Edgar Filing: ANTARES PHARMA INC

As Filed with the Securities and Exchange Commission on July 19, 2002

Registration No. 333-

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Securities and Exchange Commission
Washington, D.C. 20549
________________________

Form S-3
Registration Statement
Under
The Securities Act of 1933

________________________

Antares Pharma, Inc.
(Exact Name of Registrant as Specified in its Charter)

Minnesota 41-1350192
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)

707 Eagleview Boulevard
Suite 414
Exton, PA 19341
(610) 458-6200
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
________________________

Roger G. Harrison, Ph.D.
Chief Executive Officer
Antares Pharma, Inc.
707 Eagleview Boulevard
Suite 414
Exton, PA 19341
(610) 458-6200
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
________________________

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes effective.

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE

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TITLE OF
EACH CLASS PROPOSED PROPOSED
OF MAXIMUM MAXIMUM
SECURITIES AMOUNT TO OFFERING AGGREGATE AMOUNT OF
TO BE BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED (1) SHARE (2) PRICE FEE
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Common Stock, par
value $.01 per share 1,600,000 $4.15 $6,640,000 $611
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(1) Includes shares of common stock which may be offered pursuant to this
registration statement, which shares are issuable upon conversion of secured
convertible debentures. The number of shares of common stock registered
hereunder represents a good faith estimate by the Company of the number of
shares of common stock issuable upon conversion of the debentures. This
registration statement shall also cover any additional shares of common stock
which become issuable by reason of any stock dividend, stock split,
recapitalization or other similar transaction which results in an increase in
the number of the outstanding shares of common stock in accordance with Rule
416.

(2) This estimate is made pursuant to Rule 457(c) of the Securities Act of 1933,
as amended, solely for purposes of determining the registration fee. The above
calculation is based on the average of the high and low sales price of the
Registrant's common stock on the Nasdaq SmallCap Market on Wednesday, July 17,
2002.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant files 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, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to such Section 8(a), may determine.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ The information in this prospectus is not complete and may be changed. The +
+ selling securityholders may not sell these securities until the +
+ registration statement filed with the Securities and Exchange Commission is +
+ effective. This prospective is not an offer to sell these securities and it +
+ is not soliciting an offer to buy these securities in any state where the +
+ offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JULY 19, 2002

PRELIMINARY PROSPECTUS

1,600,000 SHARES OF

ANTARES PHARMA, INC.

COMMON STOCK

This prospectus relates to the offering of 1,600,000 shares of our
common stock which may be sold from time to time by the selling shareholders
named in this prospectus.

The shares of our common stock are being registered to permit the
selling shareholders to sell the shares from time to time in the public market.
The shareholders may sell the shares in negotiated transactions or otherwise, at
market prices prevailing at the time of sale or at negotiated prices. The timing
and amount of any sale are within the sole discretion of the selling
shareholders. In addition, the shares may be offered from time to time through
ordinary brokerage transactions, directly to market makers of our shares or
through any other means described in the section entitled "Plan of Distribution"
beginning on page 15.

We will not receive any of the proceeds from the sale of the shares
although we have paid the expenses of preparing this prospectus and the related
registration expenses.

Our common stock is quoted on the Nasdaq SmallCap Market under the
symbol "ANTR." The last reported sales price of our common stock on the Nasdaq
SmallCap Market on July 17, 2002 was $4.00 per share.

BEFORE PURCHASING ANY OF THE SHARES COVERED BY THIS
PROSPECTUS, YOU SHOULD CAREFULLY READ AND CONSIDER THE RISK
FACTORS AND UNCERTAINTIES DISCUSSED IN THE SECTION ENTITLED
"RISK FACTORS" BEGINNING ON PAGE 2. YOU SHOULD BE PREPARED TO
ACCEPT ANY AND ALL OF THE RISKS ASSOCIATED WITH PURCHASING THE
SHARES, INCLUDING A LOSS OF YOUR INVESTMENT.

_____________________________

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATORS HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

The date of this prospectus is ______ __, 2002.

FORWARD LOOKING STATEMENTS

This prospectus and the documents incorporated by reference herein
contain forward-looking statements within the meaning of the securities laws.
These forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond our control. All statements other than
statements of historical facts included or incorporated by reference in this
prospectus regarding our strategy, future operations, financial position,
estimated revenues, projected costs, prospects, plans and objectives of
management are forward-looking statements. When used in this prospectus, the
words "will," "believe," "anticipate," "intend," "estimate," "expect," "project"
and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words. All
forward-looking statements speak only as of the date of this prospectus. Neither
we nor the selling shareholders undertake any obligation to update or revise
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. Although we believe that our plans, intentions and
expectations reflected in or suggested by the forward-looking statements that we
make in this prospectus are reasonable, we can give no assurance that such
plans, intentions or expectations will be achieved. The cautionary statements
qualify all forward-looking statements attributable to us or persons acting on
our behalf.

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference into this prospectus and refer you to the documents listed below:

. our annual report on Form 10-K for the fiscal year ended December 31,
2001, filed with the SEC on April 15, 2002;
. our quarterly report on Form 10-Q for the quarter ended March 31, 2002,
filed with the SEC on May 13, 2002;
. our report on Form 8-K filed with the SEC on June 28, 2002, announcing
the conversion of $2 million principal amount of debt plus accrued
interest payable to Jacques Gonella into 509,137 shares of common
stock;
. our report on Form 8-K filed with the SEC on July 17, 2002, announcing
the completion of the sale of our 10% convertible debentures;
. the description of our common stock contained in our registration
statement on Form S-1/A, filed on August 15, 1996, including any
amendment or report filed for the purpose of updating the description;
and
. any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
registration statement and prior to the filing of a post-effective
amendment that indicates that all shares offered have been sold or
which deregisters all shares then remaining unsold.

This prospectus is part of a registration statement on Form S-3 filed
with the SEC under the Securities Act. This prospectus does not contain all of
the information set forth in the registration statement. You should read the
registration statement for further information about our company and the common
stock. You may request, orally or in writing, a copy of these filings. We will
provide the copies of these filings to you at no cost. Please direct your
requests to:

Antares Pharma, Inc.
707 Eagleview Boulevard
Suite 414
Exton, Pennsylvania 19341
Attn: Lawrence Christian
(610) 458-6200

You may also find information about us at our website:
http://www.antarespharma.com. You should rely only on the information
incorporated by reference or provided in this prospectus or any prospectus
supplement. We have not authorized anyone else to provide you with different
information. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on the
front page of those documents.

RECENT DEVELOPMENTS REGARDING ISSUANCE OF SECURITIES

Because our common stock is listed on the Nasdaq SmallCap Market, we are
subject to the NASD Nasdaq Marketplace Rules. Rule 4350(i)(1)(D) requires that
we obtain shareholder approval for any issuance of our common stock at a price
below the market price where the amount of stock being issued exceeds 20% or
more of the common stock or 20% or more of the voting power outstanding before
the issuance. This registration statement is being filed to register the shares
of common stock issuable upon conversion of convertible debentures we recently
sold in a private placement. We have also filed a preliminary proxy statement
for a special meeting of our shareholders to be held on August 23, 2002. At the
special meeting, we expect to receive approval to issue common stock in excess
of 19.99% of our currently outstanding shares of common stock upon conversion of
the debentures.

SUMMARY

Introduction

The following summary does not contain all of the information that may
be important to you. You should read the entire prospectus, including the
financial statements and other information incorporated by reference in this
prospectus, before making an investment decision.

The terms "company," "Antares," "registrant," "we," "us," and "our" in
this prospectus refer to Antares Pharma, Inc.

The Company and our Business

We were incorporated in Minnesota on January 31, 1979 under the name
Derata Corporation. We changed our name to Medi-Ject Corporation on November 16,
1992. On January 31, 2001, we completed a business combination to acquire the
three operating subsidiaries of Permatec Holding AG, headquartered in Basel,
Switzerland. The business combination transaction with the Permatec subsidiaries
was accounted for as a reverse merger because upon the closing of the
transaction, Permatec owned in excess of 67% of the outstanding shares of our
common stock. The historical financial statements of Permatec thus became those
of the company. Upon consummation of the transaction, the acquired Permatec
subsidiaries were renamed Antares Pharma AG, Antares Pharma IPL AG and Antares
Pharma NV, and we changed our name to Antares Pharma, Inc. The following
discussion of our business includes our operations following the transaction
with Permatec.

We develop, manufacture and market medical devices, called jet
injectors, that allow people to self-inject drugs without using a needle. These
jet injectors utilize a small spring-action device and attached disposable
plastic syringes to hold the drug. A liquid drug is drawn up into the syringe
through a small hole at the end. When the syringe is held against the body and
the spring is released, a piston drives the fluid stream into the tissues
beneath the skin. A person may re-arm the device and repeat the process or
attach a new sterile syringe between injections. Recently we have developed a
variation of our jet injector by adding a very small hidden needle to a
pre-filled, single-use injector.

With the Permatec combination, we are also committed to other methods
of drug delivery, including trandsdermal patches and topical gel formulations.
We intend for these other drug delivery methods to become a material part of our
business moving forward.

We plan to operate in the specialized drug delivery sector of the
pharmaceutical industry. Companies in this sector generally bring technology and
know-how in the area of drug formulation (in our case, injection devices) to
pharmaceutical manufacturers through licensing and development agreements. Our
principal customer is the pharmaceutical manufacturer. We have negotiated and
executed licensing relationships in the growth hormone segment (needle-free
devices in Europe and Asia), the hormone replacement segment (transdermal
delivery of estradiol in South America) and topical hormone gels segment
(several development programs in place worldwide). In addition, we continue to
market needle-free devices for the home administration of insulin in the U.S.
and international markets as we seek a distribution relationship with an insulin
manufacturer.

Our principal executive office is located at 707 Eagleview Boulevard,
Suite 414, Exton, Pennsylvania 19341, and our telephone number at that office is
(610) 458-6200. We have wholly-owned subsidiaries in Switzerland (Antares Pharma
AG and Antares Pharma IPL AG) and the Netherlands Antilles (Antares Pharma NV).
Our United States research and manufacturing facility is located in Minneapolis,
Minnesota.

RISK FACTORS

You should consider carefully the following information about risks,
together with the other information contained in this prospectus and in the
documents referred to below in "Where You Can Find More Information," before you
decide whether to buy our common stock. Additional risks and uncertainties not
known to us or that we now believe to be unimportant could also impair our
business. If any of the following risks actually occur, our business, results of
operations and financial condition could suffer significantly. As a result, the
market price of our common stock could decline and you could lose all of your
investment.

Risks Related to Our Business

We will require additional capital to continue operations beyond approximately
October 2002

Following our receipt of a $2 million loan from our majority shareholder,
Jacques Gonella (which was converted into shares of our common stock on June 20,
2002), and our receipt of the proceeds of the sale of an aggregate of $2 million
of our 10% convertible debentures, of which we have received $700,000 to date,
our cash position will be insufficient to fund working capital requirements
beyond approximately October 2002 and will not be sufficient for us to reach
profitability. Accordingly, we will require significant additional equity and/or
debt financing. There can be no assurance that sufficient additional equity or
debt financing will be available. If we cannot obtain financing when needed, or
obtain it on favorable terms, we may be required to curtail development of new
drug technologies or expansion of manufacturing capacity or cease operations
altogether.

We have incurred significant losses to date, and for our last fiscal year we
received an opinion from our accountants expressing doubt on our ability to
continue as a going concern

The report of our independent accountants in our 10-K for the fiscal
year ended December 31, 2001, contains an explanatory paragraph expressing
substantial doubt about our ability to continue as a going concern as a result
of recurring losses and negative cash flows from operations. We had negative
working capital of $2,439,577 and $11,712 at December 31, 2000 and 2001,
respectively, and incurred net losses of $3,967,366, $5,260,387 and $9,499,101
in 1999, 2000 and 2001, respectively. In addition, we have had net losses and
have had negative cash flows from operating activities since inception. We
expect to report a net loss for the year ending December 31, 2002, as marketing
and development costs related to bringing future generations of products to
market continue. Long-term capital requirements will depend on numerous factors,
including the status of collaborative arrangements, the progress of research and
development programs and the receipt of revenues from sales of products.

We have never been profitable, and we do not expect to achieve profitability in
the near future

The business combination on January 31, 2001 among Medi-Ject
Corporation and Permatec Holding AG, Permatec Pharma AG, Permatec Technology AG
and Permatec NV was accounted for as a reverse merger, as Permatec owned in
excess of 67% of the outstanding shares of our common stock after completion of
the transaction. The operating financial history of Antares has become that of
Permatec. Since the mid-1990's, Permatec generated revenue from product
development fees and licensing arrangements and has never been profitable.

Currently, we are not profitable, nor do we expect to achieve
profitablity in the near future. We have accumulated aggregate net losses from
the inception of business through March 31, 2002, of approximately $31,603,673,
which includes Permatec losses prior to the January 31, 2001, transaction and

the losses of the combined businesses following the January 31, 2001
transaction. The costs for research and product development of our drug delivery
technologies along with marketing and selling expenses and general and
administrative expenses have been the principal causes of our losses. Our
ability to achieve and/or sustain profitable operations depends on a number of
factors, many of which are beyond our control. These factors include the
following:

. the demand for our technologies;
. our ability to manufacture products efficiently and with the
required quality;
. our ability to increase manufacturing capacity;
. the level of product and price competition;
. our ability to develop additional commercial applications for our
products;
. our ability to obtain regulatory approvals;
. our ability to control costs; and
. general economic conditions.

We depend on a limited number of customers for the majority of our revenue

During the first five months of 2002, we derived 86.8% of our revenue
from three customers. The loss of any one of these customers could cause
revenues to decrease significantly, resulting in, or increasing, our losses from
operations. If we cannot broaden our customer base, we will continue to depend
on a few customers for the majority of our revenues. We may be unable to
negotiate favorable business terms with customers that represent a significant
portion of our revenues. If that occurs, our revenues and gross profits may be
insufficient to allow us to achieve and/or sustain profitability.

We have limited manufacturing experience and may experience manufacturing
difficulties related to the use of new materials and procedures

Our past assembly, testing and manufacturing experience for certain of
our technologies has involved the assembly of products from machined stainless
steel and composite components in limited quantities. Our planned future drug
delivery technologies necessitate significant changes and additions to our
manufacturing and assembly process to accommodate new components. These systems
must be manufactured in compliance with regulatory requirements, in a timely
manner and in sufficient quantities while maintaining quality and acceptable
manufacturing costs. In addition, our plans call for significantly increased
levels of production and a shift to performing more manufacturing functions
internally rather than relying on third-party suppliers, which will require us
to eventually expand beyond our current facilities. In the course of these
changes and additions to our manufacturing and production methods, we may
encounter difficulties, including problems involving yields, quality control and
assurance, product reliability, manufacturing costs, existing and new equipment,
component supplies and shortages of personnel, any of which could result in
significant delays in production. There can be no assurance that we will be able
to successfully produce and manufacture our drug delivery technology. Any
failure to do so would negatively impact our business, financial condition and
results of operations.

Our technologies have achieved only limited acceptance by patients and
physicians, which could have a negative effect on our revenue

Our revenues depend on ultimate patient and physician acceptance of our
needle-free injectors, gels, patches and our other potential drug delivery
technologies as an alternative to more traditional forms of drug delivery
including injections using a needle, tablets and liquid formulas. To date, these
delivery technologies have achieved only limited success from such parties. If
our drug delivery technologies are not accepted in the marketplace, the
pharmaceutical company partners may be unable to successfully market and sell
our products, which would limit our ability to generate revenues and to achieve
and/or sustain

profitability. The degree of acceptance of our drug delivery systems depends on
a number of factors. These factors include the following:

. demonstrated clinical efficacy and safety;
. cost-effectiveness;
. convenience and ease of administration of injectors, transdermal
gels and patches;
. advantages over alternative drug delivery systems; and
. marketing and distribution support.

Physicians may refuse to prescribe products incorporating our drug
delivery technologies if the physicians believe that the active ingredient is
better administered to a patient using alternative drug delivery technologies or
the physicians believe that the delivery method will result in patient
noncompliance. Factors such as allergic reactions, patient perceptions that a
gel is inconvenient and cosmetic considerations about patches may cause patients
to reject our drug delivery technologies.

In addition, we expect that the pharmaceutical company partners will price
products incorporating their drug delivery technologies slightly higher than
conventional methods, which may impair their acceptance. Because only a limited
number of products incorporating our drug delivery technologies are commercially
available, we cannot yet assess the level of market acceptance of our drug
delivery technologies.

Our success depends on the market acceptance of alternative drug delivery
technologies, and we may be unable to obtain such acceptance

Our success will, in large part, depend upon increasing market
acceptance of our drug delivery technologies as an alternative to traditional
delivery systems. During the time period since initial commercial introduction,
our products have had only limited success competing with traditional drug
delivery systems for a variety of reasons, including the size, cost and
complexity of use and maintenance of our drug delivery technologies and the
relatively small number of drugs that have been self-administered. In order to
increase market acceptance, we believe that we must successfully develop
improvements in the design and functionality of future drug delivery technology
that will reduce cost and increase appeal to users, thereby making these
technologies desirable despite their premium cost over traditional drug delivery
systems. Projected improvements in functionality and design may not adequately
address the actual or perceived complexity of using our drug delivery
technologies or adequately reduce cost. In addition, we believe that our future
success depends upon our ability to enter into additional collaborative
agreements with drug and medical device manufacturers, as discussed below. There
can be no assurance that we will be successful in these efforts or that our drug
delivery technologies will ever gain sufficient market acceptance to achieve
and/or sustain profitable operations.

Although transdermal patches are a well-accepted method of drug
delivery, many other companies compete in this sector. Because the cost of
manufacturing equipment for transdermal patches is high, most manufacturing is
done by a limited number of contract manufacturers. Therefore, our costs will
remain high and our pricing options will be limited. We may develop a superior
patch, but we may not be able to price it competitively, or our margins may not
justify maintaining the business if our market share is low. Patches are not
central to our business strategy and may suffer from lack of attention. There
can be no assurance that we will be successful in the transdermal patch market.

Because transdermal gels are a newer, less understood method of drug
delivery, our potential consumers, the pharmaceutical manufacturers, have little
experience with manufacturing costs or pricing parameters. Our assumption of
higher value may not be shared by the consumer. To date, transdermal gels have
gained successful entry into only a limited number of markets. There can be no
assurance that

transdermal gels will ever gain sufficient market acceptance in those or other
markets to achieve and/or sustain profitable operations.

Although the injectable gel research field is active, there is
essentially no data regarding consumer acceptance. Regulatory compliance and
approvals can take a substantial amount of time due to clinical evaluations that
are required for this type of method but not for other drug delivery methods.
There can be no assurance that injectable gels will ever obtain the necessary
regulatory approvals or gain sufficient market acceptance to achieve and/or
sustain profitable operations.

The future of the hormone replacement therapy market for menopausal women is
uncertain

In July 2002, the Federal Drug Administration halted a study being
conducted on oral female hormone replacement therapy (HRT) because the study
showed an increased risk of breast cancer, heart disease and blood clots in
women taking HRT. The study looked at only one brand of oral HRT, and there is
no information on whether other brands with different levels of hormones would
carry the same risks. Because the FDA's findings are very recent, we cannot
assess what impact, if any, they will have on the HRT market as a whole, or on
our own HRT product line. Additionally, there is no information at this point
regarding whether the transdermal gels and patches that we market for HRT will
be shown to carry the same risks as those found in the study.

We rely on third parties to supply components for our products

Certain of our technologies contain a number of customized components
manufactured by various third parties. Regulatory requirements applicable to
medical device and transdermal patch manufacturing can make substitution of
suppliers costly and time-consuming. In the event that we could not obtain
adequate quantities of these customized components from our suppliers, there can
be no assurance that we would be able to access alternative sources of such
components within a reasonable period of time, on acceptable terms or at all.
The unavailability of adequate quantities, the inability to develop alternative
sources, a reduction or interruption in supply or a significant increase in the
price of components could have a material adverse effect on our ability to
manufacture and market our products.

We may be unable to successfully expand into new areas of drug delivery
technology

We intend to continue to enhance our current technologies and pursue
additional proprietary drug delivery technologies. Even if enhanced or
additional technologies appear promising during various stages of development,
we may not be able to develop commercial applications for them because

. the potential technologies may fail clinical studies;
. we may not find a pharmaceutical company to adopt the technologies;
. it may be difficult to apply the technologies on a commercial scale;
. the technologies may be uneconomical to market; or
. we may not receive necessary regulatory approvals for the potential
technologies.

We have not yet completed research and development work or obtained regulatory
approval for any technologies for use with any drugs other than insulin, human
growth hormone and estradiol. There can be no assurance that any newly developed
technologies will ultimately be successful or that unforeseen difficulties will
not occur in research and development, clinical testing, regulatory submissions
and approval, product manufacturing and commercial scale up, marketing, or
product distribution related to any such improved technologies or new uses. Any
such occurrence could materially delay the commercialization of such improved
technologies or new uses or prevent their market introduction entirely.

Our revenues will be negatively affected if third-party insurers refuse to
reimburse end users for our products

Certain sales of our current and proposed technologies in certain
markets are dependent in part on the availability of adequate reimbursement from
third-party healthcare payers. Currently, insurance companies and other
third-party payers reimburse the cost of certain technologies on a case-by-case
basis and may refuse reimbursement if they do not perceive benefits to the
technologies' use in a particular case. Third-party payers are increasingly
challenging the pricing of medical products and services, and there can be no
assurance that such third-party payers will not in the future increasingly
reject claims for coverage of the cost of certain of our technologies. In
addition, there can be no assurance that adequate levels of reimbursement will
be available to enable us to achieve or maintain market acceptance of our
technologies or maintain price levels sufficient to realize profitable
operations. Furthermore, there is a possibility of increased government control
or influence over a broad range of healthcare expenditures in the future. Any
such trend could negatively impact the market for our drug delivery
technologies.

We depend on licensing agreements with pharmaceutical companies to provide a
substantial portion of our revenue

We believe that the introduction and broad acceptance of our drug
delivery technologies is in part dependent upon the success of our current and
any future development and licensing arrangements with pharmaceutical and
medical device companies covering the development, manufacture, use and
marketing of drug delivery technologies with specific parenteral drug therapies.
We anticipate that under these arrangements the pharmaceutical or medical device
company will assist in the development of systems for such drug therapies and
collect or sponsor the collection of the appropriate data for submission for
regulatory approval of the use of the drug delivery technology with the licensed
drug therapy. The pharmaceutical or medical device company also will be
responsible for distribution and marketing of the technologies for these drug
therapies either worldwide or in specific territories. We are currently a party
to a number of such agreements. There can be no assurance that we will be
successful in executing additional agreements with pharmaceutical or medical
device companies or that existing or future agreements will result in increased
sales of our drug delivery technologies. If we do not enter into additional
agreements in the future, or if our current or future agreements do not result
in successful marketing of our products, our business, results of operations and
financial condition could be adversely affected, and our revenues and gross
profits may be insufficient to allow us to achieve and/or sustain profitability.
As a result of these arrangements, we are dependent upon the development, data
collection and marketing efforts of such pharmaceutical and medical device
companies. The amount and timing of resources such pharmaceutical and medical
device companies devote to these efforts are not within our control, and such
pharmaceutical and medical device companies could make material decisions
regarding these efforts that could adversely affect our future financial
condition and results of operations. In addition, factors that adversely impact
the introduction and level of sales of any drug covered by such licensing
arrangements, including competition within the pharmaceutical and medical device
industries, the timing of regulatory or other approvals and intellectual
property litigation, may also negatively affect sales of our drug delivery
technology.

Additional risks that we face related to our collaborative agreements
include:

. we may be unable to enter into collaborative agreements to develop
additional products using drug delivery technologies;
. any existing or future collaborative agreements may not result in
additional commercial products;
. additional commercial products that we may develop may not be
successful;

. we may not be able to meet the milestones established in our current
or future collaborative agreements and thus, would not receive the
fees; and
. we may not be able to develop successful new drug delivery
technologies that will be attractive to potential pharmaceutical
company partners.

We depend on third party licensees to develop, obtain regulatory approvals for,
market, distribute and sell our products

Pharmaceutical company partners help us develop, obtain regulatory
approvals for, manufacture and sell our products. If one or more of these
pharmaceutical company partners fail to pursue the development or marketing of
the products as planned, our revenues and gross profits may not reach
expectations or may decline. We may not be able to control the timing and other
aspects of the development of products because pharmaceutical company partners
may have priorities that differ from ours. Therefore, commercialization of
products under development may be delayed unexpectedly. Further, we may
incorporate certain of our drug delivery technologies into the oral dosage forms
of products marketed and sold by pharmaceutical company partners. We do not have
a direct marketing channel to consumers for drug delivery technologies.
Therefore, the success of the marketing organizations of the pharmaceutical
company partners, as well as the level of priority assigned to the marketing of
the products by these entities, which may differ from our priorities, will
determine the success of the products incorporating our technologies.

We may be unable to effectively compete in our industry

Our current competition comes primarily from traditional hypodermic
needles and syringes that are used for the vast majority of injections
administered today and from transdermal patch and gel products marketed by
others. Currently, competition in the needle-free injection market is limited to
small companies with limited financial and other resources, but the barriers to
entry are currently low, and additional competitors may enter the needle-free
injection systems market, including companies with substantially greater
resources and experience than us. There can be no assurance that we will be able
to compete effectively against our current or potential competitors in the drug
delivery market, or that such competitors will not succeed in developing or
marketing products that will be more accepted in such market. Competition in
this market could also force us to reduce the prices of our technologies below
currently planned levels, which could adversely affect our revenues and future
profitability.

In general, injection is used only with drugs for which other drug
delivery methods are not possible, in particular with biopharmaceutical proteins
(drugs derived from living organisms, such as insulin and human growth hormone)
that cannot currently be delivered orally, transdermally (through the skin) or
pulmonarily (through the lungs). Transdermal patches and gels are also used for
drugs that cannot be delivered orally. Many companies, both large and small, are
engaged in research and development efforts on novel techniques aimed at
delivering such drugs through the skin, either without needle injection or by
patch and gel. The successful development and commercial introduction of such a
non-injection technique would likely have a material adverse effect on our
business, financial condition, results of operations and general prospects.

We have applied for, and have received, several patents, and we may be unable to
protect our intellectual property, which would negatively affect our ability to
compete

Our success depends, in part, on our ability to obtain and enforce
patents for our products, processes and technologies and to preserve our trade
secrets and other proprietary information. If we cannot do so, our competitors
may exploit our innovations and deprive us of the ability to realize revenues
and profits from our developments.

Currently, we own or have made application for 67 patents, both in the
United States and in other countries. Any patent applications we may have made
or may make relating to our potential products, processes and technologies may
not result in patents being issued. Our current patents may not be valid or
enforceable and may not protect us against competitors that challenge our
patents, obtain patents that may have an adverse effect on our ability to
conduct business or are able to circumvent our patents. Further, we may not have
the necessary financial resources to enforce our patents.

To protect our trade secrets and proprietary technologies and
processes, we rely, in part, on confidentiality agreements with employees,
consultants and advisors. These agreements may not provide adequate protection
for our trade secrets and other proprietary information in the event of any
unauthorized use or disclosure, or if others lawfully develop the information.

Others may bring infringement claims against us, which could be time-consuming
and expensive to defend

Third parties may claim that the manufacture, use or sale of our drug
delivery technologies infringe their patent rights. If such claims are asserted,
we may have to seek licenses, defend infringement actions or challenge the
validity of those patents in court. If we could not obtain required licenses,
are found liable for infringement or are not able to have these patents declared
invalid, we may be liable for significant monetary damages, encounter
significant delays in bringing products to market or be precluded from
participating in the manufacture, use or sale of products or methods of drug
delivery covered by the patents of others. We may not have identified, or be
able to identify in the future, United States or foreign patents that pose a
risk of potential infringement claims.

Additionally, the drugs to which our drug delivery technologies are
applied are generally the property of the pharmaceutical companies. Those drugs
may be the subject of patents or patent applications and other forms of
protection owned by the pharmaceutical companies or third parties. If those
patents or other forms of protection expire, become ineffective or are subject
to the control of third parties, sales of the drugs by the collaborating
pharmaceutical company may be restricted or may cease. Our revenues, in that
event, may decline.

We may incur significant costs seeking approval for our products

The design, development, testing, manufacturing and marketing of
pharmaceutical compounds, medical nutrition and diagnostic products and medical
devices are subject to regulation by governmental authorities, including the FDA
and comparable regulatory authorities in other countries. The approval process
is generally lengthy, expensive and subject to unanticipated delays. Currently,
we, along with our partners, are actively pursuing marketing approval for a
number of products from regulatory authorities in other countries and anticipate
seeking regulatory approval from the FDA for products developed pursuant to the
agreement with BioSante. Our revenue and profit will depend, in part, on the
successful introduction and marketing of some or all of such products by us or
our partners. There can be no assurance as to when or whether such approvals
from regulatory authorities will be received.

Applicants for FDA approval often must submit extensive clinical data
and supporting information to the FDA. Varying interpretations of the data
obtained from pre-clinical and clinical testing could delay, limit or prevent
regulatory approval of a drug product. Changes in FDA approval policy during the
development period, or changes in regulatory review for each submitted new drug
application also may cause delays or rejection of an approval. Even if the FDA
approves a product, the approval may limit the uses or "indications" for which a
product may be marketed, or may require further studies. The

FDA also can withdraw product clearances and approvals for failure to comply
with regulatory requirements or if unforeseen problems follow initial marketing.

In other jurisdictions, we, and the pharmaceutical companies with whom
we are developing technologies, must obtain required regulatory approvals from
regulatory agencies and comply with extensive regulations regarding safety and
quality. If approvals to market the products are delayed, if we fail to receive
these approvals, or if we lose previously received approvals, our revenues would
be reduced. We may not be able to obtain all necessary regulatory approvals. We
may be required to incur significant costs in obtaining or maintaining
regulatory approvals.

We may be subject to sanctions if we fail to comply with regulatory requirements

If we, or pharmaceutical companies with whom we are developing
technologies, fail to comply with applicable regulatory requirements, we, and
the pharmaceutical companies, may be subject to sanctions, including the
following:

. warning letters;
. fines;
. product seizures or recalls;
. injunctions;
. refusals to permit products to be imported into or exported out of
the applicable regulatory jurisdiction;
. total or partial suspension of production;
. withdrawals of previously approved marketing applications; or
. criminal prosecutions.

Our revenues may be limited if the marketing claims asserted about our products
are not approved

Once a drug product is approved by the FDA, the Division of Drug
Marketing, Advertising and Communication, the FDA's marketing surveillance
department within the Center for Drugs, must approve marketing claims asserted
by our pharmaceutical company partners. If a pharmaceutical company partner
fails to obtain from the Division of Drug Marketing acceptable marketing claims
for a product incorporating our drug technologies, our revenues from that
product may be limited. Marketing claims are the basis for a product's labeling,
advertising and promotion. The claims the pharmaceutical company partners are
asserting about our drug delivery technologies, or the drug product itself, may
not be approved by the Division of Drug Marketing.

We may face product liability claims related to participation in clinical trials
or the use or misuse of our products

The testing, manufacturing and marketing of products utilizing our drug
delivery technologies may expose us to potential product liability and other
claims resulting from their use. If any such claims against us are successful,
we may be required to make significant compensation payments. Any
indemnification that we have obtained, or may obtain, from contract research
organizations or pharmaceutical companies conducting human clinical trials on
our behalf may not protect us from product liability claims or from the costs of
related litigation. Similarly, any indemnification we have obtained, or may
obtain, from pharmaceutical companies with whom we are developing drug delivery
technologies may not protect us from product liability claims from the consumers
of those products or from the costs of related litigation. If we are subject to
a product liability claim, our product liability insurance may not reimburse us,
or may not be sufficient to reimburse us, for any expenses or losses that may
have been suffered. A successful product liability claim against us, if not
covered by, or if in excess of the product

liability insurance, may require us to make significant compensation payments,
which would be reflected as expenses on our statement of operations. As the
result either of adverse claim experience or of medical device or insurance
industry trends, we may in the future have difficulty in obtaining product
liability insurance or be forced to pay very high premiums, and there can be no
assurance that insurance coverage will continue to be available on commercially
reasonable terms or at all.

We must keep pace with the rapid technological change and meet the intense
competition in the industry

Our success depends, in part, upon maintaining a competitive position
in the development of products and technologies in a rapidly evolving field. If
we cannot maintain competitive products and technologies, our current and
potential pharmaceutical company partners may choose to adopt the drug delivery
technologies of our competitors. Drug delivery companies that compete with our
technologies include Bioject Medical Technologies, Inc., Weston Medical Group
plc, Equidyne Corporation, Bentley Pharmaceuticals, Inc., Cellegy
Pharmaceuticals, Inc., Laboratoires Besins-Iscovesco, MacroChem Corporation,
NexMed, Inc. and Novavax, Inc., along with other companies. We also compete
generally with other drug delivery, biotechnology and pharmaceutical companies
engaged in the development of alternative drug delivery technologies or new drug
research and testing. Many of these competitors have substantially greater
financial, technological, manufacturing, marketing, managerial and research and
development resources and experience than we do, and, therefore, represent
significant competition.

Competitors may succeed in developing competing technologies or obtaining
governmental approval for products before we do. Competitors' products may gain
market acceptance more rapidly than our products. Developments by competitors
may render our products, or potential products, noncompetitive or obsolete.

We expect our quarterly revenues and operating results to fluctuate for a number
of reasons, which could cause our stock price to fluctuate

Our operating results may vary significantly from quarter to quarter,
in part because of changes in consumer buying patterns, aggressive competition,
the timing of the recognition of licensing or development fee payments and the
timing of, and costs related to, any future technology or new drug use
introductions. Our operating results for any particular quarter are not
necessarily indicative of any future results. The uncertainties associated with
the introduction of any new technology or drug use and with general market
trends may limit management's ability to forecast short-term results of
operations accurately. Fluctuations caused by variations in quarterly operating
results or our failure to meet analysts' projections or public expectations as
to results may adversely affect the market price of our Common Stock.

Our business may suffer if we lose certain key officers or employees

The success of our business is materially dependent upon the continued
services of certain of our key officers and employees. The loss of such key
personnel could have a material adverse effect on our business, operating
results or financial condition. We plan on hiring personnel to work in the areas
of regulatory/clinical, device production and administrative support.
Competition for such personnel is intense, and there can be no assurance that we
will be successful in attracting and retaining key personnel in the future.

We are involved in many international markets, and this subjects us to
additional business risks

We have offices and a research facility in Basel, Switzerland, and we
also have several license and distribution agreements with foreign entities to
market our products in various foreign countries. Our international sales growth
in these markets will be limited if we are unable to establish relationships
with the international distributors. Even if we are able to successfully develop
these relationships, we cannot be certain that we will be able to maintain or
increase international market demand for our products. Our international
operations are subject to a number of risks, including the following:

. increased complexity and costs of managing international operations;

. protectionist laws and business practices that favor local
companies;

. dependence on local vendors;

. multiple, conflicting and changing governmental laws and
regulations;

. difficulties in enforcing our legal rights;

. reduced or limited protections of intellectual property rights; and

. political and economic instability.

A significant portion of our international revenues is denominated in foreign
currencies. An increase in the value of the U.S. dollar relative to these
currencies may make our products more expensive and, thus, less competitive in
foreign markets.

Future Terrorist Attacks Could Substantially Harm Our Business

On September 11, 2001, the United States was the target of terrorist
attacks of unprecedented scope. The U.S. government and media agencies were also
subject to subsequent acts of terrorism through the distribution of anthrax
through the mail. Such attacks and the U.S. government's ongoing response may
lead to further acts of terrorism, bio-terrorism and financial and economic
instability. The precise effects of these attacks, future attacks or the U.S.
government's response to the same are difficult to determine, but they could
have an adverse effect on our business, profitability and financial condition.

Risks Related to our Common Stock

Our stock price has been, and is likely to continue to be, volatile, which may
result in a loss to our shareholders

The market price for our common stock has been volatile. As of July 15,
2002, the 52-week low and high sales prices of our common stock reported by the
Nasdaq SmallCap market ranged from $1.59 per share to $5.00 per share. The
trading prices of our common stock could be subject to wide fluctuations in
response to events or factors, many of which are beyond our control. These could
include, without limitation (i) quarter to quarter variations in our operating
results, (ii) announcements by us or our competitors regarding the results of
regulatory approval filings, clinical trials or testing, (iii) developments or
disputes concerning proprietary rights, (iv) technological innovations or new
commercial products, (v) material changes in our collaborative arrangements and
(vi) general conditions in the

medical technology industry. Moreover, the stock market has experienced extreme
price and volume fluctuations, which have particularly affected the market
prices of many medical technology and device companies and which have often been
unrelated to the operating performance of such companies.

A single shareholder owns a majority of the voting power of our common stock

As a result of our reverse business combination with Permatec in
January 2001, Permatec Holding AG and its controlling shareholder, Dr. Jacques
Gonella own a majority of (currently 63.8%) the outstanding shares of our common
stock. Because of Permatec's and Dr. Gonella's control of the Company, investors
will be unable to affect or change the management or the direction of the
Company. As a result, some investors may be unwilling to purchase our common
stock. If the demand for our common stock is reduced because of Permatec's and
Dr. Gonella's control of the Company, the price of our common stock could be
materially depressed.

Because Permatec and Dr. Gonella own more than 50% of the combined
voting power of our stock, they will be able to generally determine the outcome
of all corporate actions requiring shareholder approval. As a result, Permatec
and Dr. Gonella will be in a position to control all matters affecting the
Company, including decisions as to our corporate direction and policies; future
issuances of our common stock or other securities; our incurrence of debt;
amendments to our articles of incorporation and bylaws; payment of dividends on
our common stock; and acquisitions, sales of our assets, mergers or similar
transactions, including transactions involving a change of control.

Sales of our common stock by our officers and directors may lower the market
price of our common stock

As of July 17, 2002, our officers and directors beneficially owned an
aggregate of 6,772,234 shares (or 66.5%) of our common stock, including stock
options exercisable within 60 days. If our officers and directors, or other
shareholders, sell a substantial amount of our common stock, it could cause the
market price of our common stock to decrease and could hamper our ability to
raise capital through the sale of our equity securities.

Sales of our common stock by the holders of the convertible debentures may lower
the market price of our common stock

As of July 17, 2002, $700,000 principal amount of secured convertible
debentures were issued and outstanding. Upon the filing of this registration
statement, investors have agreed to fund an additional $700,000 of principal
amount of convertible debentures and an additional $600,000 upon the
registration statement becoming effective. The debentures are convertible into
such number of shares of common stock as is determined by dividing the principal
amount thereof by the then current conversion price. If converted on July 17,
2002, the outstanding debentures would have been convertible into approximately
280,000 shares of common stock, but this number of shares could prove to be
significantly greater in the event of a decrease in the trading price of our
common stock. If the aggregate $2 million principal amount of debentures were
outstanding at July 17, 2002, they would be currently convertible into 800,000
shares of our common stock, which could also prove to be significantly greater
in the event of a decrease in the trading price of our common stock. Purchasers
of common stock could therefore experience substantial dilution of their
investment upon conversion of the debentures. In addition, as the per share
conversion price of the debentures into common stock is substantially lower than
the current market price of our common stock, we will be recording an accounting
charge for the beneficial in-the-money conversion feature of the debentures.
This charge will be material to our financial statements and could equal the
principal amount of the converted debentures. The debentures are not registered
and may be sold only if registered under the Securities Act of 1933, as amended,
or sold in accordance with an

applicable exemption from registration, such as Rule 144. The shares of common
stock into which the debentures may be converted are being registered pursuant
to this registration statement.

As of July 17, 2002, 1,600,000 shares of common stock were reserved for
issuance upon conversion of the debentures. As of July 17, 2002, there were
9,790,325 shares of common stock outstanding. Of these outstanding shares,
3,022,802 shares were freely tradable without restriction under the Securities
Act of 1933, as amended, unless held by affiliates.

We do not expect to pay dividends in the foreseeable future

We intend to retain all earnings in the foreseeable future for our
continued growth and, thus, do not expect to declare or pay any cash dividends
in the foreseeable future.

Anti-takeover effects of certain by-law provisions and Minnesota law could
discourage, delay or prevent a change in control

Our articles of incorporation and bylaws along with Minnesota law could
discourage, delay or prevent persons from acquiring or attempting to acquire us.
Our articles of incorporation authorize our board of directors, without action
by our shareholders, to designate and issue preferred stock in one or more
series, with such rights, preferences and privileges as the board of directors
shall determine. In addition, our bylaws grant our board of directors the
authority to adopt, amend or repeal all or any of our bylaws, subject to the
power of the shareholders to change or repeal the bylaws. In addition, our
bylaws limit who may call meetings of our shareholders.

As a public corporation, we are prohibited by the Minnesota Business
Corporation Act, except under certain specified circumstances, from engaging in
any merger, significant sale of stock or assets or business combination with any
shareholder or group of shareholders who own at least 10% of our common stock.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares of our
common stock by the selling shareholders.

SELLING SHAREHOLDERS

In connection with a Securities Purchase Agreement dated July 12, 2002,
the selling shareholders purchased, and agreed to purchase, 10% Convertible
Debentures in the aggregate amount of $2,000,000. At the same time, we entered
into a Registration Rights Agreement under which we agreed to register the stock
issuable upon conversion of the debentures. Under the terms of the Registration
Rights Agreement, we agreed to file a registration statement for the conversion
stock within 15 days of the closing of the transaction. We have filed a
registration statement on Form S-3, of which this prospectus is a part, to
register the shares of common stock issuable upon conversion of the debentures
for resale by the selling shareholders to meet this obligation.

Based on information provided by the selling shareholders, the following
table lists the selling shareholders and other information regarding their
beneficial ownership of the shares of our common stock. The following table sets
forth (i) the number of shares of common stock beneficially owned by each
selling shareholder at July 17, 2002; (ii) the number of shares of common stock
to be offered for resale by each selling shareholder; and (iii) the number and
percentage of outstanding shares of common stock to be held by each selling
shareholder after completion of the offering (assumes the sale of all shares
offered pursuant to this prospectus).

Number of
shares of
Common
Stock Number of
beneficially shares of Shares Owned after
owned at Common Completion of Offering (1)
July 17, Stock to be
Name 2002 (1) Offered (1) Number Percentage

AJW Partners, LLC 110,000 110,000 0 0%
AJW/New Millennium Offshore, Ltd. 180,000 180,000 0 0%
Pegasus Capital Partners, LLC 110,000 110,000 0 0%
Xmark Fund, LP 93,320 93,320 0 0%
Xmark Fund, Ltd. 306,680 306,680 0 0%
SDS Merchant Fund, LP 400,000 400,000 0 0%
OTATO Limited Partnership 400,000 400,000 0 0%

_______________________

(1) A person is deemed to be the beneficial owner of voting securities that
can be acquired by such person within 60 days after the date hereof upon
the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
the warrants that are held by such person (but not those held by any
other person) and that are currently exercisable (i.e., that are
exercisable within 60 days from the date hereof) have been exercised.

CERTAIN INFORMATION ABOUT THE SELLING SHAREHOLDERS

The number of shares set forth in the table for the selling shareholders
represents a good faith estimate of the number of shares of common stock to be
offered by the selling shareholders. The debentures are convertible at a price
which is the lesser of $2.50 or 75% of the average of the three lowest intraday
trading prices of our common stock, as reported on the Nasdaq SmallCap Market,
for the twenty days prior to the conversion date. The actual number of shares of
common stock issuable upon conversion of the debentures is indeterminate, is
subject to adjustment and could be materially less or more than such estimated
number depending on factors which cannot be predicted by us at this time
including, among other factors, the future market price of the common stock.
Under the terms of our Registration Rights Agreement with the selling
shareholders listed herein, we are obligated to register 200% of the number of
shares which may be issued upon conversion of the convertible debentures held by
the selling shareholders. Thus, the number of shares and corresponding
percentages included in the Selling Shareholders Table represents 200% of the
shares which would be issued to each selling shareholder upon conversion of the
Convertible Debentures on July 17, 2002. In addition, the actual number of
shares of common stock offered in this prospectus, and included in the
registration statement of which this prospectus is a part, includes such
additional number of shares of common stock as may be issued or issuable upon
conversion of the debentures by reason of any stock split, stock dividend or
similar transaction involving the common stock, in accordance with Rule 416
under the Securities Act of 1933, as amended. Under the terms of the debentures,
if the debentures had actually been converted on July 17, 2002, the conversion
price would have been $2.50.

Under the terms of the debentures, the debentures are convertible by
any holder only to the extent that the number of shares of common stock issuable
pursuant to such securities, together with the number of shares of common stock
owned by such holder and its affiliates (but not including shares of common
stock underlying unconverted shares of debentures) would not exceed 4.9% of the
then outstanding common stock as determined in accordance with Section 13(d) of
the Exchange Act.

PLAN OF DISTRIBUTION

We are registering the resale of certain shares of common stock into
which the debentures are convertible on behalf of the selling shareholders. The
selling shareholders may offer and resell such shares from time to time, either
in increments or in a single transaction. They may also decide not to sell all
the shares they are allowed to resell under this prospectus. The selling
shareholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale.

Donees; Pledgees and Transferees

The term "selling shareholder" includes donees, i.e., persons who
receive shares from the selling shareholders after the date of this prospectus
by gift. The term also includes pledgees, i.e., persons who upon contractual
default by the selling shareholders may seize shares which the selling
shareholders pledged to such person, and other transferees or
successors-in-interest.

Types of Sale Transactions

The selling shareholders may sell the shares in one or more types of
transactions (which may include block transactions):

. on the Nasdaq SmallCap Market or any national securities exchange or
other U.S. inter-dealer system of a registered national securities
association on which the common stock may be listed or quoted at the
time of sale;
. in the over-the-counter market;
. in negotiated transactions;
. through option transactions, whether the options are listed on an
options exchange or otherwise;
. through settlement of short sales; or
. any combination of such methods of sale.

The selling shareholders may enter into hedging transactions with third parties,
which may in turn engage in short sales of the common stock into which the
debentures are convertible in the course of hedging the position they assume.
The selling shareholders may also enter into short positions or other derivative
transactions relating to the common stock into which the debentures are
convertible, or interests in the common stock, and deliver the common stock, or
interests in the common stock, to close out their short or other positions or
otherwise settle short sales or other transactions, or loan or pledge the common
stock into which the debentures are convertible, or interests in the common
stock, to third parties that in turn may dispose of these securities.

The shares may be sold at market prices prevailing at the time of sale, or at
negotiated prices. Such transactions may or may not involve underwriters,
brokers or dealers. The selling shareholders have informed us that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of the shares. They have also
informed us that no one is acting as underwriter or coordinating broker in
connection with the proposed sale of shares. The selling shareholders shall have
the sole and absolute discretion not to accept any purchase offer or make any
sale of shares if they deem the purchase price to be unsatisfactory at any
particular time.

Costs and Commissions

We will not receive any proceeds from the sale of the stock by the
selling shareholders and will bear all costs, fees and expenses incident to our
obligation to register the shares of common stock issuable upon conversion of
the debentures under the terms of the registration rights agreement. The selling
shareholders will pay all brokerage commissions and similar selling expenses, if
any, attributable to the sale of the shares.

Sales to or through Underwriters and Broker-Dealers

The selling shareholders may conduct such transactions either by
selling shares directly to purchasers, or by selling shares to, or through
underwriters or broker-dealers. Such underwriters or broker-dealers may act
either as an agent of the selling shareholders, or as a principal for their own
account. Such underwriters or broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the selling shareholders
and/or the purchasers of the shares. This compensation might also exceed
customary commissions.

Deemed Underwriting Compensation

The selling shareholders and any third parties that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(a)(11) of the Securities Act. Any discounts, commissions, concessions
or profits they earn on the disposition of the shares of common stock may be
deemed to be underwriting discounts or commissions under the Securities Act. The
selling

shareholders have purchased the shares of our common stock in the ordinary
course of his business, and at the time the selling shareholders purchased the
shares of common stock, they were not a party to any agreement or other
understanding to distribute the shares, directly or indirectly.

Indemnification

We have agreed to indemnify the selling shareholders against certain
liabilities, including liabilities arising under the Securities Act or to
contribute to payments the selling shareholders may be required to make in
respect of such liabilities. The selling shareholders may agree to indemnify any
underwriter, agent or broker-dealer that participates in transactions involving
sales of shares against certain liabilities, including liabilities under the
Securities Act.

Prospectus Delivery Requirements

Because they may be deemed to be underwriters, the selling shareholders
must deliver this prospectus and any supplements to this prospectus in the
manner required by the Securities Act. This might include delivery through the
facilities of the Nasdaq SmallCap Market in accordance with Rule 153 of the
Securities Act. In addition, the selling shareholders' sales in the market may
be subject to the antimanipulative provisions of Regulation M under the
Securities Exchange Act of 1934, as amended, or the Exchange Act. These
provisions may restrict certain activities of, and limit the timing of purchases
and sales of any of the shares by, the selling shareholders or any other such
person. Furthermore, under Regulation M, persons engaged in a distribution of
securities are prohibited form simultaneously engaging in market making and
certain other activities with respect to such securities for a specified period
of time prior to the commencement of such distributions, subject to specified
exceptions or exemptions. Such limitations may affect the marketability of the
shares.

State Requirements

Some states require that any shares sold in that state may only be sold
through registered or licensed brokers or dealers. In addition, some states
require that the shares have been registered or qualified for sale in that
state, or that an exemption exists from the registration or qualification
requirement and that the exemption or qualification requirements have been
complied with.

Sales under Rule 144

The selling shareholders may also resell all or a portion of their
shares in open market transactions in reliance upon Rule 144 under the
Securities Act. To do so, they must meet the criteria and conform to the
requirements of Rule 144.

Distribution Arrangements

If a selling shareholder notifies us that any material arrangement has
been entered into with an underwriter, broker-dealer or agent for the sale of
shares through a

. block trade;
. special offering;
. exchange distribution or secondary distribution, or
. purchase by an underwriter or broker-dealer,

we will then file, if required, a supplement to this prospectus under Rule
424(b) under the Securities Act.

The supplement will disclose the following:

. the name of the selling shareholder and of the participating
underwriter(s) or broker-dealer(s),
. the number of shares involved;
. the price at which such shares are sold;
. the commissions paid or discounts or concessions allowed to such
underwriter(s) or broker-dealer(s), where applicable;
. that such underwriter(s) or broker-dealer(s) did not conduct any
investigation to verify the information in this prospectus; and
. any other facts material to the transaction.

LEGAL MATTERS

For the purpose of this offering, Leonard, Street and Deinard
Professional Association, Minneapolis, Minnesota is giving an opinion of the
validity of the issuance of the securities offered in this prospectus.

EXPERTS

The consolidated financial statements and schedule of Antares Pharma,
Inc. as of December 31, 2000 and 2001 and for each of the years in the
three-year period ended December 31, 2001 have been incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.

The audit report covering the December 31, 2001, consolidated financial
statements contains an explanatory paragraph that states that the Company's
negative working capital, recurring losses and negative cash flows from
operations raise substantial doubt about the entity's ability to continue as a
going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.

The audit report covering the December 31, 2001, consolidated financial
statements refers to a change to the cumulative deferral method of revenue
recognition for licensing arrangements in 2000.

INDEMNIFICATION

Minnesota Statutes Section 302A.521 provides that a corporation shall
indemnify any person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of such person against
judgments, penalties, fines (including, without limitation, excise taxes
assessed against such person with respect to any employee benefit plan),
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person

unlawful; and
. reasonably believed that the conduct was in the best interests of
the corporation in the case of acts or omissions in such person's
official capacity for the corporation or reasonably believed that
the conduct was not opposed to the best interests of the corporation
in the case of acts or omissions in such person's official capacity
for other affiliated organizations.

Article 7 of our Third Amended and Restated Articles of Incorporation
provides that we will indemnify directors to the fullest extent permitted by the
Minnesota Business Corporation Act as now enacted or hereafter amended.

We also maintain an insurance policy to assist in funding
indemnification of directors and officers for certain liabilities.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling our company
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and
other information with the SEC. Our filings are available to the public over the
internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's Public Reference Rooms in Washington, D.C.,
New York, New York, and Chicago, Illinois. A Public Reference Room is located at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for additional information on the Public Reference Rooms.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts, except the SEC registration
fee, are estimates.

SEC Registration Fee .......................................... $ 611.00
Legal Fees and Expenses ....................................... 5,000.00
Accounting Fees and Expenses .................................. 3,500.00
Miscellaneous ................................................. 889.00

Total ....................................................... $10,000.00
==========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

. has not been indemnified therefor by another organization or
employee benefit plan;
. acted in good faith;
. received no improper personal benefit and Section 302A.255 (with
respect to director conflicts of interest), if applicable, has been
satisfied;
. in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and
. reasonably believed that the conduct was in the best interests of
the corporation in the case of acts or omissions in such person's
official capacity for the corporation or reasonably believed that
the conduct was not opposed to the best interests of the
corporation in the case of acts or omissions in such person's
official capacity for other affiliated organizations.

We also maintain an insurance policy to assist in funding
indemnification of directors and officers for certain liabilities.

II-1

ITEM 16. EXHIBITS

EXHIBIT
NUMBER DOCUMENT
------ --------

4.1* Form of our Common Stock Certificate.
5.1 Opinion of Leonard, Street and Deinard Professional Association.
10.29# Securities Purchase Agreement, dated July 12, 2002, between
Antares Pharma, Inc. and AJW Partners, LLC; AJW/New Millennium
Offshore, Ltd.; Pegasus Capital Partners, LLC; XMark Fund, L.P.;
XMark Fund, Ltd.; SDS Merchant Fund, LP; and OTATO Limited
Partnership.
10.30# Registration Rights Agreement, dated July 12, 2002, between
Antares Pharma, Inc. and AJW Partners, LLC; AJW/New Millennium
Offshore, Ltd.; Pegasus Capital Partners, LLC; XMark Fund, L.P.;
XMark Fund, Ltd.; SDS Merchant Fund, LP; and OTATO Limited
Partnership.
10.31# Security Agreement, dated July 12, 2002, between Antares Pharma,
Inc. and AJW Partners, LLC; AJW/New Millennium Offshore, Ltd.;
Pegasus Capital Partners, LLC; XMark Fund, L.P.; XMark Fund, Ltd.;
SDS Merchant Fund, LP; and OTATO Limited Partnership.
10.32# Form of Secured Convertible Debenture, dated July 12, 2002.
23.1 Consent of KPMG LLP, Independent Certified Public Accountants.
23.2 Consent of Leonard, Street and Deinard Professional Association
(included in Exhibit 5.1).
24.1 Power of Attorney (See page II-4).

_________________
* Previously filed as an exhibit to our Form S-3, filed with the SEC on May 31,
2001, and incorporated herein by reference.
# Previously filed as an exhibit to our Form 8-K, filed with the SEC on July 17,
2002, and incorporated herein by reference.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d)

II-2

of the Exchange Act and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC 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.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Exton, Pennsylvania, on July 19, 2002.

ANTARES PHARMA, INC.

By: /s/ Roger G. Harrison, Ph.D.
----------------------------
Roger G. Harrison, Ph.D.
Chief Executive Officer

POWER OF ATTORNEY

We, the undersigned officers and directors of Antares Pharma, Inc.
hereby constitute each of Roger G. Harrison, Ph.D. and Lawrence M. Christian our
true and lawful attorney-in-fact, with full power of substitution, to sign for
us and in our names in the capacities indicated below the registration statement
filed herewith and any and all amendments to said registration statement, and
generally to do all such things in our name and behalf in our capacities as
officers and directors to enable Antares Pharma, Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney to said registration
statement and any and all amendments thereto.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement and power of attorney has been signed below by the
following persons in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

Chief Executive Officer and Director July 19, 2002
/s/ Roger G. Harrison, Ph.D. (principal executive officer)
------------------------------
Roger G. Harrison, Ph.D.

Vice President of Finance, July 19, 2002
/s/ Lawrence M. Christian Chief Financial Officer and Secretary
------------------------------- (principal financial and accounting officer)
Lawrence M. Christian

/s/ Dr. Jacques Gonella Director, Chairman of the Board July 19, 2002
------------------------------
Dr. Jacques Gonella

/s/ Franklin Pass, M.D. Director, Vice Chairman of the Board July 19, 2002
------------------------------
Franklin Pass, M.D.

II-4

/s/ James Clark Director July 19, 2002
----------------------------------
James Clark

/s/ Prof. Ubaldo Conte Director July 19, 2002
----------------------------------
Prof. Ubaldo Conte

/s/ Dr. Philippe Dro Director July 19, 2002
----------------------------------
Dr. Philippe Dro

/s/ Kenneth Evenstad Director July 19, 2002
----------------------------------
Kenneth Evenstad

/s/ Dr. Thomas Rinderknecht Director July 19, 2002
----------------------------------
Dr. Thomas Rinderknecht

/s/ John Gogol Director July 19, 2002
----------------------------------
John Gogol

/s/ Jacques Rejeange Director July 19, 2002
----------------------------------
Jacques Rejeange

II-5

INDEX TO EXHIBITS

EXHIBIT
NUMBER DOCUMENT
------- --------

4.1* Form of our Common Stock Certificate.
5.1 Opinion of Leonard, Street and Deinard Professional Association.
10.29# Securities Purchase Agreement, dated July 12, 2002, between Antares
Pharma, Inc. and AJW Partners, LLC; AJW/New Millennium Offshore,
Ltd.; Pegasus Capital Partners, LLC; XMark Fund, L.P.; XMark Fund,
Ltd.; SDS Merchant Fund, LP; and OTATO Limited Partnership.
10.30# Registration Rights Agreement, dated July 12, 2002, between Antares
Pharma, Inc. and AJW Partners, LLC; AJW/New Millennium Offshore,
Ltd.; Pegasus Capital Partners, LLC; XMark Fund, L.P.; XMark Fund,
Ltd.; SDS Merchant Fund, LP; and OTATO Limited Partnership.
10.31# Security Agreement, dated July 12, 2002, between Antares Pharma,
Inc. and AJW Partners, LLC; AJW/New Millennium Offshore, Ltd.;
Pegasus Capital Partners, LLC; XMark Fund, L.P.; XMark Fund, Ltd.;
SDS Merchant Fund, LP; and OTATO Limited Partnership.
10.32# Form of Secured Convertible Debenture, dated July 12, 2002.

23.1 Consent of KPMG LLP, Independent Certified Public Accountants.
23.2 Consent of Leonard, Street and Deinard Professional Association
(included in Exhibit 5.1).
24.1 Power of Attorney (See page II-4).

---------------
* Previously filed as an exhibit to our Form S-3, filed with the SEC on May 31,
2001, and incorporated herein by reference.
# Previously filed as an exhibit to our Form 8-K, filed with the SEC on July 17,
2002, and incorporated herein by reference.