of the next ten days, the three neurotoxin-treated groups received, respectively, placebo, Dimebon and Tacrine (the first cholinesterase inhibitor approved by FDA to treat Alzheimer’s disease, but no longer in use). After these treatments, the rats were trained to complete the active avoidance test, and then formal testing was begun. Trained animals were tested for the number of times they were able successfully to avoid electrical shock, as well as for time required to move to the non-electrically charged chamber of the box.

 

The performance level in the active avoidance test of rats that did not receive neurotoxin, measured by the number of times the rats successfully completed the test, was defined as 100. Based on that scale, the performance level of rats receiving the neurotoxin but neither Dimebon or Tacrine dropped to 65. By contrast, the performance of neurotoxin treated rats that also received Dimebon or Tacrine was 90, a result 38% better than that of the neurotoxin treated rats that received only placebo and almost as good as that of the control rats—which did not receive any neurotoxin. The relative benefits of Dimebon and Tacrine were even higher when the rats were evaluated on whether they could successfully complete the active avoidance test eight times consecutively. The performance level of the control animals on this test again was defined as 100, and dropped to 40 in the neurotoxin treated rats that were not given either Dimebon or Tacrine. For the neurotoxin treated rats that received Dimebon or Tacrine, the performance level in completing the active avoidance test eight times in a row was 90, a result 125% better than that of the neurotoxin treated rats that received only placebo and almost as good as that of the rats that did not receive any neurotoxin. Based on these two measurements of successful completion, Dimebon and Tacrine performed comparably in this experiment.

 

When measured based on time needed for the rats successfully to complete the active avoidance test, Dimebon and Tacrine again both performed better than placebo, but in this instance Dimebon also performed better than Tacrine. Specifically, the control rats required on average 4.8 seconds to complete the active avoidance test, while the animals receiving neurotoxin required more time—on average 5.5 seconds—to do so. By contrast, the Tacrine-treated rats completed the test in an average of four seconds, and the Dimebon-treated rat required only an average of three seconds to do so. It is noteworthy that, based on the time to completion measurement in this experiment, both the Dimebon and Tacrine-treated animals performed better than the animals that did not receive any neurotoxin.

 

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The Morris Rat Water Maze Test. In this model, a rat swims in a five-foot diameter vat of water with a small submerged platform which the swimming rat cannot see. An overhead video camera tracks the rat’s swimming path, which is digitized, mapped and measured. The rat swims randomly in the vat of water with no place to rest until it finds the submerged platform. The rat is trained to find the platform and once it does and remembers the location of the platform, the route that the rat takes from its starting place to the platform becomes more direct and less random. Control rats eventually learn and remember the location of the platform and swim in a fairly direct route to the platform.

 

LOGO

 

In these experiments, rats received injections of the neurotoxin AF64A directly into their brains. One day after the neurotoxin was administered, rats were treated orally with placebo, Aricept®, Namenda® or Dimebon, respectively, for approximately three and one-half weeks. For approximately the first week and a half of treatment, the rats were trained to find the submerged platform. Training was then stopped, and assessments of memory (“retention”) were made at approximately 2 weeks (“retention 1”) and approximately 4 weeks (“retention 2”).

 

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The results of these experiments are depicted in the chart below. Neurotoxin-treated animals that were not also treated with any drug did not learn or remember the location of the platform and swam randomly. By contrast, neurotoxin-treated animals which were also treated with Aricept®, Namenda® or Dimebon all showed comparable improvement in their ability to learn and remember the platform’s location, as indicated by the more direct (less random) swimming pattern to the submerged platform. After drug treatment was discontinued at the end of approximately three and a half weeks, rats treated with Aricept® appeared to forget the location of the submerged platform, as evidenced by their swimming pattern becoming more random and less direct, while rats treated with Namenda® or Dimebon continued to remember the location. In this regard, Namenda® and Dimebon, which both appear to inhibit the NMDA receptor, appeared in these experiments to perform better than Aricept® in durability of response.

 

LOGO

Clinical Data

 

Dimebon appeared to improve some aspects of memory, cognitive and global function in a pilot open-label clinical study in 14 Alzheimer’s disease patients conducted at the Moscow Center for Gerontology in Russia. The patients were treated with oral Dimebon, three times daily for two months. Patients’ memory, cognitive and global function were assessed by two psychiatric scales, the Hasegawa Dementia Scale and a scale developed by one of the investigators in the study, called the Bukatina Scale. Baseline scores for individual patients were determined prior to drug treatment and then subsequent memory and functional assessments were performed by two psychiatrists on patients treated open-label with Dimebon. After two months of Dimebon treatment, treatment was stopped and patient psychiatric assessments for memory and cognitive function continued for an additional two months. Patients treated with Dimebon experienced an improvement in memory and cognition after two months of therapy, although the endpoints used in this study were not those currently required by the FDA for approval of Alzheimer’s disease therapeutics and the study was not placebo-controlled. Furthermore, after Dimebon was discontinued at week eight, a deterioration in cognitive function in the Alzheimer’s disease patients was observed.

 

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Development Plan for our Dimebon Program

 

Our business strategy for our Dimebon program is to advance development as quickly and efficiently as possible to the most significant near term value-enhancing milestone event—the generation of Phase II efficacy data from a rigorously conducted clinical trial in Russia. We also intend simultaneously to pursue development of Dimebon in the U.S.

 

Development in Russia

 

We have received approval from the Russian Ministry of Health to conduct a Phase II efficacy study of Dimebon in Russia, subject to ethics committee approval of any amendments we may choose to make to our approved protocol for this study. This randomized, double-blind, placebo-controlled study will enroll up to 160 patients with mild-to-moderate Alzheimer’s disease at approximately ten to fifteen sites. We intend to perform this study in compliance with good clinical practices, using Dimebon produced under current good manufacturing practices. We expect the treatment period (six months) and study endpoints to reflect those used in pivotal registration studies for drugs previously approved by the FDA to treat Alzheimer’s disease, in order to maximize the persuasive value of the data generated. We have been advised by our regulatory consultants that this study, if conducted in compliance with good clinical practices using drug produced under current good manufacturing practices, will be submissible to regulatory agencies in the U.S. and Europe. We expect to begin this study in the second or third quarter of 2005 and to complete it by June 2006. However, we caution you that this is a forward-looking statement and subject to significant risk and uncertainty. See “Forward-Looking Statements.”

 

Development in the United States

 

Simultaneously with the Russian Phase II study, we intend to embark upon a traditional FDA registration pathway for Dimebon in the U.S. Because Dimebon has not previously been approved for use in the U.S., this pathway will entail generating data from animal testing required to support an investigational new drug application to FDA, and obtaining FDA approval of the investigational new drug application, before we can begin human testing in the U.S.

 

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Potential Future Indications for Dimebon

 

Anti-Aging Indications

 

In an experiment performed at the Institute of Physiologically Active Compounds in Russia, Dimebon was shown to reduce certain aging-associated conditions, and to increase survival, in normally aging mice. In this study, 100 normally aging mice, which have a typical lifespan of approximately two years, were given either Dimebon (dissolved in their daily drinking water, 50 mice) or a placebo (drinking water control, 50 mice) for 13 months. At the end of the study, Dimebon was found to reduce several common signs of aging—cataracts (82% reduction), balding (42% reduction) and cachexia (age-associated weight loss). Most significantly, Dimebon was shown to prolong survival in this experiment. At the end of the study, 83% more mice were alive in the Dimebon group than in the control group. The survival data from this study are depicted in the chart below. The results of this study suggest that the prevention and/or treatment of cataracts, balding and cachexia may all be potential future indications for Dimebon. We own a pending patent application based on the results of this study. See “Business—Intellectual Property.”

 

LOGO

 

Prolonging Survival in Pets

 

We believe that the 83% survival advantage observed in the Institute of Physiologically Active Compounds mouse study is noteworthy. While developing a drug to prolong survival in humans would require extremely long and costly clinical studies, development of Dimebon as a treatment to prolong survival in pets would require significantly less time and cost and may represent a significant market opportunity for us. We intend to explore the feasibility of this potential opportunity, including by entering into exploratory discussions with potential collaborators in the pet food industry.

 

The NT0904 Program

 

We own a pending patent application covering a group of potential small molecule drugs in a class of compounds known as alkylisothioureas. Scientists at the Institute of Physiologically Active Compounds in Russia have performed laboratory and animal tests on various members of this compound family. The specific molecule that generated the most interesting results in those experiments is known as NT0904.

 

Experiments performed at the Institute of Physiologically Active Compounds in Russia have shown that NT0904 appears to inhibit the NMDA receptor with an affinity comparable to that of Namenda®, the NMDA

 

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receptor inhibitor approved by the FDA in October 2003 to treat moderate to severe Alzheimer’s disease. In addition, in these experiments NT0904 also appeared to enhance or potentiate the activity of a second drug target known as the AMPA receptor. Drugs that enhance the activity of the AMPA receptor are sometimes referred to in the published literature as “ampakines.” Reports in the published literature have hypothesized that ampakines may enhance memory in general, and in particular that they may help reduce the loss of memory experienced by Alzheimer’s disease patients.

 

Scientists at the Institute of Physiologically Active Compounds in Russia studied the effects of NT0904 in the Morris Rat Water Maze Test—the same animal model of Alzheimer’s disease in which they tested Dimebon as described above. In these experiments, rats were divided into five groups. Animals in group (a) were the controls, and did not receive either neurotoxin or any drug. Animals in group (b) received injections of the neurotoxin AF64A directly into their brains, but did not receive any drug. Animals in groups (c), (d) and (e) received both neurotoxin and a drug—with animals in group (c) receiving Aricept®, those in group (d) receiving Namenda® and those in group (e) receiving NT0904. The results of these experiments, depicted below, show that rats receiving Aricept®, Namenda® and NT0904 (groups (c), (d) and (e)) showed improvement in their ability to learn and remember the platform’s location, as indicated by the more direct (less random) swimming pattern to the submerged platform, as compared to neurotoxin-treated rats that did not receive any drug (group (b)).

 

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LOGO

 

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The AMPA receptor is not a validated target for memory enhancement, Alzheimer’s disease or any other condition. However, we believe that the laboratory and animal data summarized above are interesting, and we therefore intend to conduct further research on NT0904 to determine whether or not to begin preclinical development of that molecule to treat Alzheimer’s disease, to enhance memory or for some other neurological indication.

 

Intellectual Property

 

As of January 28, 2005, we owned issued patents in the U.S., Europe and Hong Kong covering the use of Dimebon and certain related compounds to treat neurodegenerative diseases, including Alzheimer’s disease. A corresponding patent application is pending in Canada, and a continuation application is pending in the U.S. We also own a pending patent application claiming the use of Dimebon for anti-aging purposes, and a pending patent application claiming NT0904 and related compounds and their use. We own all of this intellectual property and have full control over prosecution and enforcement against potential infringers. We intend to prosecute this intellectual property in the U.S., Europe and other jurisdictions that we deem appropriate.

 

Neurodegenerative Diseases

 

Medivation owns patent rights covering the use of Dimebon and related compounds to treat neurodegenerative diseases, including Alzheimer’s disease. These rights include one issued patent in each of the U.S., Europe and Hong Kong, and a pending patent application in each of the U.S. and Canada. The U.S. patent (U.S. 6,187,785) was issued on February 13, 2001, and the European patent (EP 0 876 818 B1) was issued on December 18, 2002. The U.S. and European patents expire in October 2016. However, if we succeed in receiving regulatory approval to sell Dimebon, then under current laws our patent protection for Dimebon for the first approved indication may be eligible for extension for up to five additional years. A continuation application is pending in the U.S. We purchased these patent rights from Selena Pharmaceuticals, Inc. on October 10, 2003.

 

Anti-Aging

 

Medivation owns a patent application claiming the use of Dimebon and certain related compounds as anti-aging agents. This patent application, which was filed in Russia in December 2003 and internationally under the Patent Cooperation Treaty in December 2004, is based on the results of the 13-month mouse study described elsewhere in this prospectus. If any patents issue on this application, they generally will have a term ending in December 2024. We purchased this patent application on March 21, 2004, from its inventors, both of whom are scientists at the Institute of Physiologically Active Compounds in Chernogolovka, Russia.

 

NT0904 Compounds

 

Medivation also owns a pending patent application claiming this class of small molecules and their uses to treat certain neurological diseases. This patent application was filed in Russia in December 2002 and internationally under the Patent Cooperation Treaty in December 2003. If any patents issue on this application, they generally will have a term ending in December 2023, subject to potential patent term extensions based on time required to obtain regulatory approval for products covered by the patent application. We purchased this patent application from the Institute of Physiologically Active Compounds on July 13, 2004.

 

Institute of Physiologically Active Compounds Partnership

 

On March 24, 2004, we entered into a preferred partnership letter agreement with the Institute of Physiologically Active Compounds. Under this agreement, Medivation has the right of first negotiation on any inventions made in the laboratory of Dr. Sergey Bachurin at the Institute of Physiologically Active Compounds within the fields of (a) Dimebon and certain related compounds; (b) diagnosis, treatment and prevention of diseases and disorders of the brain; and (c) anti-aging. Dr. Bachurin is an inventor on all of our existing patents

 

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and patent applications. In return, Medivation granted the Institute of Physiologically Active Compounds rights of first negotiation to perform any animal experiments required by Medivation for which the Institute of Physiologically Active Compounds has the capability to perform in a timely manner and in compliance with all applicable regulatory requirements. The term of this agreement ends on March 24, 2007. We purchased the anti-aging and NT0904 patent rights, described above, pursuant to the exercise of our rights of first negotiation under this agreement with the Institute of Physiologically Active Compounds.

 

Intellectual Property Protection

 

We require our employees and consultants to execute non-disclosure and proprietary rights agreements at the beginning of employment or consulting arrangements with us. These agreements acknowledge our exclusive ownership of all intellectual property, including, but not limited to patents, developed by the individual during the course of his or her work with us and require that all proprietary information disclosed to the individual remain confidential. We intend to enforce vigorously our intellectual property rights if infringement or misappropriation occurs.

 

Competition

 

The drug development market is intensely competitive in general, and the market for developing Alzheimer’s disease drugs is particularly competitive. There are four drugs currently marketed to treat Alzheimer’s disease, and these drugs all target at least one of the same mechanisms as does Dimebon. Companies marketing these FDA-approved Alzheimer’s disease therapeutics include some of the world’s largest and most experienced pharmaceutical companies, such as Pfizer Inc., Novartis AG and Johnson & Johnson.

 

In addition to the four currently marketed Alzheimer’s disease therapeutics, dozens of additional small molecule and recombinant protein candidates targeting many disparate mechanisms believed to play a role in the pathogenesis of Alzheimer’s disease are currently in development. General classes of agents currently in development by other companies for the treatment of Alzheimer’s disease, arranged by purported mechanism of action, include the following:

 

    Neuroprotection strategies

 

    Antioxidants

 

    Anti-inflammatories

 

    Hormonal agents

 

    Neurotrophic factors

 

    Anti-excitotoxicity agents

 

    AMPA receptor modulators

 

    Anti-apoptosis agents

 

    Amyloid protein ß lowering/disrupting strategies

 

    Neuroregenerative strategies

 

    Neural cell implants

 

    Downstream compensatory strategies

 

    Cholinesterase inhibitors

 

    Cholinergic agonists

 

    GABA antagonists

 

    Nutriceuticals

 

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Most, if not all, of these competing drug development programs are being conducted by pharmaceutical and biotechnology companies with considerably greater financial resources, human resources and experience than Medivation.

 

If we are able to obtain regulatory approval to sell Dimebon or any other product to treat Alzheimer’s disease, we will face significant competition from the approved Alzheimer’s disease drugs, as well as from any of the drugs currently under development that may subsequently be approved, as mentioned above. Bases on which we would have to compete successfully include efficacy, safety, price and cost-effectiveness. In addition, we would have to compete against these other drugs with several different categories of decision makers—including physicians, patients, government and private third-party payors, technology assessment groups and patient advocacy organizations. Even if one of our Alzheimer’s disease drug candidates is approved, we cannot guarantee that we will be able to compete successfully on any of these bases. See “Risk Factors—Risks Related to our Business.”

 

Manufacturing

 

We have entered into an agreement with a U.S. contract laboratory to manufacture bulk Dimebon drug substance for use in our preclinical and clinical studies. The laboratory has manufactured 16 kilograms of Dimebon drug substance, under current good manufacturing practices conditions. We expect this to be sufficient drug substance to supply all of our requirements for our upcoming Phase II efficacy study in Russia and for our investigational new drug-enabling preclinical studies in the U.S. We also have entered into an agreement with a second U.S. contract laboratory to manufacture finished Dimebon tablets, under current good manufacturing practices conditions, for use in our upcoming Phase II clinical study in Russia. Work on this project began in January 2005. We selected both contract laboratories under a competitive bidding process in which we received bids from multiple vendors. We believe that sufficient raw materials and manufacturing capacity exist to produce all of our requirements for Dimebon bulk substance and finished Dimebon tablets for the foreseeable future, in a timely and cost-effective manner.

 

Scientific and Clinical Advisory Board

 

We maintain a Scientific and Clinical Advisory Board comprised of scientists and physicians with experience relevant to our company and our product candidates. Members of the Scientific and Clinical Advisory Board have agreed to consult and advise us in their respective areas of expertise. We have placed special emphasis on identifying members of the Scientific and Clinical Advisory Board with expertise in the treatment of Alzheimer’s disease. As of January 28, 2005, the Scientific and Clinical Advisory Board consisted of the following members:

 

Paul Aisen, M.D. Dr. Aisen is a Professor of Neurology and Medicine, Vice Chair of the Department of Neurology and the Director of the Memory Disorders Program at Georgetown University School of Medicine. Dr. Aisen was one of the first Alzheimer’s disease clinical trialists in the U.S., and was an investigator in the pivotal FDA registration studies for Namenda®. Dr. Aisen also serves as the Associate Director of the Alzheimer’s Disease Comparative Study Group.

 

Sergey Bachurin, Ph.D., D.Sc., Prof. Dr. Bachurin is the lead inventor of our current technologies. Dr. Bachurin is the Vice Director of the Institute of Physiologically Active Compounds in Chernogolovka, Russia, and a member of the Russian Academy of Sciences. Dr. Bachurin has served as a visiting scholar at several U.S. academic research centers, including the University of California, San Francisco, Tufts University and St. Elizabeth’s Medical Center.

 

Rachelle Doody, M.D., Ph.D. Dr. Doody is the Effie Marie Cain Professor and Director of Alzheimer’s Disease Research at the Alzheimer’s Disease and Memory Disorder Center at Baylor College of Medicine.

 

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Dr. Doody participated in the development of CIBIC-plus, one of the primary cognitive assessment endpoints that the FDA has used for the currently approved Alzheimer’s drugs. Dr. Doody has worked on clinical studies for all of the FDA-approved cholinesterase drugs for Alzheimer’s disease.

 

Benjamin Lewin, Ph.D. Dr. Lewin is the founding editor of Cell, a leading international journal in the field of biology and, until 1999, also served as the Chief Executive Officer of the publisher of Cell, Cell Press. Dr. Lewin holds a M.Sc. from the University of London, and a M.A. and a Ph.D. from the University of Cambridge. Dr. Lewin also has authored multiple books and scientific publications in the field of genetics.

 

Employees

 

Consistent with our strategy of outsourcing key development functions, as of January 31, 2005, we had three employees, all of whom are full-time. In addition to our employees, we hire consultants from time to time to provide the majority of our development functions.

 

Facilities

 

We currently lease approximately 3,000 square feet of office space in one building located at 501 Second Street, Suite 211, San Francisco, California 94107 for all of our operations. The telephone number at our office is (415) 543-3470. Our lease expires in October 2005. We believe that this facility is adequate for our business needs, both currently and for the foreseeable future.

 

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MANAGEMENT

 

The following table sets forth certain information as of January 28, 2005, with respect to:

 

    our Chief Executive Officer, or any person acting in a similar capacity, during the fiscal year ended December 31, 2004;

 

    our most highly compensated executive officer, other than the foregoing Chief Executive Officer, who served as an executive officer of the company as of December 31, 2004 (who we sometimes refer to in this prospectus, together with the foregoing chief executive officer as of December 31, 2004, as the “named executive officers”); and

 

    our directors during our fiscal year ended December 31, 2004.

 

Name


  Age

 

Title


David T. Hung, M.D.

  47   President, Chief Executive Officer, Director

C. Patrick Machado

  40   Senior Vice President, Chief Financial Officer

Christopher A. Marlett

  40   Director, Former Chief Executive Officer

Anthony DiGiandomenico

  38   Director

 

There are no family relationships between any of the persons named above. Our directors hold office until their successors are elected and qualified.

 

David T. Hung, M.D. Dr. Hung became our President and Chief Executive Officer, and a member of our board of directors, pursuant to the merger on December 17, 2004. Dr. Hung also has served as the President and Chief Executive Officer, and member of the board of directors, of our wholly owned subsidiary Medivation since its inception in September 2003. From 1998 until 2001, Dr. Hung was employed by ProDuct Health, Inc., a privately held medical device company, as Chief Scientific Officer (1998-1999) and as President and Chief Executive Officer (1999-2001). In 2001, ProDuct Health, Inc. was acquired by Cytyc Corporation. Dr. Hung served as a consultant to Cytyc Corporation from 2001 until 2002 to assist with transitional matters related to Cytyc Corporation’s acquisition of ProDuct Health, Inc. Dr. Hung received an M.D. from the University of California, San Francisco, School of Medicine, and an A.B. in Biology from Harvard College.

 

Christopher A. Marlett. Mr. Marlett has served on our board of directors since 1999. Prior to the merger on December 17, 2004, Mr. Marlett also served as our President and Chief Executive Officer. Mr. Marlett is a co-founder of MDB Capital Group LLC, an investment banking firm formed in December 1996, and has served as a principal of MDB Capital Group LLC since that time. Mr. Marlett received a B.S. in Business Administration from the University of Southern California.

 

Anthony DiGiandomenico. Mr. DiGiandomenico has served on our board of directors since 1999. Prior to the merger on December 17, 2004, Mr. DiGiandomenico also served as our Chief Financial Officer. Mr. DiGiandomenico is a co-founder of MDB Capital Group LLC, and has served as a member of MDB Capital Group LLC since December 1996. Mr. DiGiandomenico received a B.S. in Finance from the University of Colorado, and an M.B.A. from the Haas School of Business at the University of California, Berkeley.

 

C. Patrick Machado. Mr. Machado became our Senior Vice President and Chief Financial Officer pursuant to the merger on December 17, 2004. Mr. Machado also has served as the Senior Vice President and Chief Financial Officer, and member of the board of directors, of our wholly owned subsidiary Medivation since its inception in September 2003. From 1998 until 2001, Mr. Machado was employed by ProDuct Health, Inc. as Vice President, Chief Financial Officer and General Counsel (1998-2000) and as Senior Vice President and Chief Financial Officer (2000-2001). From 2001 until 2002, Mr. Machado served as a consultant to Cytyc Corporation to assist with transitional matters related to Cytyc Corporation’s acquisition of ProDuct Health, Inc. Mr. Machado received a J.D. from Harvard Law School and a B.A. and B.S. in German and Economics, respectively, from Santa Clara University.

 

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Summary Compensation Table

 

The following table sets forth certain summary compensation for the periods indicated with respect to:

 

    our named executive officers as of December 31, 2004; and

 

    our former Chief Executive Officer during a portion of our fiscal year ended December 31, 2004.

 

 

Name


 

Year


  Annual Compensation

  Long Term Compensation

      Awards

  Payouts

    Salary

  Bonus

  Other Annual
Compensation


  Restricted
Stock
Awards


  Securities
Underlying
Options


  LTIP
Payouts


  All Other
Payouts


David T. Hung, M.D.

President, Chief Executive Officer, Director

  2004
2003
2002
  248,625
49,583

 

 

 

 

 

 

C. Patrick Machado

Senior Vice President,

Chief Financial Officer

  2004
2003
2002
  190,125
37,917

 

 

 

 

 

 

Christopher A. Marlett††

Director

  2004
2003
2002
 

 

 

 

 

 

 


Data with respect to Messrs. Hung and Machado for the fiscal year ended December 31, 2003, reflect payments to them by Medivation in their respective capacities as employees of Medivation during such period. In addition, no data for the fiscal year ended December 31, 2002, has been presented with respect to Messrs. Hung and Machado as Medivation was incorporated in September 2003.
†† For the fiscal years ended December 31, 2002, 2003, and 2004, the company did not compensate its officers or directors. Mr. Marlett served as the Chief Executive Officer of the company until December 17, 2004.

 

Board of Directors

 

As of January 28, 2005, our board of directors consisted of three members, Dr. Hung, our President and Chief Executive Officer, and Messrs. Marlett and DiGiandomenico, our former President and Chief Executive Officer and former Chief Financial Officer, respectively. Messrs. Marlett and DiGiandomenico are principals of MDB Capital Group LLC.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

MDB Capital Group LLC Services

 

MDB Capital Group LLC served as a placement agent in the financing. As compensation for these services, MDB Capital Group LLC and certain of its affiliates received an aggregate of 572,878 shares of common stock and warrants to purchase an aggregate of 572,878 shares of common stock having an exercise price of $1.55 per share. The compensation of MDB Capital Group LLC was negotiated on an arm’s length basis between MDB Capital Group LLC and Medivation. Messrs. Marlett and DiGiandomenico, current members of our board of directors and who, prior to December 17, 2004, had served as our President and Chief Executive Officer and Chief Financial Officer, respectively, are principals of MDB Capital Group LLC. Messrs. Marlett and DiGiandomenico, as of January 28, 2005, each beneficially owned less than one percent of our outstanding common stock in their individual capacities. In addition, as of January 28, 2005, MDB Capital Group LLC beneficially owned approximately 4.9% of the fully-diluted common stock.

 

Brock Capital Group LLC Services

 

Brock Capital Group LLC served as a placement agent in the financing. As compensation for these services, Brock Capital Group LLC and certain of its affiliates received an aggregate of 52,821 shares of our common stock. Brock Capital Group LLC, as of January 28, 2005, beneficially owned less than one percent of the fully-diluted common stock.

 

Registration Rights Agreements

 

In connection with the financing, Orion entered into registration rights agreements providing for the registration for resale of the shares sold pursuant to the financing, as well as certain other shares of common stock of Orion. The registration rights agreements require us to register for resale an aggregate of 14,327,607 shares of common stock. Pursuant to the registration rights agreements, we agreed to file a registration statement with respect to these shares no later than January 31, 2005, and to have such registration statement declared effective no later than March 31, 2005. If we fail to file, or to have declared effective, such registration statement by such respective deadlines, we agreed to pay certain liquidated amounts to the parties to such registration rights agreements who purchased shares in the financing.

 

Voting Agreements

 

In connection with the transactions, each of the persons holding shares of common stock of Medivation immediately prior to the effective time of the merger and each person who purchased shares in the financing, entered into voting agreements which provide for the agreement by such persons to vote any shares of common stock or other voting securities of the company owned by such persons in favor of: (a) an amendment to the amended and restated certificate of incorporation of the company resulting in an increase in the number of shares of authorized common stock, from 10,000,000 shares of authorized common stock to at least 25,000,000 shares of authorized common stock; (b) the election to the board of directors of the company the following individuals: (i) Mr. Steve Gorlin; (ii) David T. Hung, M.D.; (iii) one nominee acting as the representative of the individuals who held shares of common stock of Medivation immediately prior to the effective time of the merger; and (iv) two nominees acting as representatives of MDB Capital Group LLC; and (c) a change of the name of the company.

 

Acquisition of Selena Pharmaceuticals, Inc. Patent Rights

 

On October 10, 2003, Medivation purchased from Selena Pharmaceuticals, Inc. certain patent rights, including issued patents in the U.S. and Europe, covering the use of Dimebon and related compounds to treat Alzheimer’s disease and other neurodegenerative diseases. The purchase price for such rights consisted of $25,000 in cash and 900,000 shares of common stock of Medivation, which were converted into 110,642 shares of our Series B Preferred Stock in connection with the merger. As of January 28, 2005, Selena Pharmaceuticals, Inc. beneficially owned approximately 12.3% of the fully-diluted common stock. The purchase agreement with respect to the acquisition of such rights, among other things, requires us to make certain milestone payments to the inventors of the patent rights upon the occurrence of stated events, and to pay the inventors royalties on the sale of products covered by such purchased rights.

 

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Transactions with Dr. Hung

 

On November 16, 2004, Dr. Hung, our current President and Chief Executive Officer and a member of our board of directors, entered into an agreement with Medivation pursuant to which Dr. Hung guaranteed, in an amount not to exceed $78,000, the performance of Medivation of its contractual obligation to pay certain professional fees incurred by Medivation in connection with the transactions. In return for such guarantee, Medivation issued warrants to Dr. Hung exercisable for shares of Medivation equity securities. In connection with the merger, the warrants exercisable for shares of Medivation equity securities issued to Dr. Hung in connection with such guarantee were assumed by us and converted into warrants exercisable for an aggregate of 10,065 shares of our common stock at an exercise price of $1.55 per share. As of January 28, 2005, Dr. Hung beneficially owned approximately 9.6% of the fully-diluted common stock.

 

Transactions with Mr. Grano

 

Convertible Bridge Notes and Warrants

 

On June 8, August 1, and September 1, 2004, Medivation issued and sold to Joseph J. Grano, Jr. convertible bridge notes of Medivation, together with warrants exercisable for equity securities of Medivation. The aggregate principal amount of all such convertible bridge notes was $600,000, and each accrued interest at the rate of 4.5% per annum. As of December 17, 2004, the aggregate principal balance, plus accrued interest, remaining outstanding on the convertible bridge notes was $610,775, and was assumed by the company and converted into shares of common stock of the company at a conversion price of $1.55 per share in the financing. In connection with the merger, the warrants exercisable for equity securities of Medivation, issued in connection with the convertible bridge notes, were also assumed by the company and converted into warrants exercisable for an aggregate of 77,419 shares of our common stock at an exercise price of $1.55 per share.

 

Consulting Agreement

 

In addition, pursuant to a Consulting Agreement between Medivation and Mr. Grano entered in July 2004, Medivation issued to Mr. Grano options to purchase shares of Medivation common stock in July and December 2004. In connection with the merger, these options were assumed by the company and converted into options to purchase shares of our common stock.

 

As of January 28, 2005, Mr. Grano beneficially owned an aggregate of 1,279,033 shares of our common stock, or approximately 4.1% of the fully-diluted common stock.

 

Transactions with Dara BioSciences, Inc.

 

On October 10, 2003, and April 1, 2004, Medivation issued to Dara BioSciences, Inc. convertible bridge notes of Medivation, together with warrants exercisable for equity securities of Medivation. The aggregate principal amount of all such convertible bridge notes was $1,250,000, and each accrued interest at the rate of 4.5% per annum. In connection with the financing, (a) an aggregate principal balance of $688,955 remaining outstanding on the convertible bridge notes was assumed by the company and converted into shares of common stock of the company at a conversion price of $1.55 per share; and (b) an aggregate principal balance of $622,720 in principal plus accrued interest remaining outstanding on the convertible bridge notes was repaid by us. In connection with the merger, the equity securities of Medivation issued in connection with the convertible bridge notes were also assumed by the company and converted into warrants exercisable for an aggregate of 161,290 shares of our common stock at an exercise price of $1.55 per share.

 

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DESCRIPTION OF TRANSACTIONS

 

The company is the product of the merger between Medivation and merger sub, a wholly owned subsidiary of Orion, which was completed as part of the transactions, including the merger and the financing. Prior to the merger, Orion had not engaged in any substantive commercial operations, and Medivation was a privately held life sciences company. Orion was incorporated in Delaware in October 1995 for the purpose of acquiring an operating business by purchase, merger, combination or otherwise. Medivation was incorporated in Delaware in September 2003. The following is a brief description of the merger and the financing, which we sometimes refer to collectively as “the transactions” in this prospectus.

 

Overview

 

On December 17, 2004, Orion entered into an agreement and plan of merger by and among Orion, merger sub and Medivation providing for the merger of merger sub with and into Medivation, and pursuant to which each outstanding share of common stock of Medivation was converted into 0.122935 shares of the Series B Preferred Stock of the company. In addition, in connection with the transactions, Orion entered into purchase agreements with respect to the private placement by Orion of an aggregate of 7,741,935 shares of common stock to certain accredited investors at a price of $1.55 per share.

 

Merger Agreement

 

Pursuant to the merger agreement, among other things, effective as of December 17, 2004, (a) David T. Hung, M.D. was elected to the board of directors of the company and was appointed as the President and Chief Executive Officer of the company; (b) C. Patrick Machado was appointed as the Senior Vice President and Chief Financial Officer of the company; (c) Christopher A. Marlett resigned from the positions of President and Chief Executive Officer of the company, and continues to serve on the board of directors of the company; and (d) Anthony DiGiandomenico resigned from the position of Chief Financial Officer of the company, and continues to serve on the board of directors of the company.

 

In addition, pursuant to the merger agreement, the company agreed that it shall prepare and file with the Commission as soon as practicable after December 17, 2004, a proxy statement with respect to an annual meeting of the holders of common stock for the purpose of obtaining the approval of the holders of the common stock of each of the following actions: (a) an amendment to the amended and restated certificate of incorporation of the company resulting in an increase in the number of shares of authorized common stock, from 10,000,000 shares of authorized common stock to at least 25,000,000 shares of authorized common stock; (b) the election to the board of directors of the company the following individuals: (i) Mr. Steve Gorlin; (ii) David T. Hung, M.D.; (iii) one (1) nominee acting as the representative of the individuals who held shares of common stock of Medivation immediately prior to the effective time of the merger; and (iv) two nominees acting as representatives of MDB Capital Group LLC; and (c) a change of the name of the company.

 

Series B Preferred Stock

 

On December 15, 2004, we amended and restated the certificate of designations, preferences, rights and limitations of the Series B Preferred Stock. The amendment to and restatement of the certificate of designations, among other things, (a) increased the number of shares of common stock that shall be issuable upon conversion of the shares of the Series B Preferred Stock from 10 shares of common stock for each share of Series B Preferred Stock to 20 shares of common stock for each share of Series B Preferred Stock; and (b) provided that, until all the shares of Series B Preferred Stock shall have been automatically converted into shares of common stock, (i) all actions submitted for approval by holders of shares of common stock shall in addition require the approval of the holders of a majority of the shares of Series B Preferred Stock (voting as a separate series); and (ii) all actions taken by the board of directors of the company shall require the approval of the director nominated by the holders of the shares of Series B Preferred Stock. Shares of the Series B Preferred Stock shall be automatically converted into shares of common stock upon receipt of stockholder approval to increase the authorized common stock to at least 25,000,000 shares.

 

Purchase Agreements

 

In connection with the financing, Orion entered into purchase agreements with respect to the private placement of an aggregate of 7,741,935 shares of common stock to certain accredited investors at a price of $1.55 per share.

 

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Registration Rights Agreements

 

In connection with the financing, Orion entered into registration rights agreements providing for the registration for resale of the shares sold pursuant to the financing, as well as certain other shares of common stock of Orion. The registration rights agreements require us to register for resale an aggregate of 14,327,607 shares of common stock. Pursuant to the registration rights agreements, we agreed to file a registration statement with respect to these shares no later than January 31, 2005, and to have such registration statement declared effective no later than March 31, 2005. If we fail to file, or to have declared effective, such registration statement by such respective deadlines, we agreed to pay certain liquidated amounts to the parties to such registration rights agreements who purchased shares in the financing.

 

Voting Agreements

 

In connection with the transactions, each of the persons holding shares of common stock of Medivation immediately prior to the effective time of the merger and each person who purchased shares in the financing, entered into voting agreements which provide for the agreement by such persons to vote any shares of common stock or other voting securities of the company owned by such persons in favor of: (a) an amendment to the amended and restated certificate of incorporation of the company resulting in an increase in the number of shares of authorized common stock, from 10,000,000 shares of authorized common stock to at least 25,000,000 shares of authorized common stock; (b) the election to the board of directors of the company the following individuals: (i) Mr. Steve Gorlin; (ii) David T. Hung, M.D.; (iii) one nominee acting as the representative of the individuals who held shares of common stock of Medivation immediately prior to the effective time of the merger; and (iv) two nominees acting as representatives of MDB Capital Group LLC; and (c) a change of the name of the company.

 

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DESCRIPTION OF CAPITAL STOCK

 

General Matters

 

Pursuant to our amended and restated certificate of incorporation, the total amount of our authorized capital stock is 11,000,000 shares, which consists of 10,000,000 shares of authorized common stock, par value $0.01 per share, and 1,000,000 shares of authorized preferred stock, par value $0.01 per share. With respect to the authorized preferred stock, 200 shares have been designated as Series A Preferred Stock and 450,000 shares have been designated as Series B Preferred Stock. As of January 28, 2005, we had outstanding 9,581,141 shares of common stock, and 110 shares and 331,925 shares of Series A Preferred Stock and Series B Preferred Stock, respectively.

 

According to the records of our transfer agent, American Stock Transfer & Trust Company, as of December 14, 2004, we had 15 holders of record of our common stock. As of January 28, 2005, we had one holder of record of our Series A Preferred Stock and four holders of record of our Series B Preferred Stock.

 

The following summary of our capital stock does not purport to be complete and is subject to and qualified in its entirety by, our amended and restated certificate of incorporation and our bylaws, each of which are included as exhibits to the registration statement of which this prospectus forms a part and by the provisions of applicable law.

 

Common Stock

 

The holders of shares of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. All shares of our common stock are entitled to share equally in any dividends our board of directors may declare from legally available sources.

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “MTMR”. The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.

 

Preferred Stock

 

The board of directors is authorized, subject to any limitations imposed by law, without stockholder approval, from time to time to issue up to a total of 1,000,000 shares of preferred stock, in one or more series, each series to have rights and preferences, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as the board of directors may determine.

 

As of January 28, 2005, the Series A Preferred Stock and the Series B Preferred Stock were the only series of preferred stock designated by the company.

 

Series A Preferred Stock

 

Holders of Series A Preferred Stock are not entitled to vote their shares with respect to the election of directors or any other matter submitted to the stockholders, unless required by law or upon conversion of their shares of Series A Preferred Stock into shares of common stock. Each share of Series A Preferred Stock is convertible into 1,000 shares of common stock at the holder’s election for a period of one year commencing on December 17, 2004. Each share of Series A Preferred Stock is redeemable at the option of the holder thereof at any time at a price per share equal to the price per share originally paid to the company for such share. Upon our liquidation, dissolution or winding up, the holders of Series A Preferred Stock are entitled to receive their initial purchase price per share of Series A Preferred Stock prior and in preference to any distribution to the holders of shares of common stock. The Series A Preferred Stock is not entitled to any preemptive rights.

 

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Series B Preferred Stock

 

In the event of any liquidation, dissolution or winding up of the company, either voluntary or involuntary, subject to the rights of other series of preferred stock that are in existence or may, from time to time, come into existence, the assets of the company available for distribution to stockholders shall be distributed among the holders of shares of the Series B Preferred Stock and among the holders of shares of common stock on the basis of each share of Series B Preferred Stock receiving an amount of cash or other distributable property that is the conversion rate (as defined below) times the amount payable or distributable for each share of common stock.

 

The Series B Preferred Stock does not have any redemption rights. The Series B Preferred Stock will not be entitled to dividends unless the company pays cash dividends or dividends in other property to holders of outstanding shares of common stock, in which event, each outstanding share of the Series B Preferred Stock will be entitled to receive dividends of cash or property equivalent to that paid in respect of one share of common stock times the conversion rate.

 

In the event that the company increases the number of shares of authorized common stock to be equal to or in excess of 25,000,000 shares of common stock, then upon the filing and acceptance of any change in the amended and restated certificate of incorporation reflecting the increase in capital, whether by amendment or restatement, all the outstanding shares of Series B Preferred Stock will immediately and automatically convert into shares of common stock without any notice required on the part of the company or the holder. In such event, holders of Series B Preferred Stock will be entitled to receive shares of common stock at the conversion rate of twenty shares of fully paid and non-assessable common stock for one share of Series B Preferred Stock.

 

The holders of record of shares of Series B Preferred Stock shall be entitled to vote together with the holders of the shares of common stock upon all matters submitted to such holders for a vote, the vote of each share of Series B Preferred Stock to be equal to the then conversion rate. So long as any shares of Series B Preferred Stock are outstanding, the holders of shares of Series B Preferred Stock voting as a separate class shall have the right to elect one member of the board of directors of the company, which director shall be subject to removal only upon the vote of the holders of a majority of the Series B Preferred Stock.

 

In addition, so long as any shares of Series B Preferred Stock are outstanding, the company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least sixty percent of the then outstanding shares of Series B Preferred Stock, voting as a separate class (a) create (by reclassification or otherwise) any new class or series of shares having rights, preferences or privileges equal or senior to the Series B Preferred Stock; (b) alter or change the rights, preferences or privileges of the Series B Preferred Stock; (c) amend the amended and restated certificate of incorporation in a manner that materially adversely affects the rights, preferences or privileges of the holders of the Series B Preferred Stock; (d) increase or decrease the authorized number of shares of Preferred Stock of the company; (e) liquidate or wind-up the company; (f) redeem, purchase or otherwise acquire (or pay into or set funds aside for a sinking fund for such purpose) any share or shares of preferred stock or common stock; or (g) take any other action which is required to be taken only with the consent or approval of the holders of the company’s capital stock, whether pursuant to the amended and restated certificate of incorporation or the provisions of the Delaware General Corporation Law. In addition, so long as any shares of Series B Preferred Stock are outstanding, the company shall not take any action which is required to be taken only with the consent or approval of a majority of the board of directors without the consent or approval of the director nominated by the holders of the shares of Series B Preferred Stock.

 

Registration Rights Agreements

 

In connection with the financing, Orion entered into registration rights agreements providing for the registration for resale of the shares sold pursuant to the financing, as well as certain other shares of common stock of Orion. The registration rights agreements require us to register for resale an aggregate of 14,327,607 shares of common stock. Pursuant to the registration rights agreements, we agreed to file a registration statement

 

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with respect to these shares no later than January 31, 2005, and to have such registration statement declared effective no later than March 31, 2005. If we fail to file, or to have declared effective, such registration statement by such respective deadlines, we agreed to pay certain liquidated amounts to the parties to such registration rights agreements who purchased shares in the financing.

 

Warrants

 

As of January 28, 2005, the aggregate number of shares of common stock issuable upon exercise of outstanding warrants was 1,049,991. If all outstanding warrants are exercised in connection with this offering for cash, the estimated net aggregate proceeds to us from the sale of the shares of common stock issuable upon exercise of such warrants will be approximately $1,306,136.

 

Prior to Transactions. As of December 16, 2004, the date immediately prior to effective date of the merger, Orion had outstanding Class B Warrants to purchase 225,500 shares of common stock. On the effective date of the merger, all outstanding Class B Warrants became exercisable during the period beginning on December 17, 2004, and ending on December 17, 2005 for an aggregate of 225,500 shares of common stock at an exercise price of $0.125 per share.

 

Subsequent to Transactions. Pursuant to the merger, previously issued Medivation warrants were assumed by us and became exercisable to purchase an aggregate of 251,613 shares of our common stock at an exercise price of $1.55 per share. In addition, as compensation for the services of MDB Capital Group LLC as placement agent in connection with the financing, MDB Capital Group LLC and certain affiliates received a warrant exercisable for an aggregate of 572,878 shares of common at an exercise price of $1.55 per share. The expiration dates of the warrants previously issued by Medivation and held by Dr. Hung and Mr. Machado are November 16, 2014. The expiration dates of the warrants previously issued by Medivation and held by Dara BioSciences, Inc. are October 10, 2013, and April 1, 2014. The expiration dates of the warrants previously issued by Medivation and held by Mr. Grano are each the earlier to occur of (a) a change of control of the company; and (b) the tenth anniversary of the issuance date of the applicable warrant, or June 8, 2014, September 1, 2014, and August 1, 2014, respectively. The expiration date of the warrant held by MDB Capital Group LLC is December 17, 2009.

 

Delaware General Corporation Law

 

Provisions of the Delaware General Corporation Law could discourage potential acquisition proposals and could delay, deter or prevent a change in control. The anti-takeover provisions of the Delaware General Corporation Law impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. In addition, Section 203 of the Delaware General Corporation Law, unless its application has been waived, provides certain default anti-takeover protections in connection with transactions between the company and an “interested stockholder” of the company. Although we have not waived application of Section 203 of the Delaware General Corporation Law, because our common stock is not listed on any national securities exchange or authorized for quotation on the NASDAQ Stock Market, we are not afforded the anti-takeover protections of Section 203 of the Delaware General Corporation Law. Additionally, provisions of our amended and restated certificate of incorporation and bylaws could deter, delay or prevent a third party from acquiring us, even if doing so would benefit our stockholders, including without limitation, the authority of the board of directors to issue, without stockholder approval, preferred stock with such terms as the board of directors may determine.

 

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PRINCIPAL AND SELLING STOCKHOLDERS

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of January 28, 2005, for:

 

    each of our directors;

 

    each of our named executive officers;

 

    all of our directors and named executive officers as a group;

 

    each person who we know beneficially owns more than 5% of our common stock; and

 

    each selling stockholder.

 

Beneficial ownership data in the table below has been calculated based on Commission rules requiring that all equity securities exercisable for or convertible into shares of our common stock within 60 days of January 28, 2005, shall be deemed to be outstanding for the purpose of computing the percentage of ownership of any person holding such exercisable or convertible equity securities, but shall not be deemed to be outstanding for computing the percentage of ownership of any other person.

 

Except as indicated by footnote, and subject to applicable community property laws, each person identified in the table possesses sole voting and investment power with respect to all capital stock shown to be held by that person. The address of each named executive officer and director, unless indicated otherwise by footnote, is c/o Orion Acquisition Corp. II, 501 Second Street, Suite 211, San Francisco, California 94107.

 

     Shares Beneficially
Owned Prior to
Offering


    Shares
Being
Offered


   Shares
Beneficially
Owned after
Offering


     Number

   Percent

       Number

   Percent

Named Executive Officers and Directors:

                         

Hung, M.D., David T.(1)

   1,731,165    15.30 %   1,731,165       *

Marlett, Christopher A.(3)

   981,613    9.67 %   981,613       *

Machado, C. Patrick(2)

   494,579    4.91 %   494,579       *

DiGiandomenico, Anthony(4)

   49,303    *     49,303       *

All named executive officers and directors as a group (four persons)(1-4)

   3,256,660    30.39 %   3,256,660       *

5% Stockholders:

                         

Affiliates of Marxe, Austin and Greenhouse, David(5)

   2,580,645    26.93 %   2,580,645       *

Dara BioSciences, Inc.(6)

   2,818,617    23.58 %   2,818,617       *

Selena Pharmaceuticals, Inc.(7)

   2,212,840    18.76 %   2,212,840       *

Grano, Jr., Joseph J.(8)

   1,279,033    12.53 %   1,279,033       *

MDB Capital Group LLC(9)

   889,523    8.76 %   889,523       *

 

41


Table of Contents
     Shares Beneficially
Owned Prior to
Offering


    Shares
Being
Offered


   Shares Beneficially
Owned after
Offering


     Number

   Percent

       Number

   Percent

Affiliates of ProMed Partners(10)

      838,710      8.75 %      838,710       *

Affiliates of Walker Smith Capital(11)

   774,194    8.08 %   774,194       *

TTC Private Equity Partners LLC

   504,780    5.27 %   504,780       *

Other Selling Stockholders:

                         

Affiliates of Bailey, Gregory(12)

   636,516    6.46 %   636,516       *

Friese, Robert Charles

   161,290    1.68 %   161,290       *

Cimarron Overseas Equity Master Fund L.P.

   129,032    1.35 %   129,032       *

Lewin Investments LLC

   129,032    1.35 %   129,032       *

Silicon Prairie Partners, L.P.

   129,032    1.35 %   129,032       *

Trust Under Will of A. Wilfred May dated November 11, 1969

   129,032    1.35 %   129,032       *

Affiliates of SRB Greenway Capital(13)

   96,774    1.01 %   96,774       *

Weiss, Melvyn

   96,774    1.01 %   96,774       *

Bushido Capital Master Fund, L.P.

   80,645    *     80,645       *

Gamma Opportunity Capital Partners, L.P.

   80,645    *     80,645       *

Thye, Dick

   67,056    *     67,056       *

Shartsis, Arthur

   65,000    *     65,000       *

Braniff, John

   64,516    *     64,516       *

Edgewater Ventures

   64,516    *     64,516       *

Micek, III, John

   64,516    *     64,516       *

Negley, Edward

   64,516    *     64,516       *

Tierney, James P.

   40,000    *     40,000       *

Clarkson, R. L.

   35,000    *     35,000       *

Clarkson, Richard D.

   35,000    *     35,000       *

Clarkson, Richard L., for the benefit of Lucille S. Ball U/A dated September 12, 1991

   35,000    *     35,000       *

Barletta, Joseph F.

   32,258    *     32,258       *

Joel T. Leonard Trust dated October 25, 1994

   32,258    *     32,258       *

Kwong, Shon and Micek, Laura

   32,258    *     32,258       *

McCollor, D. Clay and Elissa

   32,258    *     32,258       *

Micek, Maurice

   32,258    *     32,258       *

O’Kuhn, Steven

   32,258    *     32,258       *

Zenker,, Jr., David O.(14)

   29,052    *     29,052       *

Simi, Karen(12)

   25,806    *     25,806       *

Zelinger, Steven L.

   16,200    *     16,200       *

Micek, John, custodian for Gabriel Micek(15)

   16,129    *     16,129       *

Micek, John, custodian for Jordan Micek(15)

   16,129    *     16,129       *

Micek, John, custodian for Peter Micek (15)

   16,129    *     16,129       *

Micek, Maurice, custodian for Andrew Micek (15)

   16,129    *     16,129       *

Micek, Maurice, custodian for Benjamin Micek(15)

   16,129    *     16,129       *

Brock Capital Group LLC(16)

   15,846    *     15,846       *

Vanzura, Cedric

   15,000    *     15,000       *

Micek, Greg J., guardian for Gregory J. Micek, Jr.(15)

   12,903    *     12,903       *

Marlett, Raymond

   10,000    *     10,000       *

Guinta, Robert(14)

   7,923    *     7,923       *

MacIntyre, Christopher(12)

   7,742    *     7,742       *

John A. Raiser Irrevocable Trust dated April 2, 1988

   6,452    *     6,452       *

 

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Table of Contents
     Shares Beneficially
Owned Prior to
Offering


   Shares
Being
Offered


   Shares
Beneficially
Owned after
Offering


     Number

   Percent

      Number

   Percent

Micek, Greg J., guardian for Alexandria L. Micek(15)

          6,452    *           6,452       *

Fitterer, Edmund Roy and Brenda L.

   5,000    *    5,000       *

Fusco, Joseph

   4,500    *    4,500       *

Perry, Josephine

   4,000    *    4,000       *

Eva Car Enterprises Ltd.

   3,750    *    3,750       *

Stroud, Jeff and Jean

   3,226    *    3,226       *

Lehman, Robert

   2,500    *    2,500       *

Dad, Julie(12)

   2,000    *    2,000       *

Fusco, Robert

   2,000    *    2,000       *

Renner, Kimberly(12)

   1,342    *    1,342       *

Bright Capital Ltd.

   1,000    *    1,000       *

Rosicki, Thomas

   1,000    *    1,000       *

Wernick, Jan, custodian for Jeremy Wernick(15)

   50    *    50       *

Wernick, Jan, custodian for Jordana Wernick(15)

   50    *    50       *

Clacha, Sarah, custodian for Orion Clachar(15)

   10    *    10       *

* Represents beneficial ownership of less than 1%.
  (1) Consists of 10,065 shares of common stock issuable upon exercise of warrants exercisable within 60 days; 1,635,040 shares of common stock issuable upon conversion of shares of Series B Preferred Stock convertible within 60 days; and 86,060 shares of common stock issuable upon conversion of shares of Series B Preferred Stock convertible within 60 days held indirectly in trust.
  (2) Consists of 2,839 shares of common stock issuable upon exercise of warrants exercisable within 60 days; and 491,740 shares of common stock issuable upon conversion of shares of Series B Preferred Stock convertible within 60 days.
  (3) Consists of 92,090 shares of common stock; 572,878 shares of common stock issuable upon exercise of options held by MDB Capital Group LLC; and 316,645 shares of common stock held by MDB Capital Group LLC. Mr. Marlett is the principal and majority owner of MDB Capital Group LLC. The address for Mr. Marlett is c/o MDB Capital Group LLC, 401 Wilshire Boulevard, Suite 1020, Santa Monica, California 90401.
  (4) Consists of 2,090 shares of common stock; and 90,000 shares of common stock held indirectly in trust. The address for Mr. DiGiandomenico is c/o MDB Capital Group LLC, 401 Wilshire Boulevard, Suite 1020, Santa Monica, California 90401.
  (5) Consists of 1,290,322 shares of common stock held by Special Situations Private Equity Fund, L.P.; 967,742 shares of common stock held by Special Situations Fund III, L.P.; and 322,581 shares of common stock held by Special Situations Cayman Fund, L.P. MGP Advisors Limited is the general partner of Special Situations Fund III, L.P. AWM Investment Company, Inc. is the general partner of MGP Advisors Limited and the general partner of and investment adviser to the Special Situations Cayman Fund, L.P. MG Advisers, L.L.C. is the general partner of and investment adviser to the Special Situations Private Equity Fund, L.P. Austin W. Marxe and David M. Greenhouse are the principal owners of MGP Advisors Limited, AWM Investment Company, Inc. and MG Advisers, L.L.C. and are principally responsible for the selection, acquisition and disposition of the portfolio securities by each investment adviser on behalf of its fund. MGP Advisors Limited is the general partner of Special Situations Fund III, L.P. AWM Investment Company, Inc. is the general partner of MGP Advisors Limited and the general partner of and investment adviser to the Special Situations Cayman Fund, L.P. MG is the general partner of and investment adviser to the Special Situations Private Equity Fund, L.P. Mr. Marxe and Mr. Greenhouse are the principal owners of MGP Advisors Limited, AWM Investment Company, Inc. and MG Advisers, L.L.C. and are principally responsible for the selection, acquisition and disposition of the portfolio securities by each investment adviser on behalf of its fund.

 

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Table of Contents
  (6) Consists of 444,487 shares of common stock; 161,290 shares of common stock issuable upon exercise of warrants exercisable within 60 days; and 2,212,840 shares of common stock issuable upon conversion of shares of Series B Preferred Stock convertible within 60 days.
  (7) Consists of 2,212,840 shares of common stock issuable upon conversion of shares of Series B Preferred Stock convertible within 60 days.
  (8) Consists of 652,114 shares of common stock; and 77,419 shares of common stock issuable upon exercise of warrants exercisable within 60 days; and 549,500 shares of common stock issuable upon exercise of options exercisable within 60 days. Mr. Grano is a consultant to the company.
  (9) Consists of 316,645 shares of common stock; and 572,878 shares of common stock issuable upon exercise of warrants exercisable within 60 days. MDB Capital Group LLC served as placement agent to the company in connection with the financing.
(10) Consists of 345,850 shares of common stock held by ProMed Offshore Fund II, Ltd.; 56,460 shares of common stock held by ProMed Offshore Fund, Ltd.; 85,370 shares of common stock held by ProMed Partners II, L.P.; and 351,030 shares of common stock held by ProMed Partners, L.P.
(11) Consists of 257,420 shares of common stock held by Walker Smith Capital (QP), L.P.; 54,258 shares of common stock held by Walker Smith Capital, L.P.; 44,322 shares of common stock held by WS Opportunity Fund (QP), L.P.; 333,484 shares of common stock held by Walker Smith International Fund, Ltd.; 48,710 shares of common stock held by WS Opportunity Fund International, Ltd.; and 36,000 shares of common stock held by WS Opportunity Fund, L.P. Reid S. Walker and G. Stacy Smith are the general partners of WS Capital, LLC, which is the general partner of WS Capital Management, L.P., which is the general partner of Walker Smith Capital and Walker Smith Capital (QP), L.P., and the agent and attorney-in-fact for Walker Smith International Fund, Ltd. Reid S. Walker, G. Stacy Smith and Patrick P. Walker are principals of WSV Management, L.L.C., the general partner of WS Ventures Management, L.P., the general partner of WS Opportunity Fund, L.P. and WS Opportunity Fund (QP), L.P. and the agent and attorney-in-fact for WS Opportunity Fund International, Ltd.
(12) Consists of 214,508 shares of common stock held by 703149 Ontario Inc.; 214,508 shares of common stock issuable upon exercise of warrants held by 703149 Ontario Inc. exercisable within 60 days of January 28, 2005; 150,000 shares of common stock held by Topix, Inc.; and 57,500 shares of common stock issuable upon exercise of warrants held by Topix, Inc. Mr. Bailey is the principal shareholder and officer of each of Topix, Inc. and 703149 Ontario Inc.
(13) Consists of 10,074 shares of common stock held by SRB Greenway Capital, L.P.; and 86,700 shares of common stock held by SRB Greenway Capital (QP), L.P. Steven R. Becker is the sole managing member of BC Advisors, LLC, which is the general partner of SRB Management, L.P., the sole general partner of SRB Greenway Capital, L.P. and SRB Greenway Capital (QP), L.P.
(14) Individual is affiliated with Brock Capital Group LLC and disclaims beneficial ownership of shares of common stock held by Brock Capital Group LLC.
(15) Shares of common stock held indirectly pursuant to guardianship or custodial arrangement.
(16) Brock Capital Group LLC served as placement agent to the company in connection with the financing.
(17) Shares of common stock held in joint tenancy with rights of survivorship.

 

 

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Table of Contents

MARKET FOR COMMON STOCK AND RELATED MATTERS

 

Common Stock Prices

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “MTMR.” The following table sets forth on a per share basis the high and low bid prices, respectively, of our common stock as reported on the OTC Bulletin Board for the periods indicated. The company is the product of the merger between Medivation and a wholly owned subsidiary of Orion, which was completed as part of the transactions, including the merger and the financing, on December 17, 2004. Prior to the merger, Orion had not engaged in any substantive commercial operations. Accordingly, prices in the table below for any period prior to the transactions do not reflect commercial operations of Medivation.

 

     High Bid

   Low Bid

Year ended December 31, 2003

             

First quarter

   $ 0.75    $ 0.45

Second quarter

   $ 0.85    $ 0.51

Third quarter

   $ 0.85    $ 0.81

Fourth quarter

   $ 1.01    $ 0.81

Year ended December 31, 2004

             

First quarter

   $ 1.70    $ 0.98

Second quarter

   $ 7.00    $ 1.70

Third quarter

   $ 3.40    $ 1.50

Fourth quarter

   $ 4.10    $ 0.55

Year ended December 31, 2005

             

First quarter (through January 25, 2005)

   $ 4.00    $ 2.50

 

On January 25, 2005, the average of the high ask and low bid prices, respectively, of our common stock as reported on the OTC Bulletin Board on January 25, 2005, was $3.25 per share. According to the records of our transfer agent, American Stock Transfer & Trust Company, as of December 14, 2004, we had 15 holders of record of common stock.

 

The source of the information provided in the table above is the OTC Bulletin Board®, Quarterly Trade and Quote Summary Report, and represents prices between dealers without adjustments for retail markups, markdowns or commissions, and may not represent actual transactions.

 

Equity Compensation Plans

 

The following table sets forth certain information concerning shares of our common stock issuable and available for issuance under our stockholder approved and non-stockholder approved equity compensation plans, in each case as of December 31, 2004. All such options were issued to consultants of Medivation under an equity compensation plan approved by the holders of common stock of Medivation prior to the merger and assumed in connection therewith.

 

    

Shares Issuable

upon Exercise
of Options


   Weighted Average
Exercise Price
of Options


   Shares Available
for Issuance
under Plan


Equity compensation plans approved by stockholders

   616,556    $ 0.85    489,859

Equity compensation plans not approved by stockholders

          
    
         

Total

   616,556    $    489,859
    
         

 

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Table of Contents

PLAN OF DISTRIBUTION

 

The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

 

    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;

 

    short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the Commission;

 

    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, 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, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act 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.

 

In connection with the sale of shares of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of shares of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the shares of common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The aggregate proceeds to the selling stockholders from the sale of the shares of common stock offered by them will be the purchase price of the shares of common stock less discounts or commissions, if any. Each of the

 

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Table of Contents

selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of shares of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants.

 

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the shares of common stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

 

To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

 

We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended, may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

 

We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

 

We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (a) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement; or (b) the date on which the shares may be sold pursuant to Rule 144(k) of the Securities Act.

 

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Table of Contents

LEGAL MATTERS

 

Latham & Watkins LLP, Menlo Park, California will opine as to the validity of the shares of common stock being offered by this prospectus.

 

EXPERTS

 

The consolidated financial statements as of and for the periods therein indicated included in the prospectus have been audited by Singer Lewak Greenbaum & Goldstein LLP, independent registered public accounting firm of Orion Acquisition Corp. II, to the extent and for the periods set forth in their report appearing in this prospectus, and are included in reliance upon such report given upon the authority of Singer Lewak Greenbaum & Goldstein LLP as experts in auditing and accounting.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed a registration statement on Form SB-2 with the Commission of which this prospectus is a part under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all of the information included in the registration statement, and statements contained in this prospectus concerning the provisions of any document are not necessarily complete. For further information about us and the shares of common stock covered by this prospectus, you should read the registration statement including its exhibits.

 

We file annual reports on Form 10-KSB, quarterly reports of Form 10-QSB, current reports on Form 8-K, proxy statements and other information with the Commission under the Exchange Act. You may read and copy this information at Commission’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. Please call the Commission at (800) 732-0330 for further information on the operation of the Commission’s Public Reference Room. The Commission also maintains an Internet site that contains reports, proxy statements and other information about issuers, like us, who file electronically with the Commission. The address of the Commission’s web site is www.sec.gov.

 

We intend to furnish our holders of common stock with annual reports containing financial statements audited by an independent accounting firm and to make available quarterly reports containing unaudited financial information for the first three quarters of each year.

 

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Table of Contents

PROVISION FOR INDEMNIFICATION

 

Commission Position on Indemnification

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and their respective controlling persons, or otherwise, we have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

Delaware General Corporation Law

 

Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the company. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

 

Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for any breach of the director’s duty of loyalty to the corporation or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions or for any transaction from which the director derived an improper personal benefit.

 

Amended and Restated Certificate of Incorporation

 

Article Ninth of the amended and restated certificate of incorporation of the company provides that the personal liability of the directors of the company shall be eliminated to the fullest extent permitted by the provisions of Section 102(b)(7) of the Delaware General Corporation Law, as the same may be amended and supplemented.

 

Article Tenth of the amended and restated certificate of incorporation of the company provides that company shall, to the fullest extent permitted by the provisions of Section 145 of the Delaware General Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for therein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

Indemnification Agreements

 

We also enter into indemnification agreements with our directors and officers. The indemnification agreements provide indemnification to our directors and officers under certain circumstances for acts or omissions which may not be covered by directors’ and officers’ liability insurance.

 

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Table of Contents

Liability Insurance

 

We have also obtained directors’ and officers’ liability insurance, which insures against liabilities that our directors or officers may incur in such capacities.

 

Registration Rights Agreements

 

Section 6 of each of the registration rights agreements of the selling stockholders provides that we will indemnify and hold harmless each selling stockholder and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such selling stockholder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (a) any untrue statement or alleged untrue statement of any material fact contained in the registration statement, preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof; (b) any blue sky application or other document executed by us specifically for that purpose or based upon written information furnished by us filed in any state or other jurisdiction in order to qualify any or all of the registrable securities under the securities laws thereof; (c) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (d) any violation by us or our agents of any rule or regulation promulgated under the Securities Act applicable to us or our agents and relating to action or inaction required of us in connection with such registration; or (e) any failure to register or qualify the securities covered by the registration statement included in any such registration in any state where we or our agents have affirmatively undertaken or agreed in writing that we will undertake such registration or qualification on behalf of any selling stockholder, and will reimburse such selling stockholder, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that we will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such selling stockholder or any such controlling person in writing specifically for use in such registration statement or prospectus.

 

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Table of Contents

FINANCIAL STATEMENTS

Financial Statements Index

 

     Page

Report of Singer Lewak Greenbaum & Goldstein LLP, Independent Registered Public Accounting Firm of Orion Acquisition Corp. II

   F-2

Consolidated Balance Sheet as of December 31, 2004

   F-3

Consolidated Statements of Operations for the year ended December 31, 2004, for the period from inception (September 4, 2003) to December 31, 2003, and for the period from inception (September 4, 2003) to December 31, 2004

   F-4

Consolidated Statements of Stockholders’ Equity for the period from inception (September 4, 2003) to December 31, 2004

   F-5

Consolidated Statements of Cash Flows for the year ended December 31, 2004, for the period from inception (September 4, 2003) to December 31, 2003, and for the period from inception (September 4, 2003) to December 31, 2004

   F-6

Notes to Consolidated Financial Statements

   F-7

 

F-1


Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Orion Acquisition Corp. II and subsidiary

San Francisco, California

 

We have audited the accompanying consolidated balance sheet of Orion Acquisition Corp. II and subsidiary as of December 31, 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the period from September 4, 2003 (inception) to December 31, 2003 and for the year ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Orion Acquisition Corp. II and subsidiary as of December 31, 2004, and the results of their operations and their cash flows for the period from September 4, 2003 (inception) to December 31, 2003 and for the year ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

 

SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

 

Los Angeles, California

January 25, 2005

 

F-2


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2004

 

ASSETS

        

Current assets

        

Cash and cash equivalents

   $ 10,671,707  

Prepaid expenses and other current assets

     300,208  
    


Total current assets

     10,971,915  

Intellectual property (net of amortization)

     144,628  
    


TOTAL ASSETS

   $ 11,116,543  
    


LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Current liabilities

        

Warrant liability

   $ 633,149  

Accounts payable

     375,435  

Series A convertible redeemable preferred stock

     11,000  

Series B convertible preferred stock liability

     2,700  

Other current liabilities

     3,986  
    


Total current liabilities

     1,026,270  

COMMITMENTS AND CONTINGENCIES

        

Stockholders’ equity

        

Preferred stock, $0.01 par value per share
1,000,000 shares authorized

      

Common stock, $0.01 par value per share
10,000,000 shares authorized
9,581,141 shares issued and outstanding

     95,811  

Additional paid-in capital

     13,270,057  

Deficit accumulated during the development stage

     (3,275,595 )
    


Total stockholders’ equity

     10,090,273  
    


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 11,116,543  
    


 

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

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Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2004

INCEPTION (SEPTEMBER 4, 2003) TO DECEMBER 31, 2003

INCEPTION (SEPTEMBER 4, 2003) TO DECEMBER 31, 2004

 

    

Year Ended

December 31, 2004


   

Inception

(Sept. 4, 2003) to

December 31, 2003


   

Inception

(Sept. 4, 2003) to

December 31, 2004


 

Operating expenses:

                        

General and administrative

   $ 1,062,017     $ 174,815     $ 1,236,832  

Research and development

     1,613,569       217,322       1,830,891  

Stock-based compensation

     109,265             109,265  
    


 


 


Total operating expenses

     2,784,851       392,137       3,176,988  
    


 


 


Loss from operations

     (2,784,851 )     (392,137 )     (3,176,988 )
    


 


 


Other expense:

                        

Interest expense (net)

     70,191       8,512       78,703  

Warrants issued to guarantors

     17,505             17,505  
    


 


 


Total other expense

     87,896       8,512       96,208  
    


 


 


Loss before provision for income taxes:

     (2,872,547 )     (400,649 )     (3,273,195 )
    


 


 


Provision for income taxes:

     1,600       800       2,400  
    


 


 


Net loss:

   $ (2,874,147 )   $ (401,449 )   $ (3,275,595 )
    


 


 


Basic and diluted loss per share:

   $ (0.41 )   $ (0.09 )   $ (0.51 )
    


 


 


Weighted average common shares outstanding assuming conversion of Series B convertible preferred stock:

     7,010,205       4,425,660       6,378,784  
    


 


 


 

 

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

F-4


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

INCEPTION (SEPTEMBER 4, 2003) TO DECEMBER 31, 2004

 

     COMMON STOCK

   ADDITIONAL
PAID-IN
CAPITAL


    ACCUMULATED
(DEFICIT)


   

TOTAL

STOCKHOLDERS'
EQUITY


 
     SHARES

   AMOUNT

      

Balances at inception (September 4, 2003)

      $    $     $     $  

Net loss

                         (401,449 )     (401,449 )
    
  

  


 


 


Balances as of December 31, 2003

                   (401,449 )     (401,449 )

Common stock issued for:

                                    

Cash in the Offering

   6,903,399      69,034      10,631,236               10,700,270  

Debt conversion in the Offering

   838,536      8,385      1,291,345               1,299,731  

Placement agent services to MDB Capital Group LLC

   572,878      5,729      882,232               887,961  

Placement agent services to Brock Capital Group LLC

   52,821      528      81,345               81,873  

Offering expenses

                 (1,602,981 )             (1,602,981 )

Warrants issued to guarantors

                 17,505               17,505  

Stock-based compensation expense

                 109,265               109,265  

Reverse merger transaction:

                                    

Elimination of retained earnings

                 (422,120 )             (422,120 )

Previously issued Orion stock

   1,213,507      12,135      2,282,231               2,294,366  

Net loss

                       (2,874,147 )     (2,874,147 )
    
  

  


 


 


Balances as of December 31, 2004

   9,581,141    $ 95,811    $ 13,270,057     $ (3,275,595 )   $ 10,090,273  
    
  

  


 


 


 

 

 

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

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Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2004

INCEPTION (SEPTEMBER 4, 2003) THROUGH DECEMBER 31, 2003

INCEPTION (SEPTEMBER 4, 2003) THROUGH DECEMBER 31, 2004

 

     Year ending
Dec. 31, 2004


    Inception
(Sep. 4, 2003) to
Dec. 31, 2003


    Inception
(Sep. 4, 2003) to
Dec. 31, 2004


 

Cash flows from operating activities:

                        

Net loss

   $ (2,874,147 )   $ (401,449 )   $ (3,275,595 )

Adjustments to reconcile net loss to net cash used by operating activities:

                        

Impairment of intellectual property

     75,000             75,000  

Depreciation and amortization

     5,940       332       6,272  

Stock-based compensation

     109,265             109,265  

Warrants issued to guarantors

     17,505             17,505  

Changes in operating assets and liabilities:

                        

Prepaid expenses and other current assets

     (292,498 )     (7,710 )     (300,208 )

Accounts payable

     351,655       23,780       375,435  

Other current liabilities

     (6,139 )     10,125       3,986  
    


 


 


Net cash provided by (used in) operating activities:

     (2,613,419 )     (374,922 )     (2,988,341 )
    


 


 


Cash flows from investing activities:

                        

Pre-Merger cash balances in Orion accounts

     1,928,839             1,928,839  

Purchase of intellectual property

     (200,000 )     (25,000 )     (225,000 )
    


 


 


Net cash provided by (used in) investing activities:

     1,728,839       (25,000 )     1,703,839  
    


 


 


Cash flows from financing activities:

                        

Proceeds from issuance of convertible notes

     850,000       1,000,000       1,850,000  

Repayment of unconverted portion of convertible notes

     (595,861 )           (595,861 )

Proceeds from sale of common stock in the Offering

     10,700,270             10,700,270  

Proceeds from sale of Series B preferred stock

           1,800       1,800  
    


 


 


Net cash provided by (used in) financing activities:

     10,954,409       1,001,800       11,956,209  
    


 


 


Net increase in cash

     10,069,829       601,878       10,671,707  

Cash at beginning of period

     601,878              
    


 


 


Cash at end of period

   $ 10,671,707     $ 601,878     $ 10,671,707  
    


 


 


Supplemental schedule of non-cash investing and financing activities:

                        

Shares issued for conversion of debt (including accrued interest)

   $ 1,299,731     $     $ 1,299,731  

Shares issued to purchase intellectual property

           900       900  

Shares issued for placement agent services in the offering

     969,734             969,734  

Warrants issued for placement agent services in the offering

     633,149             633,149  
    


 


 


     $ 2,902,614     $ 900     $ 2,903,514  
    


 


 


 

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

F-6


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004

 

1. DESCRIPTION OF BUSINESS

 

Orion Acquisition Corp. II (Orion or the Company), together with its wholly owned operating subsidiary Medivation, Inc. (Medivation), is a life sciences company based in San Francisco, California. The Company’s corporate strategy is to identify and acquire development stage medical technologies—including both pharmaceuticals and medical devices—that have promising scientific, clinical and commercial prospects and strong intellectual property positions, and to develop those technologies through a largely outsourced model to achieve valuation-enhancing milestone events. The Company currently has acquired and is developing two technologies, both of which are small molecule drugs targeted at Alzheimer’s disease. The Company’s lead drug candidate—Dimebon—is scheduled to enter a randomized, double-blind, placebo-controlled Phase II efficacy study in Alzheimer’s disease patients in Russia in the second or third quarter of 2005. The Company’s second drug candidate—NT0904—is in the preclinical research phase. The Company also is evaluating other medical technologies for potential acquisition.

 

2. THE MERGER

 

(a) Description of the Merger

 

On December 17, 2004, Medivation Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company, merged with and into Medivation, Inc. (Medivation), a Delaware corporation, pursuant to an Agreement and Plan of Merger, dated as of December 17, 2004. Pursuant to the merger (the Merger), Medivation became a wholly owned subsidiary of the Company, the issued and outstanding shares of common stock of Medivation were converted into an aggregate of 331,925 shares of the Series B Preferred Stock of the Company, which is convertible into an aggregate of 6,638,490 shares of the Company’s Common Stock, and Orion’s pre-Merger cash balances of approximately $1,929,000 became available to fund the ongoing operations of the combined Company. After the Merger, but before giving effect to the Offering described in Note 6(a) below, the former Medivation stockholders owned approximately 81% of the Company’s issued and outstanding Common Stock, assuming conversion of all of the issued and outstanding Series B Preferred Stock and Series A Preferred Stock, and the exercise of all of the issued and outstanding Class B Warrants. Following the Merger, the business conducted by the Company is the business conducted by Medivation prior to the Merger.

 

As a result of the Merger, the 225,500 issued and outstanding Class B Warrants of the Company became exercisable to purchase an aggregate of 225,500 shares of the Company’s Common Stock at an exercise price of $0.125 per share. The Class B Warrants are exercisable until 5PM, New York City Time, on December 17, 2005.

 

(b) Accounting Treatment of the Merger; Financial Statement Presentation

 

The Merger was accounted for as a reverse merger under generally accepted accounting principles. Therefore: (1) the Company’s historical accumulated deficit for periods prior to December 17, 2004, in the amount of $422,120, was eliminated against additional-paid-in-capital, and (2) the consolidated financial statements present the previously issued shares of Series A Preferred Stock and Common Stock of Orion as having been issued pursuant to the Merger on December 17, 2004, and the shares of Series B Preferred Stock of the Company issued to the former Medivation stockholders in the Merger as having been outstanding since October 2003 (the month when Medivation first sold its equity securities). No goodwill or other intangible asset was recorded as a result of the Merger.

 

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Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

(c) Summary Pro Forma Financial Information

 

The following tables set forth (1) the total operating expenses, other income (net of other expense) and net losses of Orion and Medivation for the year ended December 31, 2004, for the period from inception (September 4, 2003) to December 31, 2003 and for the period from inception (September 4, 2003) to December 31, 2004, (2) the consolidated pro-forma information for Orion and Medivation for the above periods assuming that the Merger was completed on September 4, 2003, and (3) the consolidated pro-forma information for the above periods as further adjusted to eliminate Orion’s legal expenses and interest income earned on loans made to Citadel, Inc. as part of the merger agreement between Orion and Citadel, Inc., which was signed on June 23, 2004 and terminated on September 15, 2004, but which would not have been entered into had the Merger been completed on September 4, 2003.

 

Year ended December 31, 2004

 

     Medivation

    Orion

    Pro-forma

    Adjustments

   

Pro-forma,

as-adjusted


 

Total operating expenses

   $ 2,876,298     $ 288,107     $ 3,164,405     $ (109,969 )   $ 3,054,436  

Other income (net of other expense)

     2,151       77,868       80,019       (71,609 )     8,410  

Net income (loss)

   $ (2,874,147 )   $ (210,239 )   $ (3,084,386 )   $ (38,360 )   $ (3,046,026 )

 

Inception (September 4, 2003) to December 31, 2003

 

     Medivation

    Orion

    Pro-forma

    Adjustments

  

Pro-forma,

as-adjusted


 

Total operating expenses

   $ 403,062     $ (28,892 )   $ 374,170        $ 374,170  

Other income (net of other expense)

     1,613       8,774       10,387          10,387  

Net income (loss)

   $ (401,449 )   $ 37,666     $ (363,783 )      $ (363,783 )

 

Inception (September 4, 2003) to December 31, 2004

 

     Medivation

    Orion

    Pro-forma

    Adjustments

   

Pro-forma,

as-adjusted


 

Total operating expenses

   $ 3,279,360     $ 259,215     $ 3,538,575     $ (109,969 )   $ 3,428,606  

Other income (net of other expense)

     3,765       86,642       90,406       (71,609 )     18,797  

Net income (loss)

   $ (3,275,595 )   $ (172,573 )   $ (3,448,169 )   $ (38,360 )   $ (3,409,809 )

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(a) Basis of Consolidation

 

The consolidated financial statements incorporate the accounts of Orion Acquisition Corp. II, an inactive parent company, and its wholly owned operating subsidiary, Medivation, Inc. All significant inter-company transactions have been eliminated in consolidation.

 

(b) Development Stage Company

 

For the period from inception (September 4, 2003) to date, the Company has been a development stage enterprise, and accordingly, the Company’s operations have been directed primarily toward developing its

 

F-8


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

proprietary technologies. The Company has experienced net losses since its inception and as of December 31, 2004, had an accumulated deficit of $3,275,595. Such losses and accumulated deficit resulted from the Company’s absence of revenue and significant costs incurred in the development of the Company’s proprietary technologies. The Company expects to incur substantial losses as it continues its research and development activities, particularly the conduct of clinical trials.

 

(c) Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions principally relate to services performed by third parties but not yet invoiced. Actual results could differ from those estimates.

 

(d) Cash Equivalents

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2004, cash and cash equivalents included $10,671,707 in cash and money market securities. The Company deposits cash and cash equivalents with high credit quality financial institutions and is insured to the maximum limitations. The Company presently maintains checking and money market accounts at Bank of America, and a money market account at Wells Fargo Bank. Deposits in these accounts totaled $34,286, $1,791,300 and $448, respectively, as of December 31, 2004, and are insured by the Federal Deposit Insurance Corporation up to a maximum of $100,000. The Company also maintains brokerage accounts at Bank of America and Wells Fargo Bank, with balances of $8,000,000 and $845,673, respectively, as of December 31, 2004, all of which was held in money market funds as of that date. Deposits in these accounts are insured by the Securities Investor Protection Corporation up to a maximum of $500,000 (including cash claims limited to $100,000). In January 2005, the Company used $7,897,851 of the money market funds held it its Bank of America brokerage account to purchase U.S. government debt securities with maturities ranging from April 2005 to November 2005.

 

(e) Property and Equipment

 

Property and equipment purchases incurred to date have been minor and have thus been expensed through December 31, 2004. Property and equipment purchases are recorded at cost. Repairs and maintenance costs are expensed in the period incurred. Items of property and equipment with costs greater than $5,000 will be capitalized and depreciated or amortized on a straight-line basis over the estimated useful lives of the assets as follows:

 

Description


  

Estimated Useful Life


Office equipment; furniture and fixtures

   2-5 years

Leasehold improvements

   Lesser of estimated useful life or life of lease

 

(f) Intellectual Property

 

Intellectual property acquired from third parties is recorded at historical acquisition cost, and at December 31, 2004 consisted of issued patents and pending patent applications. Any milestone payments that become due to third parties from whom the Company has acquired patent rights will be added to intellectual

 

F-9


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

property acquisition cost and capitalized. Intellectual property consisting of issued patents is amortized over the period beginning on the acquisition date and ending on the expiration date of the patent. Intellectual property consisting of patent applications is amortized over the period beginning on the acquisition date and ending on the expiration date of any patent that may issue on that application. Legal and other costs of prosecuting and maintaining patent rights are expensed as incurred.

 

(g) Income Taxes

 

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

 

(h) Research and Development

 

Research and development costs are charged to expense when incurred.

 

(i) Fair Value of Financial Instruments

 

The Company’s financial instruments include cash and cash equivalents and trade payables. At December 31, 2004 the fair values of cash and cash equivalents and trade payables approximated their financial statement carrying amounts.

 

(j) Stock Based Compensation

 

The Company accounts for its stock-based compensation arrangements for employees, contractors and directors using the intrinsic value method pursuant to Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” as clarified by Financial Accounting Standards Board (FASB) Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation.” As such, compensation expense is recorded when, on the date of grant, the fair value of the underlying common stock exceeds the exercise price for stock options or the purchase price for issuances or sales of common stock. Statement of Financial Accounting Standard (SFAS) No. 123 “Accounting for Stock-Based Compensation,” established a fair value based method of accounting for stock-based compensation plans. The Company has adopted the disclosure only alternative under SFAS 123 which requires disclosure of the pro-forma effects of using the fair value method of accounting for stock-based compensation arrangements on earnings and earnings per share as if SFAS 123 had been adopted. The Company records compensation expense for the fair value of options granted to non-employees.

 

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-based Compensation—Transition and Disclosure, an Amendment of FASB Statement No. 123.” SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial reports

 

F-10


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

about the method of accounting for stock-based compensation and the effect of the method used on reported results. To date, the Company has not issued stock options to employees.

 

(k) Impairment or Disposal of Long-lived Assets

 

The Company evaluates its long-lived assets, primarily its intellectual property, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. In the year ended December 31, 2004, the Company wrote off $75,000 of its historical patent acquisition costs to reflect management’s decision to stop work on a patent application that does not cover either of the Company’s Dimebon or NT0904 product candidates. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. The impairment amount is included in research and development expenses.

 

(l) Loss per Common Share

 

The Company calculates loss per share in accordance with SFAS No. 128, “Earnings per Share.” Basic loss per share is computed by dividing the loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

 

The following potential common shares have been excluded from the computation of diluted net loss per share for the periods ended December 31, 2004 and 2003 because they are antidilutive:

 

Series B Preferred Stock

   6,638,490

Series A Preferred Stock

   110,000

Warrants

   1,049,991

Options

   626,556
    

TOTAL

   8,425,037
    

 

(m) Reclassifications

 

Certain prior year amounts have been reclassified in order to conform to current year presentation.

 

(n) Recently Issued Accounting Pronouncements

 

SFAS No. 151

 

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs.” SFAS No. 151 amends the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) under the guidance in ARB No. 43, Chapter 4, “Inventory Pricing.” Paragraph 5 of ARB No. 43, Chapter 4, previously stated that “…under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges….” This Statement requires that those items be recognized as current-period charges regardless of whether they meet

 

F-11


Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not expect adoption of SFAS No. 151 to have any impact on the Company’s financial statements.

 

SFAS No. 152

 

In December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions.” The FASB issued this Statement as a result of the guidance provided in AICPA Statement of Position (SOP) 04-2, “Accounting for Real Estate Time-Sharing Transactions.” SOP 04-2 applies to all real estate time-sharing transactions. Among other items, the SOP provides guidance on the recording of credit losses and the treatment of selling costs, but does not change the revenue recognition guidance in SFAS No. 66, “Accounting for Sales of Real Estate,” for real estate time-sharing transactions. SFAS No. 152 amends Statement No. 66 to reference the guidance provided in SOP 04-2. SFAS No. 152 also amends SFAS No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects”, to state that SOP 04-2 provides the relevant guidance on accounting for incidental operations and costs related to the sale of real estate time-sharing transactions. SFAS No. 152 is effective for years beginning after June 15, 2005, with restatements of previously issued financial statements prohibited. This statement is not applicable to the Company.

 

SFAS No. 153

 

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,” an amendment to Opinion No. 29, “Accounting for Nonmonetary Transactions.” Statement No. 153 eliminates certain differences in the guidance in Opinion No. 29 as compared to the guidance contained in standards issued by the International Accounting Standards Board. The amendment to Opinion No. 29 eliminates the fair value exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Such an exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in periods beginning after December 16, 2004. Management does not expect adoption of SFAS No. 153 to have any impact on the Company’s financial statements.

 

SFAS No. 123(R)

 

In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment.” SFAS 123(R) amends SFAS No. 123, “Accounting for Stock-Based Compensation,” and APB Opinion 25, “Accounting for Stock Issued to Employees.” SFAS No. 123(R) requires that the cost of share-based payment transactions (including those with employees and non-employees) be recognized in the financial statements. SFAS No. 123(R) applies to all share-based payment transactions in which an entity acquires goods or services by issuing (or offering to issue) its shares, share options, or other equity instruments (except for those held by an ESOP) or by incurring liabilities (1) in amounts based (even in part) on the price of the entity’s shares or other equity instruments, or (2) that require (or may require) settlement by the issuance of an entity’s shares or other equity instruments. This statement is effective (1) for public companies qualifying as SEC small business issuers, as of the first interim period or fiscal year beginning after December 15, 2005, or (2) for all other public companies, as of the first interim period or fiscal year beginning after June 15, 2005, or (3) for all nonpublic entities, as of the first fiscal

 

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Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

year beginning after December 15, 2005. Management is currently assessing the effect of SFAS No. 123(R) on the Company’s financial statements.

 

4. INTELLECTUAL PROPERTY

 

At December 31, 2004, intellectual property consisted of three patent families—one covering the use of Dimebon and certain related compounds to treat neurodegenerative diseases, one covering the use of Dimebon and certain related compounds for anti-aging purposes, and one covering the NT0904 family of compounds and uses thereof. Cash purchases of patent rights totaled $200,000 in the year ended December 31, 2004 and $25,000 in the period from inception (September 4, 2003) to December 31, 2003. This intellectual property is being amortized over periods ranging from 156 months to 248 months. Amortization expense on the Company’s intellectual property was $5,940 in the year ended December 31, 2004, and $332 in the period from inception (September 4, 2003) to December 31, 2003. Total amortization expenses under the foregoing schedule in the years ended December 31, 2005 through December 31, 2009 for intellectual property costs capitalized on or before December 31, 2004 will be $8,274 per year.

 

5. CONVERTIBLE NOTES WITH WARRANTS

 

Between October 10, 2003 and September 1, 2004, Medivation issued convertible promissory notes, with associated warrant coverage, in a series of transactions with two investors. The notes bore interest at a rate of 4.5% per year, were convertible into the class of equity securities issued by Medivation at its next equity financing at the same price per share as paid by investors in that equity financing, and matured on October 10, 2004. The associated warrants were exercisable to purchase shares of the class of equity securities issued by Medivation in its next equity financing at the same price per share as paid by investors in that equity financing. Using the Black-Scholes option pricing model and the following assumptions as of the dates these warrants were issued—stock price of $0.0004; historical volatility of 90%; risk free rate of approximately 4.5%; dividend yield of 0%; and warrant life of 10 years—the warrants were assigned no value. Accordingly, 100% of the proceeds received by Medivation in these financing transactions were allocated to the convertible notes. The following table summarizes these convertible note transactions.

 

Date


   Principal
Balance of
Note


October 10, 2003

   $ 1,000,000

April 1, 2004

     250,000

June 8, 2004

     200,000

August 1, 2004

     200,000

September 1, 2004

     200,000

 

Principal and accrued interest on these convertible notes as of December 17, 2004 was $1,922,450. A total of $1,299,731 of this amount was converted in the Offering into 838,536 shares of Common Stock at a price of $1.55 per share, and the remaining $622,720 (consisting of $595,861 in principal plus $26,859 in accrued interest) was repaid from proceeds of the Offering. The outstanding balance on these convertible notes as of December 31, 2004 was $0. The associated warrants were assumed by the Company in the Merger and became exercisable to purchase an aggregate of 238,709 shares of the Company’s Common Stock at an exercise price of $1.55 per share. The warrants are fully vested and expire in 2013 and 2014.

 

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ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

6. STOCKHOLDER’S EQUITY

 

(a) Common Stock

 

On December 17, 2004, the Company issued 7,741,935 shares of its Common Stock in a private placement to accredited investors at a price of $1.55 per share (the Offering), 6,903,399 of which were sold for cash, generating $10,700,270 in gross proceeds. The remaining 838,536 shares were issued in exchange for cancellation of outstanding bridge notes of Medivation, in the aggregate amount of $1,299,731, which were assumed by the Company in the Merger (Note 5). The shares issued in the Offering were not subject to refund, redemption or rescission and, accordingly, were included as a component of stockholders’ equity, net of the applicable costs.

 

MDB Capital Group LLC (MDB) acted as placement agent with respect to certain investors in the Offering. As partial compensation for these services, the Company issued to MDB and certain of its affiliates an aggregate of 572,878 shares of Common Stock. The cost of these shares, in the amount of $887,961 based on the $1.55 purchase price of the shares in the Offering, was offset against additional paid-in-capital in the year ended December 31, 2004. MDB also received warrants as partial compensation for its placement agent services (Note 6(c)).

 

Brock Capital Group LLC (Brock) acted as placement agent with respect to certain investors in the Offering. As compensation for these services, the Company issued to Brock and certain of its affiliates an aggregate of 52,821 shares of Common Stock. The cost of these shares, in the amount of $81,873 based on the $1.55 purchase price of the shares in the Offering, was offset against additional paid-in-capital in the year ended December 31, 2004.

 

In connection with the Merger and the Offering, the Company, the former stockholders of Medivation, the investors in the Offering and MDB have entered into registration rights agreements, pursuant to which the Company has agreed to register with the Securities and Exchange Commission for re-offer and re-sale (a) the 6,638,490 shares of Common Stock issuable upon conversion of the Series B Preferred Stock received by the former stockholders of Medivation in the Merger, (b) the 7,741,935 shares of Common Stock sold in the Offering, and (c) the 572,878 shares of Common Stock issued to MDB, and the 572,878 shares of Common Stock issuable upon exercise of the warrant issued to MDB, for placement agent services rendered in connection with the Offering. The Company has agreed with investors in the Offering to file the registration statement no later than January 31, 2005, and to arrange to have the registration statement declared effective no later than March 31, 2005, and must pay the investors in the Offering an aggregate of $6,000 for each day that the Company misses either or both of these deadlines. The Company intends to include in the registration statement an additional 477,113 shares of its Common Stock underlying outstanding warrants, and the 52,821 shares of Common Stock issued to Brock Capital Group LLC as compensation for placement agent services in the Offering.

 

(b) Preferred Stock

 

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting, and other rights and preferences as may be determined from time to time by the Board of Directors.

 

Series A Convertible Redeemable Preferred Stock. The Company has outstanding 110 shares of Series A Convertible Redeemable Preferred Stock, which it issued for an aggregate purchase price of $11,000. The Series A Convertible Redeemable Preferred Stock is non-voting and does not bear dividends. Each share of Series A Convertible Redeemable Preferred Stock is convertible into 1,000 shares of the Company’s Common Stock at

 

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ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

any time until December 17, 2005. The Series A Convertible Redeemable Preferred Stock is redeemable at any time, at the option of the holder(s) thereof, for a redemption price equal to its original purchase price. Because of this redemption feature, the Series A Convertible Redeemable Preferred Stock is reflected as a liability on the consolidated financial statements.

 

Series B Convertible Preferred Stock. Pursuant to the Merger, on December 17, 2004, the 2,700,000 issued and outstanding shares of Medivation Common Stock, $0.001 par value per share, were converted into an aggregate of 331,925 shares of Series B Convertible Preferred Stock of the Company. The shares of Medivation Common Stock were issued in private transactions in October 2003 for an aggregate price of $2,700. Payment for 1,800,000 of these shares was in cash, and payment for the remaining 900,000 shares was in intellectual property.

 

Each outstanding share of Series B Convertible Preferred Stock will convert automatically into 20 shares of Common Stock (subject to normal adjustments) at such time as the Company increases the number of authorized shares of Common Stock to be equal to or in excess of 25,000,000. The Series B Convertible Preferred Stock has no liquidation rights in preference to the Common Stock, no redemption rights, and no right to dividends, unless dividends are paid to holders of the Common Stock. Until the Series B Convertible Preferred Stock converts into Common Stock, (1) all matters submitted for a vote or consent of the stockholders of the Company will require approval of a majority of the outstanding shares of Series B Convertible Preferred Stock, voting separately as a series, and of a majority of the outstanding shares of Common Stock of the Company on an as-converted basis, (2) the holders of the Series B Convertible Preferred Stock have the right to nominate one member of the Company’s board of directors, and (3) all matters submitted for a vote or consent of the board of directors of the Company require the approval of Series B Board Representative.

 

Because the number of authorized shares of the Company’s common stock is not currently sufficient for the conversion of all of the shares Series B Convertible Preferred Stock, full conversion is contingent on the amendment of the Company’s certificate of incorporation to increase the number of authorized common shares. Pursuant to EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” the fair value of the Series B Convertible Preferred Stock has been recorded as a current liability until the Company has sufficient authorized shares available to be delivered if the Series B Convertible Preferred Stock is converted to common stock.

 

(c) Warrants

 

On November 16, 2004, Medivation issued warrants to purchase its equity securities to two officers in return for their agreement to guarantee specified professional fees incurred by Medivation related to the Merger. These warrants were assumed by the Company in the Merger, and became exercisable to purchase an aggregate of 12,904 shares of the Company’s Common Stock at a price of $1.55 per share. The fair value of these warrants in the amount of $17,505 (based on the Black-Scholes option pricing model and the following assumptions: stock price of $1.55; historical volatility of 90%; risk free rate of approximately 4.5%; dividend yield of 0%; and warrant life of 10 years) was recorded as an expense in the statement of operations for the year ended December 31, 2004.

 

MDB Capital Group LLC (MDB) acted as placement agent with respect to certain investors in the Offering. As partial compensation for these services, the Company issued to MDB and certain of its affiliates warrants to purchase an aggregate of 572,878 shares of Common Stock at a price of $1.55 per share, exercisable for a period beginning on December 17, 2004 and ending five years thereafter. The fair value of these warrants is $633,149, based on the Black-Scholes option pricing model and the following assumptions: stock price of $1.55; historical

 

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Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

volatility of 90%; risk free rate of approximately 4.5%; dividend yield of 0%; and warrant life of 5 years. Pursuant to Emerging Issues Task Force 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” the fair value of these warrants has been recorded as a current liability until the Company has sufficient authorized shares available to be delivered if the warrants were exercised. In addition, the Company is required to report the fluctuation to the fair value of the warrant liability in current operations. During the period from December 17, 2004 to December 31, 2004, the fair value of these warrants did not change.

 

(d) Equity Incentive Plan

 

Pursuant to the Merger, the Company assumed the Medivation Equity Incentive Plan (the Equity Incentive Plan), and reserved an aggregate of 1,106,415 shares of the Company’s Common Stock for issuance upon the exercise of awards granted under the Equity Incentive Plan. As of December 31, 2004 and 2003, there were 616,556 and 0 options outstanding under the Equity Incentive Plan, all of which were issued to consultants. As of December 31, 2004, the weighted average exercise price and the weighted average fair value of the outstanding options were $0.85 and $2.84, respectively, all 616,556 options were exercisable (but the shares of Common Stock issuable upon exercise of those options remained subject to repurchase by the Company at the option exercise price if the optionee’s term of service for the Company ends), and none of these options had been exercised. At December 31, 2004, 489,859 options were available for future grants under the Equity Incentive Plan.

 

The Equity Incentive Plan provides for the issuance of options and other equity-based awards, including restricted stock and stock appreciation rights. Options granted under the Equity Incentive Plan may be nonqualified or qualified incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended. The Equity Incentive Plan is administered by our board of directors, or a committee appointed by the Board, which determines recipients and types of options to be granted, including the vesting schedule, the number of shares subject to the options and the exercisability of the options. The term of the stock options granted under the Equity Incentive Plan may not exceed ten years. The exercise price for all options is determined by our board of directors, or by a committee appointed by the board, at the time of grant. The options may, but need not, contain provisions for early exercise and the right of first refusal. No incentive stock option may be granted to any person who, at the time of the grant, owns, or is deemed to own, stock constituting more than 10% of our total combined voting power, unless the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant, and the term of the option does not exceed five years from the date of grant.

 

Options granted under the Equity Incentive Plan vest at the rate specified in each optionee’s option agreement. Unless determined otherwise by the administrator of the Equity Incentive Plan, no stock option may be transferred by the optionee other than by will or the laws of descent or distribution and may be exercised during the lifetime of the optionee only by the optionee. An optionee whose relationship with us or any affiliate ceases for any reason, other than by death or permanent or total disability, may exercise options within the period of time as is specified in the optionee’s option agreement, which typically is at least thirty days. If no period of time is specified in the optionee’s option agreement, then the option is exercisable for a period of three months. When an optionee’s relationship with us or any affiliate ceases due to death or permanent or total disability, options may be exercised within the period of time as is specified in the optionee’s option agreement, which typically is at least six months. If no period of time is specified in the optionee’s option agreement, then the option is exercisable for a period of twelve months.

 

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ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

Upon our change in control, all outstanding options under the Equity Incentive Plan will be accelerated and become immediately exercisable. A change of control is defined in the Equity Incentive Plan to include, subject to certain exceptions (i) the acquisition, directly or indirectly, by any “person” or “group” (as defined in the Securities Exchange Act of 1934, as amended, and the rules thereunder) of “beneficial ownership” (as defined in the Securities Exchange Act of 1934, as amended, and the rules thereunder) of our voting securities that represent 50% or more of our combined outstanding voting power; (ii) during any period of two consecutive years, individuals who, at the beginning of such period, constitute our board of directors together with any new director(s), cease for any reason to constitute a majority thereof; (iii) the consummation, whether directly or indirectly and subject to certain exceptions, of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of our assets or (z) our acquisition of assets or stock of another entity and (iv) our liquidation or dissolution. The Merger and the Offering did not constitute a change of control under the Equity Incentive Plan.

 

(e) Options

 

For the year ended December 31, 2004, the Company recorded a stock-based compensation expense of $109,265 to reflect the appropriate portion of the total cost of the 616,556 options granted in 2004. All such options were granted to consultants as partial or total compensation for services to be provided under consulting agreements.

 

These options were assigned an aggregate value of $882,719 as of December 31, 2004 using the Black-Scholes option pricing model and the following assumptions: stock price of $1.55; historical volatility of 90%; risk free rate of approximately 4.5%; dividend yield of 0%; and option life of approximately 9.5 years. In accordance with Emerging Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services,” and EITF Issue No. 00-18, “Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees,” the stock-based compensation expense recorded in the Company’s Statement of Operations for the year ended December 31, 2004, in the amount of $109,265, reflected the portion of the aggregate option value corresponding to the aggregate number of shares vested on the options through that date. As further portions of these options are earned in the future, the Company will recognize additional expense based on their then-current fair market value.

 

(f) Equity Transactions Related to the Reverse Merger

 

Because the Merger was accounted for as a reverse merger under generally accepted accounting principles, (1) the Company’s historical accumulated deficit for periods prior to December 17, 2004, in the amount of $422,120, was eliminated against additional-paid-in-capital, and (2) the consolidated financial statements present the previously issued shares of Series A Preferred Stock and Common Stock of Orion as having been issued pursuant to the Merger on December 17, 2004, and the shares of Series B Preferred Stock of the Company issued to the former Medivation stockholders in the Merger as having been outstanding since October 2003 (the month when Medivation first sold its equity securities).

 

7. COMMITMENTS AND CONTINGENCIES

 

The Company leases office facilities under a non-cancelable operating lease that expires in October 2005. Total rent expense under this operating lease for the year ended December 31, 2004 and for the period from inception (September 4, 2003) through December 31, 2003 was $62,517 and $10,420, respectively. Future lease obligations under this non-cancelable operating lease as of December 31, 2004 are $52,098.

 

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Table of Contents

ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

The Company’s intellectual property at December 31, 2004 consisted of three patent families purchased by the Company from third parties (Note 4). The purchase agreements require the Company to make certain milestone payments upon the occurrence of stated events, and to pay royalties on the sale of any products covered by such purchased patent rights.

 

8. INCOME TAXES

 

The tax effects of temporary differences which give rise to the deferred tax provision at December 31, 2004 consisted of the following:

 

Deferred tax assets

        

Net operating loss carryforward

   $ 1,267,807  

Warrant based compensation

     54,308  

State tax-deferred

     (58,384 )

Less valuation allowance

     (1,263,731 )
    


Net deferred tax assets

   $  
    


 

The following table presents the current and deferred income tax provision for (benefit from) federal and state income taxes for the year ended December 31, 2004 and for the period from inception (September 4, 2003) to December 31, 2003:

 

     Year ended
Dec. 31, 2004


   Inception
(Sept. 4, 2003) to
Dec. 31, 2003


Current

             

Federal

   $    $

State

     1,600      800
    

  

       1,600      800
    

  

Deferred

             

Federal

         

State

         
    

  

     $ 1,600    $ 800
    

  

 

The provision for income taxes differs from the amount that would result from applying the federal statutory rate for the year ended December 31, 2004 and for the period from inception (September 4, 2003) to December 31, 2003 as follows:

 

     Year ended
Dec. 31, 2004


    Inception
(Sept. 4, 2003) to
Dec. 31, 2003


 

Statutory regular federal income benefit rate

   (34.0 )%   (34.0 )%

State taxes

   (3.0 )%   (2.8 )%

Prior year adjustments

   (1.9 )%    

Change in valuation allowance

   38.8 %   36.9 %

Other

   0.1 %   (0.1 )%
    

 

Total

   0.0 %   0.0 %
    

 

 

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ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

 

The valuation allowance increased by $1,115,982 and $147,749 during the year ended December 31, 2004, and for the period from inception (September 4, 2003) to December 31, 2003, respectively. The deferred income tax benefit of the loss carryforward is the only significant deferred income tax asset or liability of the Company and has been offset by a valuation allowance since management does not believe the recoverability of this deferred tax asset during the next fiscal year is more likely than not. Accordingly, a deferred income tax benefit for the year ended December 31, 2004 has not been recognized in these financial statements.

 

As December 31, 2004, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $3,207,000 and $1,961,000, respectively. The net operating loss carryforwards begin expiring in 2022 and 2012, respectively.

 

F-19


Table of Contents

Prospectus

 

 


 

ORION ACQUISITION CORP. II

 

Up to 16,056,115 Shares

Common Stock, par value $0.01 per share

 


 

 

The date of this prospectus is                         , 2005


Table of Contents

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 24. Indemnification of Directors and Officers.

 

Delaware General Corporation Law

 

Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the company. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

 

Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for any breach of the director’s duty of loyalty to the corporation or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions or for any transaction from which the director derived an improper personal benefit.

 

Amended and Restated Certificate of Incorporation

 

Article Ninth of the amended and restated certificate of incorporation of the company provides that the personal liability of the directors of the company shall be eliminated to the fullest extent permitted by the provisions of Section 102(b)(7) of the Delaware General Corporation Law, as the same may be amended and supplemented.

 

Article Tenth of the amended and restated certificate of incorporation of the company provides that the company shall, to the fullest extent permitted by the provisions of Section 145 of the Delaware General Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for therein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

Indemnification Agreements

 

We also enter into indemnification agreements with our directors and officers. The indemnification agreements provide indemnification to our directors and officers under certain circumstances for acts or omissions which may not be covered by directors’ and officers’ liability insurance.

 

Liability Insurance

 

We have also obtained directors’ and officers’ liability insurance, which insures against liabilities that our directors or officers may incur in such capacities.

 

II-1


Table of Contents

Registration Rights Agreements

 

Section 6 of each of the registration rights agreements of the selling stockholders provides that we will indemnify and hold harmless each selling stockholder and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such selling stockholder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (a) any untrue statement or alleged untrue statement of any material fact contained in the registration statement, preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof; (b) any blue sky application or other document executed by us specifically for that purpose or based upon written information furnished by us filed in any state or other jurisdiction in order to qualify any or all of the registrable securities under the securities laws thereof; (c) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (d) any violation by us or our agents of any rule or regulation promulgated under the Securities Act applicable to us or our agents and relating to action or inaction required of us in connection with such registration; or (e) any failure to register or qualify the securities covered by the registration statement included in any such registration in any state where we or our agents have affirmatively undertaken or agreed in writing that we will undertake such registration or qualification on behalf of any selling stockholder, and will reimburse such selling stockholder, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that we will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such selling stockholder or any such controlling person in writing specifically for use in such registration statement or prospectus.

 

Item 25. Other Expenses of Issuance and Distribution.

 

The following table sets forth all expenses to be paid by us, other than underwriting discounts and commissions, in connection with this offering. Pursuant to registration rights agreements entered into by and among us and certain selling stockholders, subject to certain exceptions, we have agreed to pay all expenses of the company and all reasonable expenses of the selling stockholders (excluding transfer taxes and underwriters’ discounts, commissions and the like of the selling stockholders), in each case incurred in connection with the registration of the shares of common stock covered by the prospectus of which this registration statement forms a part. All amounts shown are estimates other than the registration fee.

 

     Amount to be Paid

SEC registration fee

     6,143

Printing and engraving

     50,000

Legal fees and expenses

     100,000

Accounting fees and expenses

     100,000

Blue sky fees and expenses (including legal fees)

     15,000

Transfer agent and registrar fees

     10,000

Miscellaneous

     8,857
    

Total

   $ 290,000
    

 

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Table of Contents

Item 26. Recent Sales of Unregistered Securities.

 

Since February 1, 2002, we have issued the following unregistered securities.

 

Option Grants

 

On December 17, 2004, in connection with the merger, we issued options exercisable for 335,839 shares of common stock to a consultant under our 2004 Equity Incentive Plan at an exercise price of $1.55 per share. In addition, in connection with the merger, we assumed options exercisable for 280,717 shares of common stock at an exercise price of $0.02 per share. These transactions were effected in reliance on Rule 701 of Regulation D under the Securities Act.

 

Warrants

 

On December 17, 2004, in connection with the financing, we issued warrants exercisable for 572,878 shares of common stock to a consultant and certain of its affiliates at an exercise price of $1.55 per share with respect to services provided to us in connection with the financing. In addition, in connection with the merger, we assumed warrants exercisable for 251,613 shares of common stock at an exercise price of $1.55 per share. These transactions were effected in reliance on Section 4(2) of the Securities Act.

 

Common Stock

 

On December 17, 2004, in connection with the financing, we issued 7,741,935 shares of our common stock to accredited investors at a purchase price of $1.55 for an aggregate consideration of $11,999,999.25, paid with a combination of cash and the cancellation of certain preexisting indebtedness of Medivation. This transaction was effected in reliance on Rule 506 of Regulation D under the Securities Act.

 

On December 17, 2004, in connection with the financing, we issued 625,699 of common stock to consultants and certain of their respective affiliates with respect to services provided to us in connection with the financing. These transactions were effected in reliance on Section 4(2) of the Securities Act.

 

On August 5, 2004, in connection with the settlement of legal proceedings then pending against us, we issued 182,600 shares of common stock in exchange for the cancellation of 132,600 Class B Warrants. This transaction was effected in reliance on Section 3(a)(9) of the Securities Act.

 

Preferred Stock

 

On December 17, 2004, in connection with the merger, we issued 331,925 shares of Series B Preferred Stock to four former stockholders of Medivation. These transactions were effected in reliance on Section 4(2) of the Securities Act.

 

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Table of Contents

Item 27. Exhibits.

 

Exhibit No.

 

Exhibit Description


  2.1   Agreement and Plan of Merger dated as of December 17, 2004, by and among the Orion Acquisition Corp. II, Medivation Acquisition Corp. and Medivation, Inc. (1)
  3.1(a)   Form of Certificate of Common Stock, par value $0.01 per share, of Orion Acquisition Corp. II (2)
  3.1(b)   Form of Certificate of Series A Convertible Preferred Stock, par value $0.01 per share, of Orion Acquisition Corp. II*
  3.1(c)   Form of Certificate of Series B Convertible Preferred Stock, par value $0.01 per share, of Orion Acquisition Corp. II
  3.1(d)   Amended and Restated Certificate of Incorporation of Orion Acquisition Corp. II (3)
  3.1(e)   Certificate of Amendment of Amended and Restated Certificate of Incorporation of Orion Acquisition Corp. II (4)
  3.1(f)   Form of Certificate of Designations of the Series B Convertible Preferred Stock of Orion Acquisition Corp. II (5)
  3.1(g)   Amended and Restated Certificate of Designations of the Series B Convertible Preferred Stock of Orion Acquisition Corp. II (6)
  3.2   Bylaws of Orion Acquisition Corp. II, together with all amendments and restatements thereto (7)
  4.1   Warrant Agency Agreement between American Stock Transfer & Company and Orion Acquisition Corp. II, dated April 1, 1996 (8)
  4.2   Form of Class B Unit Purchase Agreement of Orion Acquisition Corp. II (9)
  4.3   Form of Certificate of the Class B Warrants of Orion Acquisition Corp. II (10)
  5.1   Opinion of Latham & Watkins LLP*
  9.1   Form of Voting Agreements by and among Orion Acquisition Corp. II and David T. Hung, M.D., C. Patrick Machado, Dara BioSciences, Inc. and Selena Pharmaceuticals, Inc., dated as of December 17, 2004
10.1   Form of Lock-Up Agreements by and among Orion Acquisition Corp. II and David T. Hung, M.D., C. Patrick Machado, Dara BioSciences, Inc. and Selena Pharmaceuticals, Inc., dated as of December 17, 2004
10.2(a)   Form of Purchase Agreement by and among Orion Acquisition Corp. II and the investors named therein, dated as of December 17, 2004 (11)
10.2(b)   Form of Purchase Agreement by and among Orion Acquisition Corp. II, Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special Situations Technology Fund, L.P., and Special Situations Technology Fund II, L.P., dated as of December 17, 2004 (12)
10.3(a)   Form of Registration Rights Agreements by and among Orion Acquisition Corp. II, Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special Situations Technology Fund, L.P., and Special Situations Technology Fund II, L.P., dated as of December 17, 2004 (13)
10.3(b)   Form of Registration Rights Agreements by and among Orion Acquisition Corp. II and the other parties thereto, dated as of December 17, 2004 (14)
10.3(c)   Form of Registration Rights Agreements by and among Orion Acquisition Corp. II, David T. Hung, M.D., C. Patrick Machado, Dara BioSciences, Inc., Selena Pharmaceuticals, Inc., and MDB Capital Group LLC, dated as of December 17, 2004 (15)

 

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Table of Contents
Exhibit No.

 

Exhibit Description


10.4(a)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Dara BioSciences, Inc., dated as of April 1, 2004
10.4(b)   Amendment Agreement by and between Orion Acquisition Corp. II and Dara BioSciences, Inc., dated as of December 17, 2004
10.5(a)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Joseph J. Grano, Jr., dated as of June 8, 2004
10.5(b)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Joseph J. Grano, Jr., dated as of August 1, 2004
10.5(c)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Joseph J. Grano, Jr., dated as of September 1, 2004
10.5(d)   Amendment Agreement by and between Orion Acquisition Corp. II and Joseph J. Grano, Jr., dated as of December 17, 2004
10.6   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to David T. Hung, M.D., dated as of November 16, 2004
10.7(a)   2004 Equity Incentive Plan of Medivation, Inc., assumed by Orion Acquisition Corp. II
10.7(b)   Form of Stock Option Agreement of Medivation, Inc., assumed by Orion Acquisition Corp. II*
21.1   Subsidiaries of Orion Acquisition Corp. II
23.1   Consent of Singer Lewak Greenbaum & Goldstein LLP, independent registered public accounting firm of Orion Acquisition Corp. II
23.2   Consent of Latham & Watkins LLP**
24.1   Power of Attorney (contained in this registration statement on Form SB-2)

(1) Incorporated by reference to Exhibit 2.1 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(2) Incorporated by reference to Exhibit 1.A. to Form 8-A of Orion Acquisition Corp. II, File No. 000-20837, dated June 10, 1996.
(3) Incorporated by reference to Exhibit 3.1 to Amendment No. 2 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated June 14, 1996.
(4) Incorporated by reference to Exhibit 3.2 to Form 10-KSB of Orion Acquisition Corp. II, File No. 000-20837, for the year ended December 31, 1999.
(5) Incorporated by reference to Exhibit 2.2 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated June 28, 2004.
(6) Incorporated by reference to Exhibit 5.1 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(7) Incorporated by reference to Exhibit 3.2 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated April 5, 1996.
(8) Incorporated by reference to Exhibit 4.2 to Amendment No. 1 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated May 15, 1996.
(9) Incorporated by reference to Exhibit 4.5 to Amendment No. 1 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated May 15, 1996.
(10) Incorporated by reference to Exhibit 1.D. to Form 8-A of Orion Acquisition Corp. II, File No. 000-20837, dated June 10, 1996.
(11) Incorporated by reference to Exhibit 10.1 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(12) Incorporated by reference to Exhibit 10.2 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(13) Incorporated by reference to Exhibit 10.3 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.

 

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(14) Incorporated by reference to Exhibit 10.4 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(15) Incorporated by reference to Exhibit 10.5 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
* To be filed by subsequent amendment to this registration statement on Form SB-2.
** Contained in exhibit 5.1 to this registration statement on Form SB-2.

 

Item 28. Undertakings.

 

The undersigned registrant hereby undertakes:

 

1. To file, during any period in which offers or sales of securities are being made, a post-effective amendment to this registration statement to (a) include any prospectus required by Section 10(a)(3) of the Securities Act; (b) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and, 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 the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and (c) include any additional or changed material information on the plan of distribution.

 

2. For determining liability under the Securities Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

 

3. To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

 

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, we have been advised that, in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

In the event that a claim for indemnification against such liabilities (other 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.

 

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SIGNATURES

 

In accordance with the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned in the City of San Francisco, State of California, on January 31, 2005.

 

ORION ACQUISITION CORP. II

By:

 

/s/     C. PATRICK MACHADO        


Name:   C. Patrick Machado
Title:   Senior Vice President and Chief Financial Officer

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. Patrick Machado his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof.

 

In accordance with the requirements of the Securities Act, this registration statement was signed by the following persons in the capacities and on the dates stated:

 

/s/    DAVID T. HUNG, M.D.        


David T. Hung, M.D.

   President and Chief Executive Officer (Principal Executive Officer)   January 31, 2005

/s/    C. PATRICK MACHADO        


C. Patrick Machado

   Senior Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)   January 31, 2005

/s/    CHRISTOPHER A. MARLETT        


Christopher A. Marlett

  

Director

  January 31, 2005

/s/    ANTHONY DIGIANDOMENICO        


Anthony DiGiandomenico

  

Director

  January 31, 2005

 

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EXHIBIT INDEX

 

Exhibit No.

 

Exhibit Description


  2.1   Agreement and Plan of Merger dated as of December 17, 2004, by and among the Orion Acquisition Corp. II, Medivation Acquisition Corp. and Medivation, Inc.(1)
  3.1(a)   Form of Certificate of Common Stock, par value $0.01 per share, of Orion Acquisition Corp. II (2)
  3.1(b)   Form of Certificate of Series A Convertible Preferred Stock, par value $0.01 per share, of Orion Acquisition Corp. II*
  3.1(c)   Form of Certificate of Series B Convertible Preferred Stock, par value $0.01 per share, of Orion Acquisition Corp. II
  3.1(d)   Amended and Restated Certificate of Incorporation of Orion Acquisition Corp. II (3)
  3.1(e)   Certificate of Amendment of Amended and Restated Certificate of Incorporation of Orion Acquisition Corp. II (4)
  3.1(f)   Form of Certificate of Designations of the Series B Convertible Preferred Stock of Orion Acquisition Corp. II (5)
  3.1(g)   Amended and Restated Certificate of Designations of the Series B Convertible Preferred Stock of Orion Acquisition Corp. II (6)
  3.2   Bylaws of Orion Acquisition Corp. II, together with all amendments and restatements thereto (7)
  4.1   Warrant Agency Agreement between American Stock Transfer & Company and Orion Acquisition Corp. II, dated April 1, 1996 (8)
  4.2   Form of Class B Unit Purchase Agreement of Orion Acquisition Corp. II (9)
  4.3   Form of Certificate of the Class B Warrants of Orion Acquisition Corp. II (10)
  5.1   Opinion of Latham & Watkins LLP*
  9.1   Form of Voting Agreements by and among Orion Acquisition Corp. II and David T. Hung, M.D., C. Patrick Machado, Dara BioSciences, Inc. and Selena Pharmaceuticals, Inc., dated as of December 17, 2004
10.1   Form of Lock-Up Agreements by and among Orion Acquisition Corp. II and David T. Hung, M.D., C. Patrick Machado, Dara BioSciences, Inc. and Selena Pharmaceuticals, Inc., dated as of December 17, 2004
10.2(a)   Form of Purchase Agreement by and among Orion Acquisition Corp. II and the investors named therein, dated as of December 17, 2004 (11)
10.2(b)   Form of Purchase Agreement by and among Orion Acquisition Corp. II, Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special Situations Technology Fund, L.P., and Special Situations Technology Fund II, L.P., dated as of December 17, 2004 (12)
10.3(a)   Form of Registration Rights Agreements by and among Orion Acquisition Corp. II, Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special Situations Technology Fund, L.P., and Special Situations Technology Fund II, L.P., dated as of December 17, 2004 (13)
10.3(b)   Form of Registration Rights Agreements by and among Orion Acquisition Corp. II and the other parties thereto, dated as of December 17, 2004 (14)
10.3(c)   Form of Registration Rights Agreements by and among Orion Acquisition Corp. II, David T. Hung, M.D., C. Patrick Machado, Dara BioSciences, Inc., Selena Pharmaceuticals, Inc., and MDB Capital Group LLC, dated as of December 17, 2004 (15)


Table of Contents
Exhibit No.

 

Exhibit Description


10.4(a)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Dara BioSciences, Inc., dated as of April 1, 2004
10.4(b)   Amendment Agreement by and between Orion Acquisition Corp. II and Dara BioSciences, Inc., dated as of December 17, 2004
10.5(a)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Joseph J. Grano, Jr., dated as of June 8, 2004
10.5(b)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Joseph J. Grano, Jr., dated as of August 1, 2004
10.5(c)   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to Joseph J. Grano, Jr., dated as of September 1, 2004
10.5(d)   Amendment Agreement by and between Orion Acquisition Corp. II and Joseph J. Grano, Jr., dated as of December 17, 2004
10.6   Warrant to purchase Common Stock of Medivation, Inc. assumed by Orion Acquisition Corp. II issued to David T. Hung, M.D., dated as of November 16, 2004
10.7(a)   2004 Equity Incentive Plan of Medivation, Inc., assumed by Orion Acquisition Corp. II
10.7(b)   Form of Stock Option Agreement of Medivation, Inc., assumed by Orion Acquisition Corp. II*
21.1   Subsidiaries of Orion Acquisition Corp. II
23.1   Consent of Singer Lewak Greenbaum & Goldstein LLP, independent registered public accounting firm of Orion Acquisition Corp. II
23.2   Consent of Latham & Watkins LLP**
24.1   Power of Attorney (contained in this registration statement on Form SB-2)

(1) Incorporated by reference to Exhibit 2.1 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(2) Incorporated by reference to Exhibit 1.A. to Form 8-A of Orion Acquisition Corp. II, File No. 000-20837, dated June 10, 1996.
(3) Incorporated by reference to Exhibit 3.1 to Amendment No. 2 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated June 14, 1996.
(4) Incorporated by reference to Exhibit 3.2 to Form 10-KSB of Orion Acquisition Corp. II, File No. 000-20837, for the year ended December 31, 1999.
(5) Incorporated by reference to Exhibit 2.2 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated June 28, 2004.
(6) Incorporated by reference to Exhibit 5.1 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(7) Incorporated by reference to Exhibit 3.2 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated April 5, 1996.
(8) Incorporated by reference to Exhibit 4.2 to Amendment No. 1 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated May 15, 1996.
(9) Incorporated by reference to Exhibit 4.5 to Amendment No. 1 to Form SB-2 of Orion Acquisition Corp. II, File No. 333-03252, dated May 15, 1996.
(10) Incorporated by reference to Exhibit 1.D. to Form 8-A of Orion Acquisition Corp. II, File No. 000-20837, dated June 10, 1996.
(11) Incorporated by reference to Exhibit 10.1 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(12) Incorporated by reference to Exhibit 10.2 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.


Table of Contents
(13) Incorporated by reference to Exhibit 10.3 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(14) Incorporated by reference to Exhibit 10.4 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
(15) Incorporated by reference to Exhibit 10.5 to Form 8-K of Orion Acquisition Corp. II, File No. 000-20837, dated December 20, 2004.
* To be filed by subsequent amendment to this registration statement on Form SB-2.
** Contained in exhibit 5.1 to this registration statement on Form SB-2.
EX-3.1(C) 2 dex31c.htm FORM OF CERTIFICATE OF SERIES B CONVERTIBLE STOCK Form of Certificate of Series B Convertible Stock

Exhibit 3.1(c)

 

Certificate No. B-[·]

  ORION ACQUISITION CORP. II   **[·]** Shares

 

Series B Convertible Preferred Stock

(par value $0.01 per share)

 

THIS CERTIFIES THAT **[·]** is the record holder of **[·] ([·])** shares of Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), of ORION ACQUISITION CORP. II, a Delaware corporation (the “Company”), transferable only on the share register of the Company, in person or by duly authorized attorney, and upon surrender of this certificate (the “Certificate”) properly endorsed or assigned.

 

This Certificate, and the shares represented by this Certificate (the “Shares”), shall be held subject to all of the provisions of the Restated Certificate of Incorporation and the Bylaws of said Company, in each case together with any amendments thereto, respectively (together, the “Charter Documents”); and by the holder’s acceptance of this Certificate, the holder of this Certificate assents to all provisions of said Charter Documents. The Shares represented by this Certificate are subject to the legends affixed to the reverse side of this Certificate.

 

The Company is authorized to issue shares of two (2) classes of capital stock, par value $0.01 per share, of the Company, shares of Common Stock and shares of Preferred Stock (the “Common Stock” and the “Preferred Stock”, respectively, and together, the “Authorized Capital Stock”). A statement of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes or series of shares of Authorized Capital Stock and upon the respective holders thereof, as established by the Charter Documents, may be obtained by any stockholder of the Company upon request at the principal office of the Company; and the Company shall furnish to any stockholder of the Company, upon request and without charge, a copy of such statement.

 

The Shares represented by this Certificate shall be convertible into shares of Common Stock only in accordance with the applicable provisions of the Charter Documents.

 

IN WITNESS WHEREOF, the authorized officers of the Company have executed this Certificate on this 17th day of December, 2004.

 

           

Bradley Bugdanowitz, Assistant Secretary

      David T. Hung, President


FOR VALUE RECEIVED ____________________________________________ HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO _____________________________________ SHARES REPRESENTED BY THE WITHIN CERTIFICATE AND DOES HEREBY IRREVOCABLY CONSTITUTE AND APPOINT _________________________________ ATTORNEY TO TRANSFER THE SAID SHARES ON THE SHARE REGISTER OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.

 

DATED                     

       
         
   

(Signature)

   

 

NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

 

NEITHER THE SHARES OF SERIES B PREFERRED STOCK NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF (TOGETHER, THE “SECURITIES”) REPRESENTED BY THIS CERTIFICATE, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.

 

EX-9.1 3 dex91.htm FORM OF VOTING AGREEMENTS Form of Voting Agreements

 

Exhibit 9.1

 

VOTING AGREEMENT

 

This Voting Agreement (the “Agreement”) is made effective as of December     , 2004, by and among Orion Acquisition Corp. II, a Delaware corporation (the “Company”) and                      (“Stockholder”).

 

RECITALS

 

WHEREAS, pursuant to a Merger Agreement (the “Merger Agreement”), by and among the Company, Medivation Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Newco”), and Medivation, Inc., a Delaware corporation (“Medivation”), Newco will be merged with and into Medivation (the “Merger”), with Medivation as the surviving corporation and a wholly-owned subsidiary of the Company;

 

WHEREAS, Stockholder and the other former stockholders of Medivation will receive in the Merger, in exchange for the issued and outstanding shares of Medivation common stock owned by them, shares of the Series B Preferred Stock of the Company;

 

WHEREAS, pursuant to stock purchase agreements, each dated of even date herewith (collectively, the “Stock Purchase Agreements”), by and between the Company and the investors listed therein (collectively, the “Investors”), the Company has agreed to issue and sell to the Investors, and the Investors have agreed to purchase from the Company, up to a maximum of 7,800,000 shares of the Company’s Common Stock at a purchase price of $1.55 per share;

 

WHEREAS, it is a condition to the obligations of the Company and Medivation under the Merger Agreement, and it is also a condition to the obligations of the Company and the Investors under the Stock Purchase Agreements, that Stockholder agree to vote the shares of Company stock owned by him in the manner set forth in this Agreement; and

 

WHEREAS, the parties desire to enter into this Agreement and to provide that in exercising any voting rights related to the subject matter of this Agreement, the shares of the Company’s voting stock held by Stockholder shall be voted as provided in this Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE 1

 

General; Definitions

 

1.1 Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

(a) “Common Stock” shall mean the Company’s common stock, $0.01 par value per share, having the rights, preferences and privileges as set forth in the Company’s certificate of incorporation and bylaws, as amended and in effect on the date thereof.

 

     -1-     

FORM OF VOTING AGREEMENT

         


(b) “Series B Preferred Stock” shall mean the Company’s Series B Preferred Stock, $0.01 par value per share, having the rights, preferences and privileges as set forth in the Company’s certificate of incorporation and bylaws, as amended and in effect on the date thereof.

 

(c) “Shares” shall mean, collectively, the shares of Series B Preferred Stock issued to Stockholder in the Merger, and the shares of Common Stock into which such Series B Preferred Stock is convertible.

 

ARTICLE 2

 

Agreement to Vote

 

2.1 Agreement to Vote. During the term of this Agreement, Stockholder hereby agrees and covenants to vote or cause to be voted all of his Shares then owned by him, or over which he has voting power, at any regular or special meeting of stockholders, or, in lieu of any such meeting, to give his written consent in any action by written consent of the stockholders, in favor of each of the following items:

 

(a) The amendment of the Certificate of Incorporation of the Company to:

 

(i) increase the authorized shares of Common Stock of the Company to 50,000,000 shares; and

 

(ii) change the name of the Company to a name specified by the Board of Directors of the Company, which name shall include the word “Medivation”; and

 

(iii) make any other change that the Company’s Board of Directors has determined to be necessary or advisable in order to obtain listing of the Company’s Common Stock on the Nasdaq SmallCap Market; and

 

(b) The election to the Company’s Board of Directors of the following five (5) individuals:

 

(i) Steve Gorlin;

 

(ii) David T. Hung, M.D.;

 

(iii) One (1) nominee of the former stockholders of Medivation; and

 

(iv) Two (2) nominees of MDB Capital Group LLC.

 

(c) In the event that any of the persons nominated pursuant to Section 2.1(b) is unable or unwilling to serve as a director, the election of such successor nominee as is designated by the parties entitled to designate such nominee pursuant to Section 2.1(b).

 

     -2-     

FORM OF VOTING AGREEMENT

         


2.2 Further Assurances. Stockholder shall take such action as may be reasonably necessary to perform his obligations hereunder.

 

ARTICLE 3

 

Miscellaneous

 

3.1 Termination. This Agreement shall remain in effect until the conclusion of any stockholders meeting, and any adjournment thereof, duly called and held to consider and vote on the matters set forth in Section 2.1 hereof (the “Required Approvals”) (or the conclusion of any solicitation of consents to such matters in lieu of a stockholders meeting). From and after such date, this Agreement shall terminate automatically and without further action by any of the parties.

 

3.2 Prompt Action. The Company agrees to take all actions necessary to obtain the Required Approvals as promptly as is practicable following the closing of the transactions contemplated by the Merger Agreement and the Stock Purchase Agreement, including without limitation, filing an appropriate proxy statement with the Securities and Exchange Commission.

 

3.3 Successors; Legending of Shares. The terms of this Agreement shall be binding upon and inure to the benefit of the heirs, personal representatives, successors and assigns of the parties hereto and each transferee or assignee of the Shares subject to this Agreement shall continue to be subject to the terms hereof. During the term of this Agreement, each certificate representing the Shares subject to this Agreement shall be endorsed by the Company with a legend reading substantially as follows:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

 

Within three (3) business days following termination of this Agreement, the Company shall provide to Stockholder new certificates from which the above legend has been removed.

 

3.4 Governing Law. This Voting Agreement shall be governed in all respects by the laws of the State of New York without regard to choice of laws or conflict of laws provisions thereof.

 

3.5 Specific Performance. In the event of a breach by any party of its obligation to vote or act as provided in this Agreement, any aggrieved party shall be entitled to a decree of specific performance. The aggrieved party shall not be denied specific performance by a court on the ground that a remedy at law is adequate or on other grounds relating to the jurisdiction of a court of equity.

 

     -3-     

FORM OF VOTING AGREEMENT

         


3.6 Successors and Assigns. This Agreement and all rights, duties and obligations hereunder shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties.

 

3.7 Entire Agreement; Amendment. This Agreement and any term hereof may be amended, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument signed by the Company and Stockholder; provided, however, that no amendment hereto shall affect the obligation of Stockholder to vote in favor of the Required Approvals. Any amendment or waiver of this Agreement so effected shall be binding upon each of the parties to this Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof. Any prior agreements, understandings or representations with respect to the subject matter hereof, are superseded by this Agreement and shall have no further force or effect.

 

3.8 Notice. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by first-class United States mail or delivered in person or sent via next day Federal Express delivery or any other nationally-recognized overnight delivery service or by facsimile (with confirmation of receipt), addressed:

 

(a) if to Stockholder, at such address as set forth opposite Stockholder’s signature to this Agreement, or at such other address as Stockholder shall have furnished to the Company in writing;

 

(b) if to any other holder of any securities subject to this Agreement, at such address as such holder shall have furnished to the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such securities who has so furnished an address to the Company; or

 

(c) if to the Company, at the address set forth below the signature of the Company’s duly authorized representative.

 

Notice shall be deemed to be received for purposes of this Agreement (i) when delivered, if delivered in person, (ii) one (1) business day after having been deposited for delivery, if delivered by next day Federal Express delivery or any other nationally-recognized overnight delivery service, (iii) three (3) days after having been deposited in the United States mails with first class postage prepaid and addressed to the recipient and (iv) when sent, if delivered by facsimile (with confirmation of receipt).

 

3.9 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party upon any breach or default under this Agreement shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be made in writing and shall

 

     -4-     

FORM OF VOTING AGREEMENT

         


be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

 

3.10 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

3.11 Counterparts. This Agreement may be executed in any number of counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of this Page Intentionally Left Blank]

 

     -5-     

FORM OF VOTING AGREEMENT

         


IN WITNESS WHEREOF, the undersigned have executed this Voting Agreement as of the date first set forth above.

 

COMPANY:

     

ORION ACQUISITION CORP. II

501 Second Street, Suite 211

       

San Francisco, CA 94107

       

Fax: (415) 543-3113

      By:    
           

Name:

   
           

Title:

   

 

         

STOCKHOLDER:

       
                Signature

 

           

FORM OF VOTING AGREEMENT

         
EX-10.1 4 dex101.htm FORM OF LOCK-UP AGREEMENTS Form of Lock-Up Agreements

 

Exhibit 10.1

 

LOCK-UP AGREEMENT

 

December     , 2004

 

Orion Acquisition Corp. II

401 Wilshire Boulevard – Suite 1020

Santa Monica, California 90401

 

Ladies and Gentlemen:

 

In connection with a private offering of stock by Orion Acquisition Corp. II, (“Corporation”) and the merger (“Merger”) between a subsidiary of the Corporation and Medivation, Inc., a Delaware corporation (“Medivation”), (i) to induce the Corporation to sell such stock to “accredited” or otherwise sophisticated investors (“Investors”), (ii) to induce the Investors to purchase stock of the Corporation, and (iii) to induce the Corporation to consummate the Merger, the undersigned, agrees to neither directly nor indirectly:

 

  (1) sell or offer or contract to sell or offer, grant any option or warrant for the sale of, assign, transfer, pledge, hypothecate, or otherwise encumber or dispose of ( all being referred to as a “Transfer”) any legal or beneficial interest in any Restricted Shares. “Restricted Shares” shall mean (a) the shares of the Series B Preferred Stock, $.01 par value, of the Corporation to be received by the undersigned in the Merger in exchange for the issued and outstanding shares of Medivation Common Stock, $.001 par value, held by the undersigned immediately prior to consummation of the Merger (the “Restricted Series B Shares”), (b) the shares of the Common Stock, $.01 per share, of the Corporation issuable upon conversion of the Restricted Series B Shares (the “Restricted Common Shares”), and (c) any other securities of the Corporation that may become issuable with respect to any of the Restricted Series B Shares and/or the Restricted Common Shares, by way of stock split, stock dividend or otherwise; or

 

  (2) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any of the Restricted Shares, whether such swap transaction is to be settled by delivery of any Restricted Shares or other securities of any person, in cash or otherwise,

 

for the period commencing the date of the consummation of the Merger and ending on the later of (i) first anniversary of the consummation of the Merger, or (ii) the closing of the database for the Corporation’s (including though its subsidiary) planned Phase II randomized, double-blinded, placebo controlled study of Dimebon in Alzheimer’s disease patients in Russia, which is expected to occur in the first half of 2006, but, notwithstanding the foregoing time periods, the lock-up period will not exceed two years after the consummation of the Merger.

 

Notwithstanding the foregoing limitations, this lock-up agreement will not prevent any Transfer of any or all of the Restricted Shares, [i] either during the undersigned’s lifetime or on the undersigned’s death, by gift, will or intestate succession, to the undersigned’s “family member” or to trusts, family limited partnerships and similar entities for the benefit of the undersigned or the undersigned’s “family members”; or if the undersigned is an entity, to the stockholders, members or other owners of such entity, provided, however, that in each and any such event it shall be a condition to the Transfer that the transferee execute an agreement stating that the transferee is receiving and holding the Restricted Shares subject to the provision of this lock-up agreement, and other than to return the Restricted Shares to the former ownership, there shall be no further Transfer of the Restricted Shares except in accordance with this lock-up agreement, or [ii] upon the approval by unanimous written consent of the then board of directors of the Corporation. For purposes of this sub-paragraph, “family member” shall mean spouse, lineal descendants, stepchildren, father, mother, brother or sister of the transferor or of the transferor’s spouse.

 

           

FORM OF LOCK UP AGREEMENT

         


The undersigned has submitted or in the future will submit any certificates representing the Restricted Shares to the Corporation so that it may apply the appropriate legend thereto to reflect the existence and general terms of this lock-up agreement.

 

This lock-up agreement will be legally binding on the undersigned and on the undersigned’s heirs, successors, executors, administrators, conservators and permitted assigns, executed as an instrument governed by the laws of the State of California.

 

Very truly yours,
 
 

Number of Series B Restricted Shares

 

     2     

FORM OF LOCK UP AGREEMENT

         
EX-10.4(A) 5 dex104a.htm WARRANT OF ORION ISSUED TO DARA BIOSCIENCES, INC. Warrant of Orion issued to DARA BioSciences, Inc.

Exhibit 10.4(a)

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.

 

Dated: April 1, 2004   Void after the date
    specified below in Section 1(c)

 

MEDIVATION, INC.

 

WARRANT

 

THIS CERTIFIES THAT, for value received, Dara BioSciences, Inc. and its registered assigns (and each transferee, hereinafter called the “Holder”) is entitled to purchase from Medivation, Inc. (the “Company”), a Delaware corporation, at the times and under the circumstances set forth below in Section 1, up to the number of Warrant Shares (defined below) specified in Section 1(b) below at an exercise price per share equal to the Exercise Price (defined below) specified in Section 1(b) below. This Warrant may be exercised in whole or in part at the option of the Holder in the manner and at the times set forth below.

 

The “Loan Agreement” shall mean that certain Convertible Note and Warrant Purchase Agreement, dated as of April 1, 2004, by and between the Company and the Holder, as the same may be amended from time to time in accordance with its terms. Unless otherwise defined herein, defined terms in this Warrant shall have the meanings ascribed thereto in the Loan Agreement.

 

1. Exercise Price, Type of Security.

 

(a) Exercisability. Subject to Section 1(c), this Warrant shall be exercisable at the option of the Holder hereof for Warrant Shares (defined below) at any time during the Exercise Period. “Exercise Period” shall mean the period beginning upon the closing of the first Equity Financing of the Company that occurs after the date hereof (the “First Equity Financing”) and ending upon the applicable termination date specified in Section 1(c) hereof; provided, however, that if a Change of Control occurs prior to the First Equity Financing, this Warrant shall also be exercisable upon the closing of such Change of Control as provided for in Section 1(b)(ii) hereof.


(b) Type of Security; Exercise Price; Number of Warrant Shares. This Warrant shall be exercisable for Warrant Shares at an Exercise Price per share as follows:

 

(i) If this Warrant is exercised following the closing of the First Equity Financing, the “Warrant Shares” shall mean the number of shares of the Company’s capital stock issued in such First Equity Financing equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) the the price per share at which the Company sells such capital stock in the First Equity Financing (the “First Equity Financing Price”). In such event, the “Exercise Price” per share shall be equal to the First Equity Financing Price, subject to adjustment as provided for herein.

 

(ii) If this Warrant is exercised before the closing of the First Equity Financing (i.e., immediately prior to a Change of Control), the “Warrant Shares” shall mean the number of shares of Company’s Common Stock, par value $.001, equal to one percent (1%) of the number of shares of capital stock outstanding immediately prior to such Change of Control. For purposes this Section the number of shares of capital stock outstanding shall be determined on an as-converted, fully diluted basis assuming the issuance of all options, warrants and other convertible securities (including when such issuance is contingent) and the full conversion or exercise thereof. In such event, the “Exercise Price” per share shall be equal to the quotient of (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) the number of shares of Common Stock determined in accordance with the first sentence of this clause (ii), subject to adjustment as provided for herein.

 

(c) Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate, if not earlier exercised, upon the first to occur of (i) the closing of a Change of Control; (ii) the closing of the Company’s initial public offering of its Common Stock; or (iii) October 10, 2013.

 

2. Method of Exercise; Payment; Issuance of New Warrant.

 

(a) Cash Exercise. The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part, by: (i) the surrender of this Warrant (with the notice of exercise form attached hereto as Attachment A duly executed) at the principal office of the Company; and (ii) the payment to the Company in cash of an amount equal to the Exercise Price per share multiplied by the number of Warrant Shares then being purchased (such aggregate amount of money, the “Purchase Price”).

 

(b) Net Issuance Exercise.

 

(i) In lieu of exercising this Warrant in the manner provided above in Section 2(a), the Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election in which event in exchange therefor the Company shall issue to such Holder a number of Warrant Shares computed using the following formula:

 

X =

   Y (A-B)     
         A     

 

2


Where                X =    The number of Warrant Shares to be issued to the Holder     
     Y =    The total number of Warrant Shares for which this Warrant is being exercised.     
     A =    The fair market value of one Warrant Share (at the date of such calculation).     
     B =    The Exercise Price.     

 

(ii) For purposes of this Section 2(b), the fair market value of one Warrant Share on the date of calculation shall mean with respect to each Warrant Share:

 

(a) if the exercise is in connection with an initial public offering of the Company’s Common Stock, and if the Company’s Registration Statement relating to such public offering has been declared effective by the Securities and Exchange Commission, then the fair market value per share shall be the product of (x) the initial “Price to Public” specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each Warrant Share is convertible on the date of calculation;

 

(b) if (a) is not applicable, the fair market value of a Warrant Share shall be as determined by the Board of Directors in good faith and taking into account the rights, preferences and privileges of the Warrant Shares issuable upon such exercise, as well as the amount to be distributed to or received by holders of Warrant Shares in connection with any transaction in connection with which this Warrant is then being exercised or upon which such exercise is being conditioned.

 

(iii) The Company and the Holder agree that any exchange of this Warrant for shares pursuant to the provisions of this Section 2(b) is being undertaken pursuant to Internal Revenue Code Section 368(a)(1)(E).

 

(c) Conditional Exercise. A Holder may condition any exercise of this Warrant upon any event, happening or condition (or the absence thereof) either within a stated period of time or otherwise, and no exercise hereof shall be deemed to have occurred except subject to and in conformance with such conditions. Any such conditions shall be in writing and delivered to the Company together with such Holder’s notice of exercise.

 

(d) Holder of Record. Upon receipt by the Company of such notice of exercise, together with, if applicable, the aggregate Purchase Price, at its office, or by the stock transfer agent or Warrant agent of the Company at its office, the Holder shall be deemed to be the holder of record of the applicable Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.

 

3


(e) Exercise for Less than All Warrant Shares. In the event that this Warrant is being exercised for less than all of the then-current number of Warrant Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company pursuant to Section 2(a) or 2(b) of the number of Warrant Shares for which this Warrant is then being exercised, the Company shall issue a new Warrant of like form exercisable for the remaining number of Warrant Shares purchasable hereunder.

 

(f) Payment of Taxes. The Company will pay all taxes (including without limitation any and all documentary stamp or similar issue or transfer taxes, but excluding taxes based upon income) and any other governmental charges that may be imposed with respect to any exercise hereof or any issuance or delivery of Warrant Shares hereunder by the Company (including upon any subsequent conversion of Warrant Shares that are shares of preferred stock).

 

3. Stock Fully Paid; Reservation of Warrant Shares. All shares of stock which may be issued upon the exercise of the rights represented by this Warrant (including without limitation upon any subsequent conversion of any Warrant Shares) will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. The Company shall have authorized and reserved for issuance (i) sufficient shares of Warrant Shares to permit the full exercise of this Warrant at or prior to the date on which this Warrant becomes exercisable, and (ii) if applicable, sufficient shares of Common Stock to permit the full conversion of such Warrant Shares in conformance with the Company’s Certificate of Incorporation as then in effect.

 

4. Adjustment of Exercise Price and Number of Warrant Shares. The number of and kind of shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time after the date on which this Warrant first becomes exercisable and prior to the expiration of this Warrant subdivide its Warrant Shares, by split-up or otherwise, or combine its Warrant Shares, or issue additional Warrant Shares as a dividend with respect to any of its Warrant Shares, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price payable per share, but the aggregate Purchase Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b) Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or other change in the capital stock of the Company (including by way of a merger or otherwise, but other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a) above), then, as a condition of such reclassification, reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the holder of this Warrant, so that the holder of this Warrant shall have the right at any time prior to

 

4


the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Warrant Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change.

 

(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the holder of such event and of the number of shares of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5. Fractional Warrant Shares. No fractional Warrant Shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

6. Compliance with Securities Act. This Warrant and all Warrant Shares (unless registered under the Securities Act of 1933, as amended, hereinafter, the “Act”) shall be stamped or imprinted with legends in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.”

 

7. Transferability of Warrant. This Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws.

 

8. Disposition of Warrant Shares. With respect to any offer, sale or other disposition of any Warrant Shares prior to registration of such shares, the Holder and each subsequent Holder of this Warrant agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such Holder’s counsel, if reasonably requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state law then in effect) of such Warrant Shares and indicating whether or not under the Act certificates for such

 

5


shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with the Act; provided, however, Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144. Notwithstanding the foregoing, no such opinion of counsel or no action letter shall be necessary for a transfer by a Holder (i) to an affiliate, (ii) to a partner, retired partner, member or retired member where the Holder is a partnership or a limited liability company, (iii) by gift, will or intestate succession to his or her spouse or lineal descendants or ancestors or any trust for the benefit of any of the foregoing; provided the transferee agrees in writing to be subject to the terms hereof to the same extent as if he/she were the original Holder hereunder.

 

9. No Rights as Stockholder. No Holder of this Warrant shall be entitled to vote or be deemed the holder of stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant has been exercised and the Warrant Shares shall have become deliverable, as provided herein.

 

10. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.

 

11. Notices. All notices, requests, demands and other communications that are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered, (ii) upon electronic confirmation of receipt, if transmitted by telecopy, (iii) the first business day after it is sent, if sent for next day delivery to a domestic address by a nationally recognized overnight delivery service (e.g., Federal Express), and (iv) five days from the date of deposit in the U.S. mails, if sent by certified or registered U.S. mail, return receipt requested. In each case such notice shall be addressed as follows:

 

To the Company:

 

Medivation, Inc.

501 Second Street, Suite 211

San Francisco, California 94107

Fax: (415) 543-3113

Attn: C. Patrick Machado

 

6


To the Holder:

 

Dara BioSciences, Inc.

1234 Airport Road, Suite 105

Destin, Florida 32541

Fax: (850) 650-2213

Attn: Steve Gorlin

 

Or to such address as Holder (or any subsequent Holder) may notify the Company of in writing at any time.

 

12. Conflicting Terms.

 

In the event of any conflict between the terms and conditions of this Warrant and the terms and conditions of the Loan Agreement, the terms and conditions of the Loan Agreement shall govern.

 

13. Miscellaneous.

 

The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Company and the registered Holder.

 

(Signature page follows)

 

7


COMPANY:
MEDIVATION, INC.
By:  

 


    David T. Hung, M.D.
    President and Chief Executive Officer

 

AGREED TO AND ACCEPTED:
DARA BIOSCIENCES, INC.
By:  

 


Name:    
Title:    

 

WARRANT TO PURCHASE NEXT EQUITY SECURITY


ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

TO: MEDIVATION, INC.

 

1. The undersigned hereby elects to purchase              shares of the Warrant Shares (such class of security being subject to adjustment as set forth in the attached Warrant) of Medivation, Inc., pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate purchase price of such shares in full. In the event that this exercise is a net-issuance exercise pursuant to Section 2(b) of the Warrant, the calculation of the number of Warrant Shares to be issued and the number of Warrant Shares to be cancelled as consideration for the aggregate purchase price shall be attached hereto.

 

2. Please issue a certificate or certificates representing said shares of stock in the name of the undersigned or in such other name as is specified below:

 


(Name)

 


(Address)

 


 

3. The undersigned represents that the aforesaid shares of stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof in contravention of applicable law and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Attachment B.

 

Name of Warrant Holder:

 

 


By:  

 


Name:  

 


Title:  

 



ATTACHMENT B TO WARRANT

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER

 

:

    

COMPANY

 

:

  

MEDIVATION, INC.

SECURITY

 

:

    

AMOUNT

 

:

    

DATE

 

:

    

 

In connection with the purchase of the above-listed securities and underlying stock (the “Securities”), I,                     , the Purchaser, represent to the Company the following:

 

(a) I am aware of the Company’s business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof in contravention of applicable law. I am an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.

 

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

 

Name of Purchaser:


By:

 

 


Name:

 

 


Title:

 

 


EX-10.4(B) 6 dex104b.htm AMENDMENT AGREEMENT BY AND BETWEEN ORION AND DARA BIOSCIENCES Amendment Agreement by and between Orion and Dara BioSciences

Exhibit 10.4(b)

 

AMENDMENT AGREEMENT

 

This Amendment Agreement (the “Amendment”), dated as of December 17, 2004, is made by and between Medivation, Inc., a Delaware corporation (“Medivation”), and Dara BioSciences, Inc., a Delaware corporation (“Dara”).

 

A. Dara and Medivation have entered into the following documents, each dated as of October 10, 2003: a Convertible Note and Warrant Purchase Agreement (the “First Purchase Agreement”); a Convertible Promissory Note (the “First Note”); and a Warrant (the “First Warrant”). The First Purchase Agreement, the First Note, and the First Warrant are collectively referred to herein as the “First Loan Documents.”

 

B. Pursuant to the First Loan Documents, Dara extended to Medivation a loan in the principal amount of One Million Dollars ($1,000,000) (the “First Loan”).

 

C. Dara and Medivation have entered into the following documents, each dated as of April 1, 2004: a Convertible Note and Warrant Purchase Agreement (the “Second Purchase Agreement”); a Convertible Promissory Note (the “Second Note”); and a Warrant (the “Second Warrant”). The Second Purchase Agreement, the Second Note, and the Second Warrant are collectively referred to herein as the “Second Loan Documents.”

 

D. Pursuant to the Second Loan Documents, Dara extended to Medivation a loan in the principal amount of Two Hundred Fifty Thousand Dollars ($250,000) (the “Second Loan”).

 

E. Medivation presently intends to enter into a reverse merger (the “Merger”) with Orion Acquisition Corp II, a Delaware corporation (“Orion”), on the terms and subject to the conditions specified in the Confidential Private Placement Memorandum dated November 30, 2004 (the “PPM”), a copy of which has been provided to Dara. As a result of the Merger, Medivation will become a wholly-owned subsidiary of Orion.

 

F. Immediately following completion of the Merger, Orion will issue shares of its Common Stock (the “Orion Common Stock”) to investors in a private placement financing (the “Offering”), and will agree with such investors to register the shares sold in the Offering with the Securities and Exchange Commission for reoffer and resale, all on the terms and subject to the conditions specified in the PPM.

 

G. The Merger and the Offering shall sometimes be referred to collectively herein as the “Transaction.”

 

DARA AMENDMENT AGREEMENT  

1


H. Medivation and Dara mutually desire to enter into this Amendment to amend the terms of certain of the First Financing Documents and Second Financing Documents, and to reflect their mutual agreement on the disposition of the First Loan and the Second Loan in the Transaction.

 

I. All of the agreements in this Amendment are subject to, and will take effect only upon the consummation of, the Transaction.

 

In consideration of the mutual promises contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, Dara and Medivation hereby agree as follows:

 

  1. First Loan.

 

(a) The aggregate principal balance, plus accrued but unpaid interest, on the First Loan shall be converted in the Offering into shares of Orion Common Stock at a conversion price per share equal to the per share price paid by new investors in the Offering (the “Offering Price”). As described in the PPM, the Offering Price is presently anticipated to be One Dollar Fifty Five Cents ($1.55) per share.

 

(b) Upon closing of the Transaction, the First Warrant shall become exerciseable, automatically and without further action on the part of either Dara or Medivation, to purchase shares of Orion Common Stock at the Offering Price per share. For purposes of the termination provisions of the First Warrant, the Transaction will be deemed not to constitute a “Change of Control” of Medivation, with the consequence that the First Warrant will remain exercisable following completion of the Transaction in accordance with its terms, except for the change in underlying security and purchase price specified in this Section 1(b).

 

  2. Second Loan.

 

(a) The aggregate principal balance, plus accrued but unpaid interest, on the Second Loan, shall be repaid by Medivation from proceeds of the Offering.

 

(b) Upon closing of the Transaction, the Second Warrant shall become exerciseable, automatically and without further action on the part of either Dara or Medivation, to purchase shares of Orion Common Stock at the Offering Price per share. For purposes of the termination provisions of the Second Warrant, the Transaction will be deemed not to constitute a “Change of Control” of Medivation, with the consequence that the Second Warrant will remain exercisable following completion of the Transaction in accordance with its terms, except for the change in underlying security and purchase price specified in this Section 2(b).

 

3. Amendment. This Amendment shall be deemed to amend each provision of the First Loan Documents and the Second Loan Documents necessary in order to reflect the agreements of the parties set forth herein. Accept as so amended, the First Loan Documents and the Second Loan Documents shall remain in full force and effect in accordance with their terms.

 

DARA AMENDMENT AGREEMENT  

2


4. Effectiveness. The agreements of the parties set forth in this Amendment shall take effect automatically, without further action by either party, upon the closing of the Transaction. Should the Transaction not close, the agreements set forth in this Amendment shall be null, void and of no effect on either party or any of the First Loan Documents or the Second Loan Documents.

 

5. Miscellaneous. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law. This Amendment constitutes the entire agreement of the parties with respect to the subject matter hereof, and any and all other written or oral agreements existing between the parties hereto are expressly cancelled. Any term of this Amendment may be amended or waived only with the written consent of both parties hereto.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first noted above.

 

MEDIVATION, INC.   DARA BIOSCIENCES, INC.
By:  

 


  By:  
Name:  

 


  Name:  

 


Title:  

 


  Title:  

 


 

 

DARA AMENDMENT AGREEMENT  

3

EX-10.5(A) 7 dex105a.htm FORM OF WARRANT OF ORION ISSUED TO JOSEPH J. GRANO, DATED JUNE 8, 2004 Form of Warrant of Orion issued to Joseph J. Grano, dated June 8, 2004

 

Exhibit 10.5(a)

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.

 

Dated: June 8, 2004

   Void after the date
     specified below in Section 1(c)

 

MEDIVATION, INC.

 

WARRANT

 

THIS CERTIFIES THAT, for value received, Joseph J. Grano, Jr. and his registered assigns (and each transferee, hereinafter called the “Holder”) is entitled to purchase from Medivation, Inc. (the “Company”), a Delaware corporation, at the times and under the circumstances set forth below in Section 1, up to the number of Warrant Shares (defined below) specified in Section 1(b) below at an exercise price per share equal to the Exercise Price (defined below) specified in Section 1(b) below. This Warrant may be exercised in whole or in part at the option of the Holder in the manner and at the times set forth below.

 

The “Loan Agreement” shall mean that certain Convertible Note and Warrant Purchase Agreement, dated as of June 8, 2004, by and between the Company and the Holder, as the same may be amended from time to time in accordance with its terms. Unless otherwise defined herein, defined terms in this Warrant shall have the meanings ascribed thereto in the Loan Agreement.

 

1. Exercise Price, Type of Security.

 

(a) Exercisability. Subject to Section 1(c), this Warrant shall be exercisable at the option of the Holder hereof for Warrant Shares (defined below) at any time during the Exercise Period. “Exercise Period” shall mean the period beginning upon the closing of the first Equity Financing of the Company that occurs after the date hereof (the “First Equity Financing”) and ending upon the applicable termination date specified in Section 1(c) hereof; provided, however, that if a Change of Control occurs prior to the First Equity Financing, this Warrant shall also be exercisable upon the closing of such Change of Control as provided for in Section 1(b)(ii) hereof.


(b) Type of Security; Exercise Price; Number of Warrant Shares. This Warrant shall be exercisable for Warrant Shares at an Exercise Price per share as follows:

 

(i) If this Warrant is exercised following the closing of the First Equity Financing, the “Warrant Shares” shall mean the number of shares of the Company’s capital stock issued in such First Equity Financing equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) the the price per share at which the Company sells such capital stock in the First Equity Financing (the “First Equity Financing Price”). In such event, the “Exercise Price” per share shall be equal to the First Equity Financing Price, subject to adjustment as provided for herein.

 

(ii) If this Warrant is exercised before the closing of the First Equity Financing (i.e., immediately prior to a Change of Control), the “Warrant Shares” shall mean the number of shares of Company’s Common Stock, par value $.001, equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) One Dollar and Twenty Five Cents ($1.25). In such event, the “Exercise Price” per share shall be equal to One Dollar and Twenty Five Cents ($1.25)

 

(c) Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate, if not earlier exercised, upon the first to occur of (i) the closing of a Change of Control; (ii) the closing of the Company’s initial public offering of its Common Stock; or (iii) June 8, 2014.

 

2. Method of Exercise; Payment; Issuance of New Warrant.

 

(a) Cash Exercise. The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part, by: (i) the surrender of this Warrant (with the notice of exercise form attached hereto as Attachment A duly executed) at the principal office of the Company; and (ii) the payment to the Company in cash of an amount equal to the Exercise Price per share multiplied by the number of Warrant Shares then being purchased (such aggregate amount of money, the “Purchase Price”).

 

(b) Net Issuance Exercise.

 

(i) In lieu of exercising this Warrant in the manner provided above in Section 2(a), the Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election in which event in exchange therefor the Company shall issue to such Holder a number of Warrant Shares computed using the following formula:

 

X =

       Y (A-B)  
               A

 

2


Where

   X =    The number of Warrant Shares to be issued to the Holder
     Y =    The total number of Warrant Shares for which this Warrant is being exercised.
     A =    The fair market value of one Warrant Share (at the date of such calculation).
     B =    The Exercise Price.

 

(ii) For purposes of this Section 2(b), the fair market value of one Warrant Share on the date of calculation shall mean with respect to each Warrant Share:

 

(a) if the exercise is in connection with an initial public offering of the Company’s Common Stock, and if the Company’s Registration Statement relating to such public offering has been declared effective by the Securities and Exchange Commission, then the fair market value per share shall be the product of (x) the initial “Price to Public” specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each Warrant Share is convertible on the date of calculation;

 

(b) if (a) is not applicable, the fair market value of a Warrant Share shall be as determined by the Board of Directors in good faith and taking into account the rights, preferences and privileges of the Warrant Shares issuable upon such exercise, as well as the amount to be distributed to or received by holders of Warrant Shares in connection with any transaction in connection with which this Warrant is then being exercised or upon which such exercise is being conditioned.

 

(iii) The Company and the Holder agree that any exchange of this Warrant for shares pursuant to the provisions of this Section 2(b) is being undertaken pursuant to Internal Revenue Code Section 368(a)(1)(E).

 

(c) Conditional Exercise. A Holder may condition any exercise of this Warrant upon any event, happening or condition (or the absence thereof) either within a stated period of time or otherwise, and no exercise hereof shall be deemed to have occurred except subject to and in conformance with such conditions. Any such conditions shall be in writing and delivered to the Company together with such Holder’s notice of exercise.

 

(d) Holder of Record. Upon receipt by the Company of such notice of exercise, together with, if applicable, the aggregate Purchase Price, at its office, or by the stock transfer agent or Warrant agent of the Company at its office, the Holder shall be deemed to be the holder of record of the applicable Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.

 

(e) Exercise for Less than All Warrant Shares. In the event that this Warrant is being exercised for less than all of the then-current number of Warrant Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company pursuant to Section 2(a) or 2(b) of the number of Warrant Shares for which this Warrant is then being exercised, the Company shall issue a new Warrant of like form exercisable for the remaining number of Warrant Shares purchasable hereunder.

 

3


(f) Payment of Taxes. The Company will pay all taxes (including without limitation any and all documentary stamp or similar issue or transfer taxes, but excluding taxes based upon income) and any other governmental charges that may be imposed with respect to any exercise hereof or any issuance or delivery of Warrant Shares hereunder by the Company (including upon any subsequent conversion of Warrant Shares that are shares of preferred stock).

 

3. Stock Fully Paid; Reservation of Warrant Shares. All shares of stock which may be issued upon the exercise of the rights represented by this Warrant (including without limitation upon any subsequent conversion of any Warrant Shares) will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. The Company shall have authorized and reserved for issuance (i) sufficient shares of Warrant Shares to permit the full exercise of this Warrant at or prior to the date on which this Warrant becomes exercisable, and (ii) if applicable, sufficient shares of Common Stock to permit the full conversion of such Warrant Shares in conformance with the Company’s Certificate of Incorporation as then in effect.

 

4. Adjustment of Exercise Price and Number of Warrant Shares. The number of and kind of shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time after the date on which this Warrant first becomes exercisable and prior to the expiration of this Warrant subdivide its Warrant Shares, by split-up or otherwise, or combine its Warrant Shares, or issue additional Warrant Shares as a dividend with respect to any of its Warrant Shares, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price payable per share, but the aggregate Purchase Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b) Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or other change in the capital stock of the Company (including by way of a merger or otherwise, but other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a) above), then, as a condition of such reclassification, reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the holder of this Warrant, so that the holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Warrant Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change.

 

4


(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the holder of such event and of the number of shares of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5. Fractional Warrant Shares. No fractional Warrant Shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

6. Compliance with Securities Act. This Warrant and all Warrant Shares (unless registered under the Securities Act of 1933, as amended, hereinafter, the “Act”) shall be stamped or imprinted with legends in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.”

 

7. Transferability of Warrant. This Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws.

 

8. Disposition of Warrant Shares. With respect to any offer, sale or other disposition of any Warrant Shares prior to registration of such shares, the Holder and each subsequent Holder of this Warrant agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such Holder’s counsel, if reasonably requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state law then in effect) of such Warrant Shares and indicating whether or not under the Act certificates for such shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with the Act; provided, however, Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144.

 

5


Notwithstanding the foregoing, no such opinion of counsel or no action letter shall be necessary for a transfer by a Holder (i) to an affiliate, (ii) to a partner, retired partner, member or retired member where the Holder is a partnership or a limited liability company, (iii) by gift, will or intestate succession to his or her spouse or lineal descendants or ancestors or any trust for the benefit of any of the foregoing; provided the transferee agrees in writing to be subject to the terms hereof to the same extent as if he/she were the original Holder hereunder.

 

9. No Rights as Stockholder. No Holder of this Warrant shall be entitled to vote or be deemed the holder of stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant has been exercised and the Warrant Shares shall have become deliverable, as provided herein.

 

10. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.

 

11. Notices. All notices, requests, demands and other communications that are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered, (ii) upon electronic confirmation of receipt, if transmitted by telecopy, (iii) the first business day after it is sent, if sent for next day delivery to a domestic address by a nationally recognized overnight delivery service (e.g., Federal Express), and (iv) five days from the date of deposit in the U.S. mails, if sent by certified or registered U.S. mail, return receipt requested. In each case such notice shall be addressed as follows:

 

To the Company:

 

Medivation, Inc.

501 Second Street, Suite 211

San Francisco, California 94107

Fax: (415) 543-3113

Attn: C. Patrick Machado

 

To the Holder:

 

Joseph J. Grano, Jr.

Centurion Holdings LLC

375 Park Avenue

New York, NY 10152-0192

 

Or to such address as Holder (or any subsequent Holder) may notify the Company of in writing at any time.

 

6


12. Conflicting Terms.

 

In the event of any conflict between the terms and conditions of this Warrant and the terms and conditions of the Loan Agreement, the terms and conditions of the Loan Agreement shall govern.

 

13. Miscellaneous.

 

The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Company and the registered Holder.

 

(Signature page follows)

 

7


COMPANY:
MEDIVATION, INC.

By:

 

 


    C. Patrick Machado
    Senior VP & Chief Financial Officer

 

 

 

AGREED TO AND ACCEPTED:
JOSEPH J. GRANO, JR.

By:

 

 


 

WARRANT TO PURCHASE EQUITY SECURITY


ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

TO:     MEDIVATION, INC.

 

1. The undersigned hereby elects to purchase                      shares of the Warrant Shares (such class of security being subject to adjustment as set forth in the attached Warrant) of Medivation, Inc., pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate purchase price of such shares in full. In the event that this exercise is a net-issuance exercise pursuant to Section 2(b) of the Warrant, the calculation of the number of Warrant Shares to be issued and the number of Warrant Shares to be cancelled as consideration for the aggregate purchase price shall be attached hereto.

 

2. Please issue a certificate or certificates representing said shares of stock in the name of the undersigned or in such other name as is specified below:

 

 


(Name)

 


(Address)

 


 

3. The undersigned represents that the aforesaid shares of stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof in contravention of applicable law and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Attachment B.

 

Name of Warrant Holder:

 

 


By:

 

 


Name:

 

 


Title:

 

 


EX-10.5(B) 8 dex105b.htm FORM OF WARRANT OF ORION ISSUED TO JOSEPH J. GRANO, DATED AS OF AUG. 1, 2004 Form of Warrant of Orion issued to Joseph J. Grano, dated as of Aug. 1, 2004

 

Exhibit 10.5(b)

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.

 

Dated: August 1, 2004

 

Void after the date

specified below in Section 1(c)

 

MEDIVATION, INC.

 

WARRANT

 

THIS CERTIFIES THAT, for value received, Joseph J. Grano, Jr. and his registered assigns (and each transferee, hereinafter called the “Holder”) is entitled to purchase from Medivation, Inc. (the “Company”), a Delaware corporation, at the times and under the circumstances set forth below in Section 1, up to the number of Warrant Shares (defined below) specified in Section 1(b) below at an exercise price per share equal to the Exercise Price (defined below) specified in Section 1(b) below. This Warrant may be exercised in whole or in part at the option of the Holder in the manner and at the times set forth below.

 

The “Loan Agreement” shall mean that certain Convertible Note and Warrant Purchase Agreement, dated as of August 1, 2004, by and between the Company and the Holder, as the same may be amended from time to time in accordance with its terms. Unless otherwise defined herein, defined terms in this Warrant shall have the meanings ascribed thereto in the Loan Agreement.

 

1. Exercise Price, Type of Security.

 

(a) Exercisability. Subject to Section 1(c), this Warrant shall be exercisable at the option of the Holder hereof for Warrant Shares (defined below) at any time during the Exercise Period. “Exercise Period” shall mean the period beginning upon the closing of the first Equity Financing of the Company that occurs after the date hereof (the “First Equity Financing”) and ending upon the applicable termination date specified in Section 1(c) hereof; provided, however, that if a Change of Control occurs prior to the First Equity Financing, this Warrant shall also be exercisable upon the closing of such Change of Control as provided for in Section 1(b)(ii) hereof.


(b) Type of Security; Exercise Price; Number of Warrant Shares. This Warrant shall be exercisable for Warrant Shares at an Exercise Price per share as follows:

 

(i) If this Warrant is exercised following the closing of the First Equity Financing, the “Warrant Shares” shall mean the number of shares of the Company’s capital stock issued in such First Equity Financing equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) the the price per share at which the Company sells such capital stock in the First Equity Financing (the “First Equity Financing Price”). In such event, the “Exercise Price” per share shall be equal to the First Equity Financing Price, subject to adjustment as provided for herein.

 

(ii) If this Warrant is exercised before the closing of the First Equity Financing (i.e., immediately prior to a Change of Control), the “Warrant Shares” shall mean the number of shares of Company’s Common Stock, par value $.001, equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) One Dollar and Twenty Five Cents ($1.25). In such event, the “Exercise Price” per share shall be equal to One Dollar and Twenty Five Cents ($1.25)

 

(c) Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate, if not earlier exercised, upon the first to occur of (i) the closing of a Change of Control; (ii) the closing of the Company’s initial public offering of its Common Stock; or (iii) August 1, 2014.

 

2. Method of Exercise; Payment; Issuance of New Warrant.

 

(a) Cash Exercise. The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part, by: (i) the surrender of this Warrant (with the notice of exercise form attached hereto as Attachment A duly executed) at the principal office of the Company; and (ii) the payment to the Company in cash of an amount equal to the Exercise Price per share multiplied by the number of Warrant Shares then being purchased (such aggregate amount of money, the “Purchase Price”).

 

(b) Net Issuance Exercise.

 

(i) In lieu of exercising this Warrant in the manner provided above in Section 2(a), the Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election in which event in exchange therefor the Company shall issue to such Holder a number of Warrant Shares computed using the following formula:

 

    

X =

  

  Y (A-B)


         

       A

 

Where X = The number of Warrant Shares to be issued to the Holder

 

11


             Y = The total number of Warrant Shares for which this Warrant is being exercised.

 

             A = The fair market value of one Warrant Share (at the date of such calculation).

 

             B = The Exercise Price.

 

(ii) For purposes of this Section 2(b), the fair market value of one Warrant Share on the date of calculation shall mean with respect to each Warrant Share:

 

(a) if the exercise is in connection with an initial public offering of the Company’s Common Stock, and if the Company’s Registration Statement relating to such public offering has been declared effective by the Securities and Exchange Commission, then the fair market value per share shall be the product of (x) the initial “Price to Public” specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each Warrant Share is convertible on the date of calculation;

 

(b) if (a) is not applicable, the fair market value of a Warrant Share shall be as determined by the Board of Directors in good faith and taking into account the rights, preferences and privileges of the Warrant Shares issuable upon such exercise, as well as the amount to be distributed to or received by holders of Warrant Shares in connection with any transaction in connection with which this Warrant is then being exercised or upon which such exercise is being conditioned.

 

(iii) The Company and the Holder agree that any exchange of this Warrant for shares pursuant to the provisions of this Section 2(b) is being undertaken pursuant to Internal Revenue Code Section 368(a)(1)(E).

 

(c) Conditional Exercise. A Holder may condition any exercise of this Warrant upon any event, happening or condition (or the absence thereof) either within a stated period of time or otherwise, and no exercise hereof shall be deemed to have occurred except subject to and in conformance with such conditions. Any such conditions shall be in writing and delivered to the Company together with such Holder’s notice of exercise.

 

(d) Holder of Record. Upon receipt by the Company of such notice of exercise, together with, if applicable, the aggregate Purchase Price, at its office, or by the stock transfer agent or Warrant agent of the Company at its office, the Holder shall be deemed to be the holder of record of the applicable Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.

 

(e) Exercise for Less than All Warrant Shares. In the event that this Warrant is being exercised for less than all of the then-current number of Warrant Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company pursuant to Section 2(a) or 2(b) of the number of Warrant Shares for which this Warrant is then being exercised, the Company shall issue a new Warrant of like form exercisable for the remaining number of Warrant Shares purchasable hereunder.

 

12


(f) Payment of Taxes. The Company will pay all taxes (including without limitation any and all documentary stamp or similar issue or transfer taxes, but excluding taxes based upon income) and any other governmental charges that may be imposed with respect to any exercise hereof or any issuance or delivery of Warrant Shares hereunder by the Company (including upon any subsequent conversion of Warrant Shares that are shares of preferred stock).

 

3. Stock Fully Paid; Reservation of Warrant Shares. All shares of stock which may be issued upon the exercise of the rights represented by this Warrant (including without limitation upon any subsequent conversion of any Warrant Shares) will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. The Company shall have authorized and reserved for issuance (i) sufficient shares of Warrant Shares to permit the full exercise of this Warrant at or prior to the date on which this Warrant becomes exercisable, and (ii) if applicable, sufficient shares of Common Stock to permit the full conversion of such Warrant Shares in conformance with the Company’s Certificate of Incorporation as then in effect.

 

4. Adjustment of Exercise Price and Number of Warrant Shares. The number of and kind of shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time after the date on which this Warrant first becomes exercisable and prior to the expiration of this Warrant subdivide its Warrant Shares, by split-up or otherwise, or combine its Warrant Shares, or issue additional Warrant Shares as a dividend with respect to any of its Warrant Shares, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price payable per share, but the aggregate Purchase Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b) Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or other change in the capital stock of the Company (including by way of a merger or otherwise, but other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a) above), then, as a condition of such reclassification, reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the holder of this Warrant, so that the holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Warrant Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change.

 

13


(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the holder of such event and of the number of shares of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5. Fractional Warrant Shares. No fractional Warrant Shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

6. Compliance with Securities Act. This Warrant and all Warrant Shares (unless registered under the Securities Act of 1933, as amended, hereinafter, the “Act”) shall be stamped or imprinted with legends in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.”

 

7. Transferability of Warrant. This Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws.

 

8. Disposition of Warrant Shares. With respect to any offer, sale or other disposition of any Warrant Shares prior to registration of such shares, the Holder and each subsequent Holder of this Warrant agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such Holder’s counsel, if reasonably requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state law then in effect) of such Warrant Shares and indicating whether or not under the Act certificates for such shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with the Act; provided, however, Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144.

 

14


Notwithstanding the foregoing, no such opinion of counsel or no action letter shall be necessary for a transfer by a Holder (i) to an affiliate, (ii) to a partner, retired partner, member or retired member where the Holder is a partnership or a limited liability company, (iii) by gift, will or intestate succession to his or her spouse or lineal descendants or ancestors or any trust for the benefit of any of the foregoing; provided the transferee agrees in writing to be subject to the terms hereof to the same extent as if he/she were the original Holder hereunder.

 

9. No Rights as Stockholder. No Holder of this Warrant shall be entitled to vote or be deemed the holder of stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant has been exercised and the Warrant Shares shall have become deliverable, as provided herein.

 

10. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.

 

11. Notices. All notices, requests, demands and other communications that are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered, (ii) upon electronic confirmation of receipt, if transmitted by telecopy, (iii) the first business day after it is sent, if sent for next day delivery to a domestic address by a nationally recognized overnight delivery service (e.g., Federal Express), and (iv) five days from the date of deposit in the U.S. mails, if sent by certified or registered U.S. mail, return receipt requested. In each case such notice shall be addressed as follows:

 

To the Company:

 

Medivation, Inc.

501 Second Street, Suite 211

San Francisco, California 94107

Fax: (415) 543-3113

Attn: C. Patrick Machado

 

To the Holder:

 

Joseph J. Grano, Jr.

Centurion Holdings LLC

375 Park Avenue

New York, NY 10152-0192

 

Or to such address as Holder (or any subsequent Holder) may notify the Company of in writing at any time.

 

15


12. Conflicting Terms.

 

In the event of any conflict between the terms and conditions of this Warrant and the terms and conditions of the Loan Agreement, the terms and conditions of the Loan Agreement shall govern.

 

13. Miscellaneous.

 

The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Company and the registered Holder.

 

(Signature page follows)

 

16


COMPANY:
MEDIVATION, INC.

By:

 

 


   

C. Patrick Machado

   

Senior VP & Chief Financial Officer

 

AGREED TO AND ACCEPTED:
JOSEPH J. GRANO, JR.

By:

 

 


 

WARRANT TO PURCHASE EQUITY SECURITY


ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

TO: MEDIVATION, INC.

 

1. The undersigned hereby elects to purchase                      shares of the Warrant Shares (such class of security being subject to adjustment as set forth in the attached Warrant) of Medivation, Inc., pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate purchase price of such shares in full. In the event that this exercise is a net-issuance exercise pursuant to Section 2(b) of the Warrant, the calculation of the number of Warrant Shares to be issued and the number of Warrant Shares to be cancelled as consideration for the aggregate purchase price shall be attached hereto.

 

2. Please issue a certificate or certificates representing said shares of stock in the name of the undersigned or in such other name as is specified below:

 

 


(Name)

 

 


(Address)

 

 


 

3. The undersigned represents that the aforesaid shares of stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof in contravention of applicable law and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Attachment B.

 

Name of Warrant Holder:

 

 


By:


Name:


Title:



ATTACHMENT B TO WARRANT

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER

   :     

COMPANY

   :   

MEDIVATION, INC.

SECURITY

   :     

AMOUNT

   :     

DATE

   :     

 

In connection with the purchase of the above-listed securities and underlying stock (the “Securities”), I,                                     , the Purchaser, represent to the Company the following:

 

(a) I am aware of the Company’s business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof in contravention of applicable law. I am an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.

 

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

 

Name of Purchaser:

 

 


By:


Name:


Title:


EX-10.5(C) 9 dex105c.htm FORM OF WARRANT OF ORION ISSUED TO JOSEPH J. GRANO, DATED AS OF SEP. 1, 2004 Form of Warrant of Orion issued to Joseph J. Grano, dated as of Sep. 1, 2004

 

Exhibit 10.5(c)

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.

 

Dated: September 1, 2004   Void after the date
    specified below in Section 1(c)

 

MEDIVATION, INC.

 

WARRANT

 

THIS CERTIFIES THAT, for value received, Joseph J. Grano, Jr. and his registered assigns (and each transferee, hereinafter called the “Holder”) is entitled to purchase from Medivation, Inc. (the “Company”), a Delaware corporation, at the times and under the circumstances set forth below in Section 1, up to the number of Warrant Shares (defined below) specified in Section 1(b) below at an exercise price per share equal to the Exercise Price (defined below) specified in Section 1(b) below. This Warrant may be exercised in whole or in part at the option of the Holder in the manner and at the times set forth below.

 

The “Loan Agreement” shall mean that certain Convertible Note and Warrant Purchase Agreement, dated as of September 1, 2004, by and between the Company and the Holder, as the same may be amended from time to time in accordance with its terms. Unless otherwise defined herein, defined terms in this Warrant shall have the meanings ascribed thereto in the Loan Agreement.

 

1. Exercise Price, Type of Security.

 

(a) Exercisability. Subject to Section 1(c), this Warrant shall be exercisable at the option of the Holder hereof for Warrant Shares (defined below) at any time during the Exercise Period. “Exercise Period” shall mean the period beginning upon the closing of the first Equity Financing of the Company that occurs after the date hereof (the “First Equity Financing”) and ending upon the applicable termination date specified in Section 1(c) hereof; provided, however, that if a Change of Control occurs prior to the First Equity Financing, this Warrant shall also be exercisable upon the closing of such Change of Control as provided for in Section 1(b)(ii) hereof.


(b) Type of Security; Exercise Price; Number of Warrant Shares. This Warrant shall be exercisable for Warrant Shares at an Exercise Price per share as follows:

 

(i) If this Warrant is exercised following the closing of the First Equity Financing, the “Warrant Shares” shall mean the number of shares of the Company’s capital stock issued in such First Equity Financing equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) the the price per share at which the Company sells such capital stock in the First Equity Financing (the “First Equity Financing Price”). In such event, the “Exercise Price” per share shall be equal to the First Equity Financing Price, subject to adjustment as provided for herein.

 

(ii) If this Warrant is exercised before the closing of the First Equity Financing (i.e., immediately prior to a Change of Control), the “Warrant Shares” shall mean the number of shares of Company’s Common Stock, par value $.001, equal to (a) twenty percent (20%) of the aggregate principal amount of the Note originally issued by the Company in connection with this Warrant pursuant to the Loan Agreement, divided by (b) One Dollar and Twenty Five Cents ($1.25). In such event, the “Exercise Price” per share shall be equal to One Dollar and Twenty Five Cents ($1.25)

 

(c) Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate, if not earlier exercised, upon the first to occur of (i) the closing of a Change of Control; (ii) the closing of the Company’s initial public offering of its Common Stock; or (iii) September 1, 2014.

 

2. Method of Exercise; Payment; Issuance of New Warrant.

 

(a) Cash Exercise. The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part, by: (i) the surrender of this Warrant (with the notice of exercise form attached hereto as Attachment A duly executed) at the principal office of the Company; and (ii) the payment to the Company in cash of an amount equal to the Exercise Price per share multiplied by the number of Warrant Shares then being purchased (such aggregate amount of money, the “Purchase Price”).

 

(b) Net Issuance Exercise.

 

(i) In lieu of exercising this Warrant in the manner provided above in Section 2(a), the Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election in which event in exchange therefor the Company shall issue to such Holder a number of Warrant Shares computed using the following formula:

 

     X   =    Y (A-B)
               A
Where    X   =    The number of Warrant Shares to be issued to the Holder

 

21


     Y   =    The total number of Warrant Shares for which this Warrant is being exercised.
     A   =    The fair market value of one Warrant Share (at the date of such calculation).
     B   =    The Exercise Price.

 

(ii) For purposes of this Section 2(b), the fair market value of one Warrant Share on the date of calculation shall mean with respect to each Warrant Share:

 

(a) if the exercise is in connection with an initial public offering of the Company’s Common Stock, and if the Company’s Registration Statement relating to such public offering has been declared effective by the Securities and Exchange Commission, then the fair market value per share shall be the product of (x) the initial “Price to Public” specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each Warrant Share is convertible on the date of calculation;

 

(b) if (a) is not applicable, the fair market value of a Warrant Share shall be as determined by the Board of Directors in good faith and taking into account the rights, preferences and privileges of the Warrant Shares issuable upon such exercise, as well as the amount to be distributed to or received by holders of Warrant Shares in connection with any transaction in connection with which this Warrant is then being exercised or upon which such exercise is being conditioned.

 

(iii) The Company and the Holder agree that any exchange of this Warrant for shares pursuant to the provisions of this Section 2(b) is being undertaken pursuant to Internal Revenue Code Section 368(a)(1)(E).

 

(c) Conditional Exercise. A Holder may condition any exercise of this Warrant upon any event, happening or condition (or the absence thereof) either within a stated period of time or otherwise, and no exercise hereof shall be deemed to have occurred except subject to and in conformance with such conditions. Any such conditions shall be in writing and delivered to the Company together with such Holder’s notice of exercise.

 

(d) Holder of Record. Upon receipt by the Company of such notice of exercise, together with, if applicable, the aggregate Purchase Price, at its office, or by the stock transfer agent or Warrant agent of the Company at its office, the Holder shall be deemed to be the holder of record of the applicable Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.

 

(e) Exercise for Less than All Warrant Shares. In the event that this Warrant is being exercised for less than all of the then-current number of Warrant Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company pursuant to Section 2(a) or 2(b) of the number of Warrant Shares for which this Warrant is then being exercised, the Company shall issue a new Warrant of like form exercisable for the remaining number of Warrant Shares purchasable hereunder.

 

22


(f) Payment of Taxes. The Company will pay all taxes (including without limitation any and all documentary stamp or similar issue or transfer taxes, but excluding taxes based upon income) and any other governmental charges that may be imposed with respect to any exercise hereof or any issuance or delivery of Warrant Shares hereunder by the Company (including upon any subsequent conversion of Warrant Shares that are shares of preferred stock).

 

3. Stock Fully Paid; Reservation of Warrant Shares. All shares of stock which may be issued upon the exercise of the rights represented by this Warrant (including without limitation upon any subsequent conversion of any Warrant Shares) will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. The Company shall have authorized and reserved for issuance (i) sufficient shares of Warrant Shares to permit the full exercise of this Warrant at or prior to the date on which this Warrant becomes exercisable, and (ii) if applicable, sufficient shares of Common Stock to permit the full conversion of such Warrant Shares in conformance with the Company’s Certificate of Incorporation as then in effect.

 

4. Adjustment of Exercise Price and Number of Warrant Shares. The number of and kind of shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time after the date on which this Warrant first becomes exercisable and prior to the expiration of this Warrant subdivide its Warrant Shares, by split-up or otherwise, or combine its Warrant Shares, or issue additional Warrant Shares as a dividend with respect to any of its Warrant Shares, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price payable per share, but the aggregate Purchase Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b) Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or other change in the capital stock of the Company (including by way of a merger or otherwise, but other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a) above), then, as a condition of such reclassification, reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the holder of this Warrant, so that the holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Warrant Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change.

 

23


(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the holder of such event and of the number of shares of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5. Fractional Warrant Shares. No fractional Warrant Shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

6. Compliance with Securities Act. This Warrant and all Warrant Shares (unless registered under the Securities Act of 1933, as amended, hereinafter, the “Act”) shall be stamped or imprinted with legends in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.”

 

7. Transferability of Warrant. This Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws.

 

8. Disposition of Warrant Shares. With respect to any offer, sale or other disposition of any Warrant Shares prior to registration of such shares, the Holder and each subsequent Holder of this Warrant agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such Holder’s counsel, if reasonably requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state law then in effect) of such Warrant Shares and indicating whether or not under the Act certificates for such shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with the Act; provided, however, Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144.

 

24


Notwithstanding the foregoing, no such opinion of counsel or no action letter shall be necessary for a transfer by a Holder (i) to an affiliate, (ii) to a partner, retired partner, member or retired member where the Holder is a partnership or a limited liability company, (iii) by gift, will or intestate succession to his or her spouse or lineal descendants or ancestors or any trust for the benefit of any of the foregoing; provided the transferee agrees in writing to be subject to the terms hereof to the same extent as if he/she were the original Holder hereunder.

 

9. No Rights as Stockholder. No Holder of this Warrant shall be entitled to vote or be deemed the holder of stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant has been exercised and the Warrant Shares shall have become deliverable, as provided herein.

 

10. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.

 

11. Notices. All notices, requests, demands and other communications that are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered, (ii) upon electronic confirmation of receipt, if transmitted by telecopy, (iii) the first business day after it is sent, if sent for next day delivery to a domestic address by a nationally recognized overnight delivery service (e.g., Federal Express), and (iv) five days from the date of deposit in the U.S. mails, if sent by certified or registered U.S. mail, return receipt requested. In each case such notice shall be addressed as follows:

 

To the Company:

 

Medivation, Inc.

501 Second Street, Suite 211

San Francisco, California 94107

Fax: (415) 543-3113

Attn: C. Patrick Machado

 

To the Holder:

 

Joseph J. Grano, Jr.

Centurion Holdings LLC

375 Park Avenue

New York, NY 10152-0192

 

Or to such address as Holder (or any subsequent Holder) may notify the Company of in writing at any time.

 

25


12. Conflicting Terms.

 

In the event of any conflict between the terms and conditions of this Warrant and the terms and conditions of the Loan Agreement, the terms and conditions of the Loan Agreement shall govern.

 

13. Miscellaneous.

 

The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Company and the registered Holder.

 

(Signature page follows)

 

26


COMPANY:

 

MEDIVATION, INC.

By:  

 


    C. Patrick Machado
    Senior VP & Chief Financial Officer

 

AGREED TO AND ACCEPTED:
JOSEPH J. GRANO, JR.
By:  

 


 

WARRANT TO PURCHASE EQUITY SECURITY


ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

TO: MEDIVATION, INC.

 

1. The undersigned hereby elects to purchase                      shares of the Warrant Shares (such class of security being subject to adjustment as set forth in the attached Warrant) of Medivation, Inc., pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate purchase price of such shares in full. In the event that this exercise is a net-issuance exercise pursuant to Section 2(b) of the Warrant, the calculation of the number of Warrant Shares to be issued and the number of Warrant Shares to be cancelled as consideration for the aggregate purchase price shall be attached hereto.

 

2. Please issue a certificate or certificates representing said shares of stock in the name of the undersigned or in such other name as is specified below:

 

 


(Name)

 


(Address)

 


 

3. The undersigned represents that the aforesaid shares of stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof in contravention of applicable law and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Attachment B.

 

Name of Warrant Holder:

 


By:  

 


Name:  

 


Title:  

 



ATTACHMENT B TO WARRANT

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER   :     
COMPANY   :   

MEDIVATION, INC.

SECURITY   :     
AMOUNT   :     
DATE   :     

 

In connection with the purchase of the above-listed securities and underlying stock (the “Securities”), I,                                 , the Purchaser, represent to the Company the following:

 

(a) I am aware of the Company’s business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof in contravention of applicable law. I am an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.

 

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

 

Name of Purchaser:

 


By:  

 


Name:  

 


Title:  

 


EX-10.5(D) 10 dex105d.htm FORM OF AMENDMENT AGREEMENT BY AND BETWEEN ORION AND JOSEPH GRANO Form of Amendment Agreement by and between Orion and Joseph Grano

Exhibit 10.5(d)

 

AMENDMENT AGREEMENT

 

This Amendment Agreement (the “Amendment”), dated as of December     , 2004, is made by and between Medivation, Inc., a Delaware corporation (“Medivation”), and Joseph J. Grano, Jr. (“Mr. Grano”).

 

A. Mr. Grano and Medivation have entered into three Convertible Note and Warrant Purchase Agreements, Convertible Promissory Notes (the “Notes”) and Warrants (the “Warrants”), dated as of June 8, August 1 and September 1, 2004. These agreements shall be referred to collectively herein as the “Loan Documents.”

 

B. Pursuant to the Loan Documents, Mr. Grano extended to Medivation loans in the aggregate principal amount of Six Hundred Thousand Dollars ($600,000) (the “Loans”).

 

C. Medivation presently intends to enter into a reverse merger (the “Merger”) with Orion Acquisition Corp II, a Delaware corporation (“Orion”), on the terms and subject to the conditions specified in the Confidential Private Placement Memorandum dated November 30, 2004 (the “PPM”), a copy of which has been provided to Mr. Grano. As a result of the Merger, Medivation will become a wholly-owned subsidiary of Orion.

 

D. Immediately following completion of the Merger, Orion will issue shares of its Common Stock (the “Orion Common Stock”) to investors in a private placement financing (the “Offering”), and will agree with such investors to register the shares sold in the Offering with the Securities and Exchange Commission for reoffer and resale, all on the terms and subject to the conditions specified in the PPM.

 

E. The Merger and the Offering shall sometimes be referred to collectively herein as the “Transaction.”

 

F. Medivation and Mr. Grano mutually desire to enter into this Amendment to amend the terms of certain of the Loan Documents, and to reflect their mutual agreement on the disposition of the Loans in the Transaction.

 

I. All of the agreements in this Amendment are subject to, and will take effect only upon the consummation of, the Transaction.


In consideration of the mutual promises contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, Mr. Grano and Medivation hereby agree as follows:

 

1. Loans.

 

(a) The aggregate principal balance, plus accrued but unpaid interest, on the Loans shall be converted in the Offering into shares of Orion Common Stock at a conversion price per share equal to the per share price paid by new investors in the Offering (the “Offering Price”). As described in the PPM, the Offering Price is presently anticipated to be One Dollar Fifty Five Cents ($1.55) per share.

 

(b) Upon closing of the Transaction, the Warrants shall become exerciseable, automatically and without further action on the part of either Mr. Grano or Medivation, to purchase shares of Orion Common Stock at the Offering Price per share. For purposes of the termination provisions of the Warrants, the Transaction will be deemed not to constitute a “Change of Control” of Medivation, with the consequence that the Warrants will remain exercisable following completion of the Transaction in accordance with their terms, except for the change in underlying security and purchase price specified in this Section 1(b).

 

2. Amendment. This Amendment shall be deemed to amend each provision of the Loan Documents necessary in order to reflect the agreements of the parties set forth herein. Accept as so amended, the Loan Documents shall remain in full force and effect in accordance with their terms.

 

3. Effectiveness. The agreements of the parties set forth in this Amendment shall take effect automatically, without further action by either party, upon the closing of the Transaction. Should the Transaction not close, the agreements set forth in this Amendment shall be null, void and of no effect on either party or any of the Loan Documents.

 

4. Miscellaneous. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law. This Amendment constitutes the entire agreement of the parties with respect to the subject matter hereof, and any and all other written or oral agreements existing between the parties hereto are expressly cancelled. Any term of this Amendment may be amended or waived only with the written consent of both parties hereto.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first noted above.

 

MEDIVATION, INC.   JOSEPH J. GRANO, JR.

By:

 

 


 

 


Name:

 

 


   

Title:

 

 


   
EX-10.6 11 dex106.htm WARRANT TO PURCHASE COMMON STOCK OF MEDIVATION, INC. Warrant to purchase Common Stock of Medivation, Inc.

Exhibit 10.6

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.

 

Dated: November 16, 2004

 

Void after the date

specified below in Section 1(c)

 

MEDIVATION, INC.

 

WARRANT

 

THIS CERTIFIES THAT, for value received, David T. Hung, MD and his registered assigns (and each transferee, hereinafter called the “Holder”) is entitled to purchase from Medivation, Inc. (the “Company”), a Delaware corporation, at the times and under the circumstances set forth below in Section 1, up to the number of Warrant Shares (defined below) specified in Section 1(b) below at an exercise price per share equal to the Exercise Price (defined below) specified in Section 1(b) below. This Warrant may be exercised in whole or in part at the option of the Holder in the manner and at the times set forth below.

 

The “Guarantee” shall mean that certain letter agreement, dated as of November 16, 2004, by and between the Company and the Holder, as the same may be amended from time to time in accordance with its terms. Unless otherwise defined herein, defined terms in this Warrant shall have the meanings ascribed thereto in the Guarantee.

 

1. Exercise Price, Type of Security.

 

(a) Exercisability. Subject to Section 1(c), this Warrant shall be exercisable at the option of the Holder hereof for Warrant Shares (defined below) at any time during the Exercise Period. “Exercise Period” shall mean the period beginning upon the closing of the first Equity Financing of the Company that occurs after the date hereof (the “First Equity Financing”) and ending upon the applicable termination date specified in Section 1(c) hereof; provided, however, that if a Change of Control occurs prior to the First Equity Financing, this Warrant shall also be exercisable upon the closing of such Change of Control as provided for in Section 1(b)(ii) hereof.


(b) Type of Security; Exercise Price; Number of Warrant Shares. This Warrant shall be exercisable for Warrant Shares at an Exercise Price per share as follows:

 

(i) If this Warrant is exercised following the closing of the First Equity Financing, the “Warrant Shares” shall mean the number of shares of the Company’s capital stock issued in such First Equity Financing equal to (a) twenty percent (20%) of the Guarantee Amount of the Holder pursuant to the Guarantee, divided by (b) the the price per share at which the Company sells such capital stock in the First Equity Financing (the “First Equity Financing Price”). In such event, the “Exercise Price” per share shall be equal to the First Equity Financing Price, subject to adjustment as provided for herein. Notwithstanding the foregoing, if the Transaction is consummated, the Warrant Shares will be the common stock of Orion.

 

(ii) If this Warrant is exercised before the closing of the First Equity Financing (i.e., immediately prior to a Change of Control), the “Warrant Shares” shall mean the number of shares of Company’s Common Stock, par value $.001, equal to (a) twenty percent (20%) of the Guarantee Amount of the Holder pursuant to the Guarantee, divided by (b) One Dollar and Twenty Five Cents ($1.25). In such event, the “Exercise Price” per share shall be equal to One Dollar and Twenty Five Cents ($1.25)

 

(c) Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate, if not earlier exercised, on November 16, 2014.

 

2. Method of Exercise; Payment; Issuance of New Warrant.

 

(a) Cash Exercise. The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part, by: (i) the surrender of this Warrant (with the notice of exercise form attached hereto as Attachment A duly executed) at the principal office of the Company; and (ii) the payment to the Company in cash of an amount equal to the Exercise Price per share multiplied by the number of Warrant Shares then being purchased (such aggregate amount of money, the “Purchase Price”).

 

(b) Net Issuance Exercise.

 

(i) In lieu of exercising this Warrant in the manner provided above in Section 2(a), the Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election in which event in exchange therefor the Company shall issue to such Holder a number of Warrant Shares computed using the following formula:

 

         X =    Y (A-B)
                      A
   

Where

   X =    The number of Warrant Shares to be issued to the Holder
         Y =    The total number of Warrant Shares for which this Warrant is being exercised.

 

2


A =   The fair market value of one Warrant Share (at the date of such calculation).
B =   The Exercise Price.

 

(ii) For purposes of this Section 2(b), the fair market value of one Warrant Share on the date of calculation shall mean with respect to each Warrant Share:

 

(a) if the exercise is in connection with an initial public offering of the Company’s Common Stock, and if the Company’s Registration Statement relating to such public offering has been declared effective by the Securities and Exchange Commission, then the fair market value per share shall be the product of (x) the initial “Price to Public” specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each Warrant Share is convertible on the date of calculation;

 

(b) if (a) is not applicable, the fair market value of a Warrant Share shall be as determined by the Board of Directors in good faith and taking into account the rights, preferences and privileges of the Warrant Shares issuable upon such exercise, as well as the amount to be distributed to or received by holders of Warrant Shares in connection with any transaction in connection with which this Warrant is then being exercised or upon which such exercise is being conditioned.

 

(iii) The Company and the Holder agree that any exchange of this Warrant for shares pursuant to the provisions of this Section 2(b) is being undertaken pursuant to Internal Revenue Code Section 368(a)(1)(E).

 

(c) Conditional Exercise. A Holder may condition any exercise of this Warrant upon any event, happening or condition (or the absence thereof) either within a stated period of time or otherwise, and no exercise hereof shall be deemed to have occurred except subject to and in conformance with such conditions. Any such conditions shall be in writing and delivered to the Company together with such Holder’s notice of exercise.

 

(d) Holder of Record. Upon receipt by the Company of such notice of exercise, together with, if applicable, the aggregate Purchase Price, at its office, or by the stock transfer agent or Warrant agent of the Company at its office, the Holder shall be deemed to be the holder of record of the applicable Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.

 

(e) Exercise for Less than All Warrant Shares. In the event that this Warrant is being exercised for less than all of the then-current number of Warrant Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company pursuant to Section 2(a) or 2(b) of the number of Warrant Shares for which this Warrant is then being exercised, the Company shall issue a new Warrant of like form exercisable for the remaining number of Warrant Shares purchasable hereunder.

 

3


(f) Payment of Taxes. The Company will pay all taxes (including without limitation any and all documentary stamp or similar issue or transfer taxes, but excluding taxes based upon income) and any other governmental charges that may be imposed with respect to any exercise hereof or any issuance or delivery of Warrant Shares hereunder by the Company (including upon any subsequent conversion of Warrant Shares that are shares of preferred stock).

 

3. Stock Fully Paid; Reservation of Warrant Shares. All shares of stock which may be issued upon the exercise of the rights represented by this Warrant (including without limitation upon any subsequent conversion of any Warrant Shares) will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. The Company shall have authorized and reserved for issuance (i) sufficient shares of Warrant Shares to permit the full exercise of this Warrant at or prior to the date on which this Warrant becomes exercisable, and (ii) if applicable, sufficient shares of Common Stock to permit the full conversion of such Warrant Shares in conformance with the Company’s Certificate of Incorporation as then in effect.

 

4. Adjustment of Exercise Price and Number of Warrant Shares. The number of and kind of shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time after the date on which this Warrant first becomes exercisable and prior to the expiration of this Warrant subdivide its Warrant Shares, by split-up or otherwise, or combine its Warrant Shares, or issue additional Warrant Shares as a dividend with respect to any of its Warrant Shares, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price payable per share, but the aggregate Purchase Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b) Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or other change in the capital stock of the Company (including by way of a merger or otherwise, but other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a) above), then, as a condition of such reclassification, reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the holder of this Warrant, so that the holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Warrant Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change.

 

4


(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the holder of such event and of the number of shares of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5. Fractional Warrant Shares. No fractional Warrant Shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

6. Compliance with Securities Act. This Warrant and all Warrant Shares (unless registered under the Securities Act of 1933, as amended, hereinafter, the “Act”) shall be stamped or imprinted with legends in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.”

 

7. Transferability of Warrant. This Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws.

 

8. Disposition of Warrant Shares. With respect to any offer, sale or other disposition of any Warrant Shares prior to registration of such shares, the Holder and each subsequent Holder of this Warrant agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such Holder’s counsel, if reasonably requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state law then in effect) of such Warrant Shares and indicating whether or not under the Act certificates for such shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with the Act; provided, however, Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144. Notwithstanding the foregoing, no such opinion of counsel or no action letter shall be necessary for a transfer by a Holder (i) to an affiliate, (ii) to a partner, retired partner, member or retired member where the Holder is a partnership or a limited liability company, (iii) by gift, will or

 

5


intestate succession to his or her spouse or lineal descendants or ancestors or any trust for the benefit of any of the foregoing; provided the transferee agrees in writing to be subject to the terms hereof to the same extent as if he/she were the original Holder hereunder.

 

9. No Rights as Stockholder. No Holder of this Warrant shall be entitled to vote or be deemed the holder of stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant has been exercised and the Warrant Shares shall have become deliverable, as provided herein.

 

10. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.

 

11. Notices. All notices, requests, demands and other communications that are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered, (ii) upon electronic confirmation of receipt, if transmitted by telecopy, (iii) the first business day after it is sent, if sent for next day delivery to a domestic address by a nationally recognized overnight delivery service (e.g., Federal Express), and (iv) five days from the date of deposit in the U.S. mails, if sent by certified or registered U.S. mail, return receipt requested. In each case such notice shall be addressed as follows:

 

To the Company:

 

Medivation, Inc.

501 Second Street, Suite 211

San Francisco, California 94107

Fax: (415) 543-3113

Attn: Chief Financial Officer

 

To the Holder:

 

David T. Hung, MD

501 Second Street, Suite 211

San Francisco, California 94107

Fax: (415) 543-3113

 

6


Or to such address as Holder (or any subsequent Holder) may notify the Company of in writing at any time.

 

12. Conflicting Terms.

 

In the event of any conflict between the terms and conditions of this Warrant and the terms and conditions of the Guarantee, the terms and conditions of the Guarantee shall govern.

 

13. Miscellaneous.

 

The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Company and the registered Holder.

 

(Signature page follows)

 

7


COMPANY:
MEDIVATION, INC.

By:

 

 


   

Steve Gorlin

   

Chairman of the Board

 

AGREED TO AND ACCEPTED:
DAVID T. HUNG, MD

By:

 

 


 

WARRANT TO PURCHASE NEXT EQUITY SECURITY


ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

TO:    MEDIVATION, INC.

 

1. The undersigned hereby elects to purchase                      shares of the Warrant Shares (such class of security being subject to adjustment as set forth in the attached Warrant) of Medivation, Inc., pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate purchase price of such shares in full. In the event that this exercise is a net-issuance exercise pursuant to Section 2(b) of the Warrant, the calculation of the number of Warrant Shares to be issued and the number of Warrant Shares to be cancelled as consideration for the aggregate purchase price shall be attached hereto.

 

2. Please issue a certificate or certificates representing said shares of stock in the name of the undersigned or in such other name as is specified below:

 


(Name)

 


(Address)

 


 

3. The undersigned represents that the aforesaid shares of stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof in contravention of applicable law and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Attachment B.

 

Name of Warrant Holder:

 


By:

 

 


Name:

 

 


Title:

 

 



ATTACHMENT B TO WARRANT

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER    :     
COMPANY    :    MEDIVATION, INC.
SECURITY    :     
AMOUNT    :     
DATE    :     

 

In connection with the purchase of the above-listed securities and underlying stock (the “Securities”), I,                     , the Purchaser, represent to the Company the following:

 

(a) I am aware of the Company’s business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof in contravention of applicable law. I am an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.

 

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

 

Name of Purchaser:


By:

 

 


Name:

 

 


Title:

 

 


EX-10.7(A) 12 dex107a.htm 2004 EQUITY INCENTIVE PLAN OF MEDIVATION, INC. 2004 Equity Incentive Plan of Medivation, Inc.

 

Exhibit 10.7(a)

MEDIVATION, INC.

2004 EQUITY INCENTIVE AWARD PLAN

 

ARTICLE 1

PURPOSE

 

1.1 General. The purpose of the Medivation, Inc. 2004 Equity Incentive Award Plan (the “Plan”) is to promote the success and enhance the value of Medivation, Inc. (the “Company”) by linking the personal interests of the members of the Board, employees, consultants, officers, and executives of the Company and any Subsidiary, to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, employees, consultants, officers, and executives of the Company upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.

 

ARTICLE 2

DEFINITIONS AND CONSTRUCTION

 

2.1 Definitions. The following words and phrases shall have the following meanings:

 

(a) “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right award, a Performance Share award, a Dividend Equivalents award, a Stock Payment award, a Restricted Stock Unit award, or a Performance-Based Award granted to a Participant pursuant to the Plan.

 

(b) “Award Agreement” means any written or electronic agreement, contract, or other instrument or document evidencing an Award.

 

(c) “Board” means the Board of Directors of the Company.

 

(d) “Change of Control” means and includes each of the following:

 

(i) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent 50% or more of the combined voting power of the Company’s then outstanding voting securities, other than:

 

(A) an acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or

 

(B) an acquisition of voting securities by the Company or a corporation owned, directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company;

 

Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by any person or group for purposes of this subsection (e): an acquisition of the Company’s securities by the Company that causes the Company’s voting securities beneficially owned by a person or

 


group to represent 50% or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of 50% or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change of Control; or

 

(ii) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in clauses (i) or (iii) of this subsection (e)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

 

(iii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

 

(A) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

 

(B) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or

 

(iv) the Company’s stockholders approve a liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a transaction shall not constitute a “Change of Control” if: (w) its sole purpose is to change the state of the Company’s incorporation; (x) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; (y) it constitutes the Company’s initial public offering of its securities; or (z) it is a transaction effected primarily for the purpose of financing the Company with cash (as determined by the Committee in its discretion and without regard to whether such transaction is effectuated by a merger, equity financing or otherwise).

 

The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change of Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change of Control and any incidental matters relating thereto.

 

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(e) “Code” means the Internal Revenue Code of 1986, as amended.

 

(f) “Committee” means the committee of the Board described in Article 12.

 

(g) “Covered Employee” means an Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code.

 

(h) “Disability” means, for purposes of this Plan, that the Participant qualifies to receive long-term disability payments under the Company’s long-term disability insurance program, as it may be amended from time to time.

 

(i) “Dividend Equivalents” means a right granted to a Participant pursuant to Article 8 to receive the equivalent value (in cash or Stock) of dividends paid on Stock.

 

(j) “Employee” means any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Subsidiary. A person shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. Neither service as a director nor payment of a director’s fee by the Company shall be sufficient, by itself, to constitute “employment” by the Company.

 

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(l) “Fair Market Value” shall mean, as of any date, the value of Stock determined as follows:

 

(i) If the Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

 

(ii) If the Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Stock on the date prior to the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

(iii) In the absence of an established market for the Stock, the Fair Market Value thereof shall be determined in good faith by the Committee.

 

(m) “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

 

(n) “Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b) (3) of the Exchange Act, or any successor definition adopted by the Board.

 

(o) “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

 

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(p) “Option” means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of shares of Stock at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

 

(q) “Participant” means a person who, as a member of the Board, consultant to the Company or any Subsidiary or Employee, has been granted an Award pursuant to the Plan.

 

(r) “Performance-Based Award” means an Award granted to selected Covered Employees pursuant to Articles 6 and 8, but which is subject to the terms and conditions set forth in Article 9. All Performance-Based Awards are intended to qualify as Qualified Performance-Based Compensation.

 

(s) “Performance Criteria” means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period. The Performance Criteria that will be used to establish Performance Goals are limited to the following: net earnings (either before or after interest, taxes, depreciation and amortization), net losses, sales or revenue, operating earnings, operating cash flow, return on net assets, return on stockholders’ equity, return on assets, return on capital, stockholder returns, gross or net profit margin, earnings per share, price per share of Stock, and market share, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Participant.

 

(t) “Performance Goals” means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. The Committee, in its discretion, may, within the time prescribed by Section 162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

 

(u) “Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance-Based Award.

 

(v) “Performance Share” means a right granted to a Participant pursuant to Article 8, to receive cash, Stock, or other Awards, the payment of which is contingent upon achieving certain performance goals established by the Committee.

 

(w) “Plan” means this Medivation, Inc. 2004 Equity Incentive Award Plan, as it may be amended from time to time.

 

(x) “Public Trading Date” means the first date upon which Stock is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system.

 

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(y) “Qualified Performance-Based Compensation” means any compensation that is intended to qualify as “qualified performance-based compensation” as described in Section 162(m) (4) (C) of the Code.

 

(z) “Restricted Stock” means Stock awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and to risk of forfeiture.

 

(aa) “Restricted Stock Unit” means a right to receive a share of Stock during specified time periods pursuant to Article 8.

 

(bb) “Stock” means the common stock of the Company and such other securities of the Company that may be substituted for Stock pursuant to Article 11.

 

(cc) “Stock Appreciation Right” or “SAR” means a right granted pursuant to Article 7 to receive a payment equal to the excess of the Fair Market Value of a specified number of shares of Stock on the date the SAR is exercised over the Fair Market Value on the date the SAR was granted as set forth in the applicable Award Agreement.

 

(dd) “Stock Payment” means (a) a payment in the form of shares of Stock, or (b) an option or other right to purchase shares of Stock, as part of any bonus, deferred compensation or other arrangement, made in lieu of all or any portion of the compensation, granted pursuant to Article 8.

 

(ee) “Subsidiary” means any corporation or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

 

ARTICLE 3

SHARES SUBJECT TO THE PLAN

 

3.1 Number of Shares.

 

(a) Subject to Article 11, the aggregate number of shares of Stock which may be issued or transferred pursuant to Awards under the Plan shall be 450,000 shares. The payment of Dividend Equivalents in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan.

 

(b) To the extent that an Award terminates, expires, or lapses for any reason, any shares of Stock subject to the Award shall again be available for the grant of an Award pursuant to the Plan. Additionally, any shares of Stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again be available for the grant of an Award pursuant to the Plan. To the extent permitted by applicable law or any exchange rule, shares of Stock issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Company or any Subsidiary shall not be counted against shares of Stock available for grant pursuant to this Plan. If shares of Stock issued pursuant to Awards are repurchased by the Company at no less than their original purchase price, such shares of Stock shall become available for future grant under the Plan (unless the Plan has terminated).

 

(c) Notwithstanding the provisions of this Section 3.1, no shares of Stock may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Code Section 422.

 

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3.2 Stock Distributed. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

 

3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any provision in the Plan to the contrary, and subject to Article 11, on and after the Public Trading Date, the maximum number of shares of Stock with respect to one or more Awards that may be granted to any one Participant during a calendar year shall be 190.

 

ARTICLE 4

ELIGIBILITY AND PARTICIPATION

 

4.1 Eligibility.

 

(a) General. Persons eligible to participate in this Plan include Employees, consultants to the Company or any Subsidiary and all members of the Board, as determined by the Committee.

 

(b) Foreign Participants. In order to assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Sections 3.1 and 3.3 of the Plan.

 

4.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be granted an Award pursuant to this Plan.

 

ARTICLE 5

STOCK OPTIONS

 

5.1 General. The Committee is authorized to grant Options to Participants on the following terms and conditions:

 

(a) Exercise Price. The exercise price per share of Stock subject to an Option shall be determined by the Committee and set forth in the Award Agreement; provided that the exercise price for any Option shall not be less than par value of a share of Stock on the date of grant.

 

(b) Time And Conditions Of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, provided that the term of any Option granted under the Plan shall not exceed ten years, and provided further, that in the case of a Non-Qualified Stock Option, such Option shall be exercisable for one year after the date of the Participant’s death. The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised.

 

(c) Payment. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash, promissory note bearing interest at such rate as is a market rate of interest and which also precludes the imputation of

 

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interest under the Code, shares of Stock held for longer than six months having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, or other property acceptable to the Committee (including through the delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided that payment of such proceeds is then made to the Company upon settlement of such sale), and the methods by which shares of Stock shall be delivered or deemed to be delivered to Participants. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate Section 13(k).

 

(d) Evidence Of Grant. All Options shall be evidenced by a written Award Agreement between the Company and the Participant. The Award Agreement shall include such additional provisions as may be specified by the Committee.

 

5.2 Incentive Stock Options. Incentive Stock Options shall be granted only to Employees and the terms of any Incentive Stock Options granted pursuant to the Plan must comply with the following additional provisions of this Section 5.2:

 

(a) Exercise Price. The exercise price per share of Stock shall be set by the Committee, provided that the exercise price for any Incentive Stock Option shall not be less than 100% of the Fair Market Value on the date of grant.

 

(b) Expiration Of Option. An Incentive Stock Option may not be exercised to any extent by anyone after the first to occur of the following events:

 

(1) Ten years from the date it is granted, unless an earlier time is set in the Award Agreement.

 

(2) One year after the date of the Participant’s termination of employment or service on account of Disability or death, unless in the case of death a shorter or longer period is designated in the Award Agreement. Upon the Participant’s Disability or death, any Incentive Stock Options exercisable at the Participant’s Disability or death may be exercised by the Participant’s legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant’s last will and testament, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution.

 

(c) Individual Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.

 

(d) Ten Percent Owners. An Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of Stock of the Company only if such Option is granted at a price that is not less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than five years from the date of grant.

 

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(e) Transfer Restriction. The Participant shall give the Company prompt notice of any disposition of shares of Stock acquired by exercise of an Incentive Stock Option within (1) two years from the date of grant of such Incentive Stock Option or (2) one year after the transfer of such shares of Stock to the Participant.

 

(f) Expiration Of Incentive Stock Options. No Award of an Incentive Stock Option may be made pursuant to this Plan after the tenth anniversary of the Effective Date.

 

(g) Right To Exercise. During a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant.

 

5.3 Early Exercisability. The Committee may provide in the terms of a Participant’s Award Agreement that the Participant may, at any time before the Participant’s status as an Employee, member of the Board or consultant to the Company terminates, exercise the Option(s) granted to such Participant in whole or in part prior to the full vesting of the Option(s); provided, however, shares of Stock acquired upon exercise of an Option which has not fully vested may be subject to any forfeiture, transfer or other restrictions as the Committee may determine in its sole discretion.

 

ARTICLE 6

RESTRICTED STOCK AWARDS

 

6.1 Grant of Restricted Stock. The Committee is authorized to make Awards of Restricted Stock to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee. All Awards of Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.

 

6.2 Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.

 

6.3 Forfeiture. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide in any Restricted Stock Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.

 

6.4 Certificates For Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse.

 

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ARTICLE 7

STOCK APPRECIATION RIGHTS

 

7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to any Participant selected by the Committee. A Stock Appreciation Right may be granted (a) in connection and simultaneously with the grant of an Option, (b) with respect to a previously granted Option, or (c) independent of an Option. A Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced by an Award Agreement.

 

7.2 Coupled Stock Appreciation Rights.

 

(a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a particular Option and shall be exercisable only when and to the extent the related Option is exercisable.

 

(b) A CSAR may be granted to a Participant for no more than the number of shares subject to the simultaneously or previously granted Option to which it is coupled.

 

(c) A CSAR shall entitle the Participant (or other person entitled to exercise the Option pursuant to the Plan) to surrender to the Company unexercised a portion of the Option to which the CSAR relates (to the extent then exercisable pursuant to its terms) and to receive from the Company in exchange therefor an amount determined by multiplying the difference obtained by subtracting the Option exercise price from the Fair Market Value of a share of Stock on the date of exercise of the CSAR by the number of shares of Stock with respect to which the CSAR shall have been exercised, subject to any limitations the Committee may impose.

 

7.3 Independent Stock Appreciation Rights.

 

(a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option and shall have a term set by the Committee. An ISAR shall be exercisable in such installments as the Committee may determine. An ISAR shall cover such number of shares of Stock as the Committee may determine. The exercise price per share of Stock subject to each ISAR shall be set by the Committee; provided, however, that, the Committee in its sole and absolute discretion may provide that the ISAR may be exercised subsequent to a termination of employment or service, as applicable, or following a Change of Control of the Company, or because of the Participant’s retirement, death or disability, or otherwise.

 

(b) An ISAR shall entitle the Participant (or other person entitled to exercise the ISAR pursuant to the Plan) to exercise all or a specified portion of the ISAR (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the ISAR from the Fair Market Value of a share of Stock on the date of exercise of the ISAR by the number of shares of Stock with respect to which the ISAR shall have been exercised, subject to any limitations the Committee may impose.

 

7.4 Payment and Limitations on Exercise.

 

(a) Payment of the amounts determined under Section 7.2(c) and 7.3(b) above shall be in cash, in Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised) or a combination of both, as determined by the Committee.

 

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(b) To the extent any payment under Section 7.2(c) or 7.3(b) is effected in Stock it shall be made subject to satisfaction of all provisions of Article 5 above pertaining to Options.

 

ARTICLE 8

OTHER TYPES OF AWARDS

 

8.1 Performance Share Awards. Any Participant selected by the Committee may be granted one or more Performance Share awards which may be denominated in a number of shares of Stock or in a dollar value of shares of Stock and which may be linked to any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. In making such determinations, the Committee shall consider (among such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and other compensation of the particular Participant.

 

8.2 Dividend Equivalents.

 

(a) Any Participant selected by the Committee may be granted Dividend Equivalents based on the dividends declared on the shares of Stock that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such Dividend Equivalents shall be converted to cash or additional shares of Stock by such formula and at such time and subject to such limitations as may be determined by the Committee.

 

(b) Dividend Equivalents granted with respect to Options or SARs that are intended to be Qualified Performance-Based Compensation shall be payable, with respect to pre-exercise periods, regardless of whether such Option or SAR is subsequently exercised.

 

8.3 Stock Payments. Any Participant selected by the Committee may receive Stock Payments in the manner determined from time to time by the Committee. The number of shares shall be determined by the Committee and may be based upon the Performance Criteria or other specific performance criteria determined appropriate by the Committee, determined on the date such Stock Payment is made or on any date thereafter.

 

8.4 Restricted Stock Units. Any Participant selected by the Committee may be granted an award of Restricted Stock Units in the manner determined from time to time by the Committee. The number of Restricted Stock Units shall be determined by the Committee and may be linked to the Performance Criteria or other specific performance criteria determined to be appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. Stock underlying a Restricted Stock Unit will not be issued until the Restricted Stock Unit has vested, pursuant to a vesting schedule or performance criteria set by the Committee. Unless otherwise provided by the Committee, a Participant awarded Restricted Stock Units shall have no rights as a Company stockholder with respect to such Restricted Stock Units until such time as the Restricted Stock Units have vested and the Stock underlying the Restricted Stock Units has been issued.

 

8.5 Term. The term of any Award of Performance Shares, Dividend Equivalents, Stock Payments or Restricted Stock Units shall be set by the Committee in its discretion.

 

8.6 Exercise or Purchase Price. The Committee may establish the exercise or purchase price of any Award of Performance Shares, Restricted Stock Units or Stock Payments; provided, however, that

 

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such price shall not be less than the par value of a share of Stock, unless otherwise permitted by applicable state law.

 

8.7 Exercise Upon Termination of Employment or Service. An Award of Performance Shares, Dividend Equivalents, Restricted Stock Units and Stock Payments shall only be exercisable or payable while the Participant is an Employee, consultant to the Company or a member of the Board, as applicable; provided, however, that the Committee in its sole and absolute discretion may provide that an Award of Performance Shares, Dividend Equivalents, Stock Payments or Restricted Stock Units may be exercised or paid subsequent to a termination of employment or service, as applicable, upon or following a Change of Control of the Company, or because of the Participant’s retirement, death or disability, or otherwise; provided, however, that any such provision with respect to Performance Shares shall be subject to the requirements of Section 162(m) of the Code that apply to Qualified Performance-Based Compensation.

 

8.8 Form of Payment. Payments with respect to any Awards granted under this Article 8 shall be made in cash, in Stock or a combination of both, as determined by the Committee.

 

8.9 Award Agreement. All Awards under this Article 8 shall be subject to such additional terms and conditions as determined by the Committee and shall be evidenced by a written Award Agreement.

 

ARTICLE 9

PERFORMANCE-BASED AWARDS

 

9.1 Purpose. The purpose of this Article 9 is to provide the Committee the ability to qualify Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the Committee, in its discretion, decides to grant a Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control over any contrary provision contained in Articles 6 or 8; provided, however, that the Committee may in its discretion grant Awards to Covered Employees that are based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Article 9.

 

9.2 Applicability. This Article 9 shall apply only to those Covered Employees selected by the Committee to receive Performance-Based Awards. The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the period. Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant in any subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period or in any other period.

 

9.3 Procedures With Respect to Performance-Based Awards. To the extent necessary to comply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted under Articles 6 and 8 which may be granted to one or more Covered Employees, no later than ninety (90) days following the commencement of any fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (i) designate one or more Covered Employees, (ii) select the Performance Criteria applicable to the Performance Period, (iii) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (iv) specify the relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the

 

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Committee shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned by a Covered Employee, the Committee shall have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Period.

 

9.4 Payment of Performance-Based Awards. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company or a Subsidiary on the day a Performance-Based Award for such Performance Period is paid to the Participant. Furthermore, a Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a Performance Period only if the Performance Goals for such period are achieved. In determining the amount earned under a Performance-Based Award, the Committee may reduce or eliminate the amount of the Performance-Based Award earned for the Performance Period, if in its sole and absolute discretion, such reduction or elimination is appropriate.

 

9.5 Additional Limitations. Notwithstanding any other provision of the Plan, any Award which is granted to a Covered Employee and is intended to constitute Qualified Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

 

ARTICLE 10

PROVISIONS APPLICABLE TO AWARDS

 

10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

 

10.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant’s employment or service terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

 

10.3 Limits on Transfer. No right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary. Except as otherwise provided by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution. The Committee by express provision in the Award or an amendment thereto may permit an Award (other than an Incentive Stock Option) to be transferred to, exercised by and paid to certain persons or entities related to the Participant, including but not limited to members of the Participant’s family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant’s family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee may establish. Any permitted transfer may be subject to the condition that the Committee receive evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a “blind trust” in connection with the Participant’s termination of employment or service with the

 

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Company or a Subsidiary to assume a position with a governmental, charitable, educational or similar non-profit institution) and on a basis consistent with the Company’s lawful issue of securities.

 

10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

 

10.5 Stock Certificates. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Board has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed or traded. All Stock certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Board may require that a Participant make such reasonable covenants, agreements, and representations as the Board, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Committee.

 

ARTICLE 11

CHANGES IN CAPITAL STRUCTURE

 

11.1 Adjustments. In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Stock or the share price of the Stock, the Committee shall make such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with respect to (i) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iii) the grant or exercise price per share for any outstanding Awards under the Plan. Any adjustment affecting an Award intended as Qualified Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code.

 

11.2 Effect of a Change of Control. In the event of a Change of Control, then all of a Participant’s unvested Awards shall become fully exercisable and/or payable as applicable, and all

 

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forfeiture restrictions on such Awards shall lapse, immediately prior to such Change of Control. Upon, or in anticipation of, a Change of Control, the Committee may cause any and all Awards outstanding hereunder to terminate at a specific time in the future and shall give each Participant the right to exercise such Awards during a period of time as the Committee, in its sole and absolute discretion, shall determine.

 

11.3 Outstanding Awards – Certain Mergers. Subject to any required action by the stockholders of the Company, in the event that the Company shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Stock receive securities of another corporation), each Award outstanding on the date of such merger or consolidation shall pertain to and apply to the securities that a holder of the number of shares of Stock subject to such Award would have received in such merger or consolidation.

 

11.4 Outstanding Awards – Other Changes. In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 11, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.

 

11.5 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.

 

ARTICLE 12

ADMINISTRATION

 

12.1 Committee. Unless and until the Board delegates administration to a Committee as set forth below, the Plan shall be administered by the Board. The Board may delegate administration of the Plan to a Committee or Committees of one or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Notwithstanding the foregoing, however, from and after the Public Trading Date, a Committee of the Board shall administer the Plan and the Committee shall consist solely of two or more members of the Board each of whom is both an “outside director,” within the meaning of Section 162(m) of the Code, and a Non-Employee Director. Within the scope of such authority, the Board or the Committee may (i) delegate to a committee of one or more members of the Board who are not “outside directors,” within the meaning of Section 162(m) of the Code the authority to grant awards under the Plan to eligible persons who are either (1) not then “covered employees,” within the meaning of Section 162(m) of the Code and are not expected to be “covered employees” at the time of recognition of income resulting from such award or (2) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a committee of one or more members of the Board who are not Non-Employee

 

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Directors, the authority to grant awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act. The Board may abolish the Committee at any time and/or revest in the Board the administration of the Plan. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may only be filled by the Board.

 

12.2 Action by the Committee. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

 

12.3 Authority of Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to:

 

(a) Designate Participants to receive Awards;

 

(b) Determine the type or types of Awards to be granted to each Participant;

 

(c) Determine the number of Awards to be granted and the number of shares of Stock to which an Award will relate;

 

(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines; provided, however, that the Committee shall not have the authority to accelerate the vesting or waive the forfeiture of any Performance-Based Awards;

 

(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

 

(f) Prescribe the form of each Award Agreement, which need not be identical for each Participant;

 

(g) Decide all other matters that must be determined in connection with an Award;

 

(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and

 

(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.

 

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12.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

 

ARTICLE 13

EFFECTIVE AND EXPIRATION DATE

 

13.1 Effective Date. The Plan will be effective as of the date of the Board’s initial adoption of the Plan (the “Effective Date”). The Plan will be submitted for the approval of the Company’s stockholders within twelve months after the Effective Date. Awards may be granted or awarded prior to such stockholder approval, provided that such Awards shall not be exercisable, shall not vest and the restrictions thereon shall not lapse prior to the time when the Plan is approved by the stockholders, and provided further that if such approval has not been obtained at the end of said twelve-month period, all Awards previously granted or awarded under the Plan shall thereupon be canceled and become null and void.

 

13.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the earlier of the tenth anniversary of (i) the Effective Date or (ii) the date this Plan is approved by the Company’s stockholders. Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement. Each Award Agreement shall provide that it will expire on the tenth anniversary of the date of grant of the Award to which it relates.

 

ARTICLE 14

AMENDMENT, MODIFICATION, AND TERMINATION

 

14.1 Amendment, Modification, and Termination. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required.

 

14.2 Awards Previously Granted. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.

 

ARTICLE 15

GENERAL PROVISIONS

 

15.1 No Rights to Awards. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.

 

15.2 No Stockholders Rights. No Award gives the Participant any of the rights of a stockholder of the Company unless and until shares of Stock are in fact issued to such person in connection with such Award.

 

15.3 Withholding. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The

 

- 16 -


Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold shares of Stock otherwise issuable under an Award (or allow the return of shares of Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of shares of Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award within six months after such shares of Stock were acquired by the Participant from the Company) in order to satisfy the Participant’s federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.

 

15.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment or services at any time, nor confer upon any Participant any right to continue in the employ or service of the Company or any Subsidiary.

 

15.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.

 

15.6 Indemnification. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her, provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

15.7 Relationship to Other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

15.8 Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.

 

15.9 Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

- 17 -


15.10 Fractional Shares. No fractional shares of Stock shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.

 

15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

 

15.12 Government And Other Regulations. The obligation of the Company to make payment of awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by government agencies as may be required. The Company shall be under no obligation to register pursuant to the Securities Act of 1933, as amended, any of the shares of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act of 1933, as amended, the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption.

 

15.13 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware.

 

15.14 Compliance with California Securities Laws. Prior to the Public Trading Date, this Plan is intended to comply with Section 25102(o) of the California Corporations Code and the regulations issued thereunder. If any of the provisions contained in this Plan are inconsistent with such requirements, such provisions shall be deemed null and void. The invalidity of any provision of this Plan shall not affect the validity or enforceability of any other provision of this Plan, which shall remain in full force and effect.

 

15.15 Appendices. The Committee may approve such supplements to, or amendments, or appendices to, the Plan as it may consider necessary or appropriate for purposes of compliance with applicable laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements, amendments or appendices shall increase the share limitations contained in Sections 3.1 and 3.3 of the Plan.

 

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APPENDIX I

 

TO

MEDIVATION, INC.

2004 EQUITY INCENTIVE AWARD PLAN

 

California State Securities Law Compliance

 

Notwithstanding anything to the contrary contained in the Plan, the provisions set forth in this Appendix shall apply to all Awards granted under the Medivation, Inc. 2004 Equity Incentive Award Plan (the “Plan”) prior to the Public Trading Date. This Appendix shall be of no further force and effect on or after the Public Trading Date. Definitions as set out in Section 2 of the Plan are applicable to this Appendix.

 

The purpose of this Appendix is to set forth those provisions of the Plan necessary to comply with Section 25102(o) of the California Corporations Code and the regulations issued thereunder. If any of the provisions contained in this Appendix are inconsistent with such requirements, such provisions shall be deemed null and void. The invalidity of any provision of this Appendix shall not affect the validity or enforceability of any other provision of this Appendix, which shall remain in full force and effect.

 

1.1 Term of Awards. The term of each Award shall be no more than ten years from the date of grant thereof.

 

2.1 Award Exercise or Purchase Price. Except as provided in Article 11, the per share exercise or purchase price for the Stock to be issued upon exercise of an Award shall be such price as is determined by the Administrator, but shall be subject to the following:

 

In the case of an Award:

 

(a) granted to a Participant who, at the time of grant of such Award, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent (as defined in Section 175 of the California Corporations Code) or Subsidiary, the per share exercise or purchase price shall be no less than 110% of the Fair Market Value per share on the date of the grant (100% in the case of an Award other than an Option); and

 

(b) granted to any other Participant, the per share exercise or purchase price shall be no less than 85% of the Fair Market Value per share on the date of grant.

 

Notwithstanding the foregoing, Awards may be granted with a per share exercise or purchase price other than as required above pursuant to a merger or other corporate transaction.

 

3.1 Exercisability. Except with regard to Awards granted to officers, directors, managers or consultants, in no event shall an Award granted hereunder become vested and exercisable at a rate of less than 20% per year over five years from the date the Award is granted, subject to reasonable conditions, such as continuing to be a service provider.

 

4.1 Exercisability Following Termination of Relationship as a Service Provider.

 

(a) Termination Other Than Death or Disability. If a Participant’s employment or service terminates for any reason other than by reason of the Participant’s disability or death, such Participant may exercise his or her Award within such period of time as is specified in the Award

 


Agreement to the extent that the Award is vested on the date of termination; provided, however, that prior to the Public Trading Date, such period of time shall not be less than thirty days (but in no event later than the expiration of the term of the Award as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three months following the Participant’s termination.

 

(b) Disability of Participant. If a Participant’s employment or service terminates as a result of the Participant’s disability, the Participant may exercise his or her Award within such period of time as is specified in the Award Agreement to the extent the Award is vested on the date of termination; provided, however, that prior to the Public Trading Date, such period of time shall not be less than six months (but in no event later than the expiration of the term of such Award as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Award shall remain exercisable for twelve months following the Holder’s termination.

 

(c) Death. If a Participant’s employment or service terminates as a result of the Participant’s death, the Award may be exercised within such period of time as is specified in the Award Agreement; provided, however, that prior to the Public Trading Date, such period of time shall not be less than six months (but in no event later than the expiration of the term of such Award as set forth in the Notice of Grant), by the Participant’s estate or by a person who acquires the right to exercise the Award by bequest or inheritance, but only to the extent that the Award is vested on the date of death. In the absence of a specified time in the Award Agreement, the Award shall remain exercisable for twelve months following the Participant’s termination.

 

5.1 Repurchase Provisions. In the event the Committee provides that the Company may repurchase Stock acquired upon exercise of an Award upon the occurrence of certain specified events, including, without limitation, termination of a Participant’s employment or service, divorce, bankruptcy or insolvency, then any such repurchase right shall be set forth in the applicable Award Agreement or in another agreement referred to in such agreement and, to the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of Regulations, any such repurchase right set forth in an Award granted prior to the Public Trading Date to a person who is not an officer, director, manager or consultant shall be upon the following terms: (i) if the repurchase option gives the Company the right to repurchase the shares upon the Participant’s termination of employment or service at not less than the Fair Market Value of the shares to be purchased on the date of termination of employment or service, then (A) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within ninety days of termination of employment or service (or in the case of shares issued upon exercise of Awards after such date of termination, within ninety days after the date of the exercise) or such longer period as may be agreed to by the Administrator and the Participant and (B) the right terminates on the Public Trading Date; and (ii) if the repurchase option gives the Company the right to repurchase the Stock upon the Participant’s termination of employment or service at the original purchase price for such Stock, then (A) the right to repurchase at the original purchase price shall lapse at the rate of at least 20% of the shares per year over five (5) years from the date the Award is granted (without respect to the date the Award was exercised or became exercisable) and (B) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within ninety days of termination of employment or service (or, in the case of shares issued upon exercise of Awards, after such date of termination, within ninety days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant.

 

6.1 Information Rights. Prior to the Public Trading Date and to the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall provide to each Participant and to each individual who acquires Stock pursuant to the Plan, not less frequently than annually during the period such Participant has one or more Awards outstanding, and, in the case of an

 

- 2 -


individual who acquires Stock pursuant to the Plan, during the period such individual owns such Stock, copies of annual financial statements. Notwithstanding the preceding sentence, the Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

 

7.1 Transferability. Prior to the Public Trading Date, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution or, with respect to Awards other than Incentive Stock Options, as permitted by Rule 701 of the Securities Act.

 

8.1 Limitation on Number of Shares. Prior to the Public Trading Date, at no time shall the total number of shares of Stock issuable upon exercise of all outstanding Options under the Plan and any shares of Stock provided for under any bonus or similar plan or agreement of the Company exceed 30% of the then-outstanding shares of Stock of the Company, as calculated pursuant to Section 260.140.45 of Title 10 of the California Code of Regulations, unless a percentage higher than 30% is approved by at least two-thirds of the outstanding securities of the Company entitled to vote. The number of shares of Stock which may be issued or transferred pursuant to Awards under the Plan shall be reduced to the extent necessary to comply with this provision.

 

- 3 -

EX-21.1 13 dex211.htm SUBSIDIARIES OF ORION ACQUISITION CORP. II Subsidiaries of Orion Acquisition Corp. II

Exhibit 21.1

 

SUBSIDIARIES

OF

ORION ACQUISITION CORP. II

 

Medivation, Inc.

EX-23.1 14 dex231.htm CONSENT OF SINGER LEWAK GREENBAUM & GOLDSTEIN LLP Consent of Singer Lewak Greenbaum & Goldstein LLP

EXHIBIT 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the use in this Registration Statement of Orion Acquisition Corp. II on Form SB-2 of our report, dated January 25, 2005, appearing in the Prospectus, which is part of this Registration Statement.

 

We also consent to the reference to our Firm under the caption “Experts” in such Prospectus.

 

SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

 

Los Angeles, California

January 31, 2005

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