424B3 1 file001.htm PROSPECTUS

As filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-117717

PROSPECTUS
NEXMED, INC.
7,447,502 SHARES
COMMON STOCK

This prospectus relates to the resale, from time to time, of up to
7,447,502 shares of Common Stock of NexMed, Inc., a Nevada corporation, all of
which are being offered by the selling shareholders named in this prospectus.

The shares consist of 5,516,668 shares of Common Stock issued pursuant
to a Common Stock and Warrant Purchase Agreement dated as of June 18, 2004 and
1,930,834 shares issuable pursuant to related warrants dated June 18, 2004. See
"Selling Shareholders" at page 16.

Pursuant to the terms of an Investor Rights Agreement dated as of June
18, 2004 between the Company and the holders of the shares and warrants, we
agreed to register for resale both the shares acquired pursuant to the purchase
agreement and the shares issuable on exercise of the warrants.

All net proceeds from the sale of the shares of Common Stock offered by
this prospectus will go to the selling shareholders; we will not receive any
proceeds from such sales.

Our Common Stock is listed on the Nasdaq Stock Market under the ticker
symbol "NEXM". On August 13, 2004, the last reported sale price of our Common
Stock was $1.56 per share.

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THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 7, IN
DETERMINING WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION 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 August 23, 2004

No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by NexMed,
Inc., any selling shareholder or by any other person. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that information herein is correct as of any time
subsequent to the date hereof. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any security other than the securities
covered by this prospectus, nor does it constitute an offer to or solicitation
of any person in any jurisdiction in which such offer or solicitation may not
lawfully be made.

TABLE OF CONTENTS

Page
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WHERE YOU CAN FIND MORE INFORMATION .................................... 3

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ........................ 3

INFORMATION ABOUT US ................................................... 4

RISK FACTORS ........................................................... 7

USE OF PROCEEDS ........................................................ 16

SELLING SHAREHOLDERS ................................................... 16

PLAN OF DISTRIBUTION ................................................... 19

LEGAL MATTERS .......................................................... 21

EXPERTS ................................................................ 21

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission, and we have an internet
website address at http://www.nexmed.com. You may read and copy any document we
file at the Securities and Exchange Commission's public reference room located
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Securities
and Exchange Commission at 1-800-732-0330 for further information on the
operation of such public reference room. You also can request copies of such
documents, upon payment of a duplicating fee, by writing to the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or obtain
copies of such documents from the Securities and Exchange Commission's website
at http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Securities and Exchange Commission 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 we incorporate by reference is considered to be part of this
prospectus and information that we file later with the Securities and Exchange
Commission automatically will update and supersede such information. We
incorporate by reference the documents listed below and any future filings we
make with the Securities and Exchange Commission under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, prior to the termination of the
offering of the securities covered by this prospectus, as amended:

(1) Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2003;

(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2004;

(3) Our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2004;

(4) Our Current Reports on Form 8-K dated March 4, May 6, May 28,
June 25, July 6, and August 9, 2004;

(5) Our definitive proxy statement on Schedule 14A filed with the
Securities and Exchange Commission on April 19, 2004;

(6) The description of our articles of incorporation and bylaws,
both contained in our Registration Statement on Form 10-SB
(File No. 0-22245), dated March 14, 1997, including any
amendment or report filed for the purpose of updating such
information; and

(7) The description of our securities contained in our
Registration Statement on Form S-3 (File No. 333-46976), dated
September 29, 2000, including any amendment or report filed
for the purpose of updating such information.

You may request a copy of these filings (including exhibits to such
filings that we have specifically incorporated by reference in such filings), at
no cost, by writing or telephoning our executive offices at the following
address:

NexMed, Inc.
350 Corporate Boulevard
Robbinsville, New Jersey 08691
Attention: Ms. Vivian H. Liu
(609) 208-9688

You should rely only on the information provided or incorporated by
reference in this prospectus or any related supplement. We have not authorized
anyone else to provide you with different information. The selling shareholders
will not make an offer of these shares in any state that prohibits such an
offer. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the cover page of
such documents.

All references in this prospectus to "NexMed," the "Company," "us,"
"our," "registrant," or "we" include NexMed, Inc., a Nevada corporation, and any
subsidiaries or other entities that we own or control. All references in this
prospectus to "Common Stock" refer to our Common Stock, par value $.001 per
share.

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this prospectus or
incorporated by reference in this prospectus.

INFORMATION ABOUT US

We have been in existence since 1987. Since 1994, we have positioned
ourselves as a pharmaceutical and medical technology company with a focus on
developing and commercializing therapeutic products based on proprietary
delivery systems.

We are currently focusing our efforts on new and patented topical
pharmaceutical products based on a penetration enhancement drug delivery
technology known as NexACT(R), which may enable an active drug to be better
absorbed through the skin. The NexACT(R) transdermal drug delivery technology is
designed to enhance the absorption of an active drug through the skin,
overcoming the skin's natural barrier properties and enabling high
concentrations of the active drug to rapidly penetrate the desired site of the
skin or extremity. Successful application of the NexACT(R) technology would
improve therapeutic outcomes and reduce gastrointestinal or other systemic side
effects that often accompany oral and injectable medications.

We intend to continue our efforts developing topical treatments
including cream, gel, patch and tape, based on the application of NexACT(R)
technology to drugs: (1) previously approved by the FDA, (2) with proven
efficacy and safety profiles, (3) with patents expiring or expired and (4) with
proven market track records and potential.

We are focusing on our application of the NexACT(R) technology to
Alprox-TD(R) cream for the treatment of male erectile dysfunction. We have
explored the application of the NexACT(R) technology to other drug compounds and
delivery systems, and are in the early stages of developing new topical
treatments for female sexual arousal disorder, nail fungus, premature
ejaculation, urinary incontinence, wound healing, pain and the prevention of

nausea and vomiting associated with post-operative surgical procedures and
cancer chemotherapy.

Alprox-TD(R) is an alprostadil-based cream treatment intended for
patients with mild, moderate or severe erectile dysfunction. Our clinical
studies have demonstrated that NexACT(R) enhancers promote the rapid absorption
of alprostadil and improve clinical responses. In December 2002, we completed
our two pivotal Phase 3 studies for Alprox-TD(R), which tested over 1,700
patients at 85 sites throughout the U.S. The two pivotal studies were
randomized, double-blind, placebo-controlled, and designed to confirm the
efficacy and safety of Alprox-TD(R) in patients with varying degrees of erectile
dysfunction.

On July 1, 2004, we entered into a license, supply and distribution
agreement with Schering AG, Germany ("Schering"). This agreement provides
Schering with exclusive commercialization rights to Alprox-TD(R) in Europe,
Russia, the Middle East, South Africa, Australia and New Zealand. We will retain
the intellectual property relating to Alprox-TD(R) and will manufacture and
supply the product to Schering. Under the terms of this partnership, we will
receive future milestone payments as well as a share of the revenue through
transfer price payments based on the supply of Alprox-TD(R). The overall
financial terms are intended, depending upon performance levels, to approximate
an equal sharing of the value of the product. We continue to engage in
discussions with several pharmaceutical companies for the commercialization of
Alprox-TD(R) in other markets, including the U.S. However, consummation of such
additional arrangement(s) is subject to the negotiation of complex contractual
relationships, and we may not be able to negotiate such agreement(s) on a timely
basis, if at all, or on terms acceptable to us.

We are pursuing meetings and discussions with various European
regulatory authorities in connection with the Marketing Authorization
Application (comparable to the New Drug Application) for Alprox-TD(R) in the
European Union (EU) markets. The purpose of these meetings is to determine what
the requirements for filing are and what additional studies, if any, may be
needed to file the Marketing Authorization Application. We also want to ensure
that all European Union requirements are incorporated into the 12-month
open-label safety study that we intend to initiate and conduct in the U.S.

Prior to filing a New Drug Application or the Marketing Authorization
Application for Alprox-TD(R), we will be required to initiate a new 12-month
open-label safety study. We had previously initiated an open-label study, which
was halted in November 2002 due to FDA concerns about results of our transgenic
mice study. However, we have determined with the FDA that completion of the
open-label study is not a prerequisite for our New Drug Application submission
provided that the 12-month safety update on 100 patients is filed within four
months after the New Drug Application submission. We are required to have three
hundred patients complete six months of testing in the study at the time of New
Drug Application submission, and 100 patients must complete the 12-month study
prior to New Drug Application approval. Patient completion requirements may be
different in the EU and other markets.

In late 2003, we met with the FDA to evaluate our Alprox-TD(R) New Drug
Application package and to discuss possible product improvements. At that time,
the FDA requested that we include a tolerance study of Alprox-TD(R) in female
subjects as part of our New Drug Application submission. We have submitted the
protocols for the female study to the FDA for their review and comment and have
requested a meeting to discuss the FDA's specific requirements for this study.
Assuming

that the FDA agrees with our plan, we intend to implement this plan concurrently
with the open label study and complete it prior to the New Drug Application
submission.

During the same meeting, we proposed to the FDA a new and improved
formulation of Alprox-TD(R), to include in our New Drug Application filing. The
FDA has permitted us to switch to the new formulation if we conduct two bridging
studies to confirm the efficacy of the new formulation. We intend to conduct
these two studies concurrently with the open-label study and complete them prior
to the New Drug Application filing.

The timeframe for us to complete these studies largely depends on our
ability to obtain financing through additional partnering agreements for
Alprox-TD(R) or from other sources, and on regulatory review. Assuming we begin
patient enrollment for the long-term open-label study in the fourth quarter of
2004, we anticipate that we will file the New Drug Application in the U.S. in
the second half of 2005. We are pursuing meetings with various European
regulatory authorities to determine the requirements and timeline for filing the
Marketing Authorization Application in the European Union, and we anticipate
that the timeframe for EU filings may be earlier. However, these timeframes may
change if we encounter any delay in financing, clinical testing or regulatory
review. If we are not able to successfully arrange financing through additional
partnering agreements or from other sources, or obtain timely and satisfactory
regulatory review, we may be required to discontinue the development of
Alprox-TD(R). In addition, it is possible that we may not have successful
clinical results or receive regulatory approval on a timely basis, if at all.

In April 2002, Alprox-TD(R) was launched in Hong Kong under the
Befar(R) trademark. The product, which has been selling in China since October
2001, is manufactured and marketed by a local affiliate of Vergemont
International Limited, our Asian licensee. We receive from our Asian licensee
royalty payments and payments for manufacturing supplies in connection with the
distribution of Befar(R) in China and will receive such payments in other Asian
markets once Befar(R) is approved for marketing in such other markets. The sale
of Befar(R) has been slower than anticipated for several reasons. First, the
switching of distributors by our Asian licensee in China and in Hong Kong during
2003 significantly disrupted the sale of the product in the two markets.
Secondly, Befar(R), along with the currently approved oral erectile dysfunction
product, are currently classified in China as controlled substances, and their
distribution is limited to prescription by certain urologists and dispensing
through hospitals. In addition, China has a limited number of patients who can
afford erectile dysfunction treatments. In December 2002 and February 2003, our
Asian licensee entered into licensing agreements for two of our NexACT(R)-based
products with CJ Pharmaceuticals, one of the five largest pharmaceutical
companies in South Korea. Its parent company, CJ Corporation, is a major
conglomerate in South Korea. Pursuant to the terms of the agreement, CJ
Pharmaceuticals will develop, file for regulatory approval, market and
distribute Befar(R) and Femprox(R) in South Korea.

We have explored the application of the NexACT(R) technology to other
drug compounds and delivery systems. The furthest advanced of these products is
Femprox(R), which is an alprostadil-based cream product intended for the
treatment of female sexual arousal disorder. We have completed one Phase 2 study
for Femprox(R) and intend to continue with its U.S. clinical development pending
the availability of additional partnering agreements. We recently announced the
initiation of a 400-patient study for Femprox(R) in China, where the cost for
conducting clinical studies is significantly lower

than in the U.S. The clinical data and experience to be gained from this study
will guide us in designing future U.S. studies.

We recently completed a three-month interim analysis of a multi-center,
randomized, placebo-controlled, parallel, blinded efficacy and safety study of
our proprietary nail lacquer treatment for onychomycosis. The overseas study,
which enrolled 120 patients with various severities of big toenail fungal
infection, is designed to evaluate the dose-response relationship of the
efficacy and safety of NM100060, our proprietary nail lacquer treatment for
onychomycosis. The interim data suggest that all three tested doses of NM100060
were well tolerated by the patients, and the primary efficacy rate, defined as a
simultaneous negative mycological test and healthy new nail growth greater than
3 millimeter (>3 mm) after three months, was up to 55%. The NM100060 nail
lacquer is topically applied, and incorporates a currently marketed oral
anti-fungal drug with the NexACT(R) technology, which facilitates the permeation
of the drug through the nail and into the nail bed. We anticipate that during
2004 we will file an Investigational New Drug Application with the FDA for
NM100060 and begin clinical testing of the product in the U.S.

During the last 18 months, we have entered into a series of research
and development agreements with Japanese pharmaceutical companies, to develop
new topical treatments for different indications. These agreements provided for
modest signing payments, followed by additional payments based on the
achievement of certain milestones. Currently, two of these agreements are still
in effect. We anticipate that we will enter into additional research and
development agreements during the next twelve months but we cannot assure you
that we will be able to conclude any arrangement on a timely basis, if at all,
or on terms acceptable to us.

RISK FACTORS

RISKS RELATED TO THE COMPANY

WE HAVE A NEED FOR ADDITIONAL FINANCING.

Our cash position as of August 13, 2004 was approximately $8.1 million,
following successful completion of a private placement in June 2004 of common
stock and warrants, yielding gross proceeds to us of approximately $8.275
million. We have been actively seeking financing from the sale of equity or
issuance of debt from private and public sources as well as from collaborative
licensing and/or marketing arrangements with third parties, and since December
31, 2002, we have raised approximately $35 million gross proceeds through the
sale of Preferred Stock, the exercise of warrants to purchase shares of our
common stock and the issuance by the Company of notes, Common Stock and warrants
to purchase shares of Common Stock. Our anticipated cash requirements for
Alprox-TD(R) through the anticipated New Drug Application filing in the second
half of 2005, including completion of an open-label and other studies, will be
approximately $15 million. Initiation, but not completion of an open-label study
is a prerequisite for our new drug application submission. There is no assurance
that we will be successful in obtaining financing on acceptable terms, if at
all. If additional financing cannot be obtained on reasonable terms, future
operations may need to be scaled back or discontinued.

WE CONTINUE TO INCUR OPERATING LOSSES.

Our current business operations began in 1994 and we have a limited
operating history. We may encounter delays, uncertainties and complications
typically encountered by development stage businesses. We have generated minimal
revenues from the limited sales of Befar(R) in Asia and our existing research
and development agreements with our Japanese partners, and have not marketed or
generated revenues in the U.S. from our products under development. We are not
profitable and have incurred an accumulated deficit of $93,250,735 since our
inception and through June 30, 2004. Our ability to generate revenues and to
achieve profitability and positive cash flow will depend on the successful
commercialization of our products currently under development. However, even if
we eventually generate revenues from sales of our products currently under
development, we expect to incur significant operating losses over the next
several years. Our ability to become profitable will depend, among other things,
on our (1) development of our proposed products, (2) obtaining of regulatory
approvals of our proposed products on a timely basis and (3) success in
manufacturing, distributing and marketing our proposed products.

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS DOUBT AS TO OUR ABILITY TO
CONTINUE AS A GOING CONCERN FOR A REASONABLE PERIOD OF TIME.

As a result of our losses to date, expected losses in the future,
limited capital resources and accumulated deficit, our independent registered
public accounting firm has concluded that there is substantial doubt as to our
ability to continue as a going concern for a reasonable period of time, and
accordingly, our independent registered public accounting firm has modified
their report on our December 31, 2003 consolidated financial statements included
in our annual report on Form 10-K in the form of an explanatory paragraph
describing the events that have given rise to this uncertainty. These factors
may make it more difficult for us to obtain additional funding to meet our
obligations. Our continuation is dependent upon our ability to generate or
obtain sufficient cash to meet our obligations on a timely basis and ultimately
to attain profitable operations. We anticipate that we will continue to incur
significant losses until successful commercialization of one or more of our
products, and we may never operate profitably in the future.

WE WILL NEED SIGNIFICANT FUNDING TO CONTINUE WITH OUR RESEARCH AND DEVELOPMENT
EFFORTS, AND IT MAY NOT BE AVAILABLE.

Our research and development expenses for the years ended December 31,
2003, 2002, and 2001 were $8,439,340, $21,615,787, and $12,456,384, respectively
and $5,291,720 for the six months ended June 30, 2004. Since January 1, 1994,
when we repositioned ourselves as a medical and pharmaceutical technology
company, and through June 30, 2004 we have spent $64,426,408 on research and
development. While our expenses for research and development were significantly
lower in 2003 than in 2002, they are increasing significantly in 2004. Given our
current level of cash reserves and low rate of revenue generation, we will not
be able to fully advance the development of our products unless we raise
additional cash through financing from the sale of our securities and/or through
additional partnering agreements. If we are successful in entering additional
partnering agreements

for our products under development, we may receive milestone payments, which
will offset some of our research and development expenses.

As indicated above, our anticipated cash requirements for Alprox-TD(R)
through the anticipated New Drug Application filing in the second half of 2005,
including completion of an open-label and other studies, will be approximately
$15 million. Initiation, but not completion of an open-label study is a
prerequisite for our New Drug Application filing.

We will also need significant funding to pursue our overall product
development plans. In general, our products under development will require
significant time-consuming and costly research and development, clinical
testing, regulatory approval and significant additional investment prior to
their commercialization. The research and development activities we conduct may
not be successful; our products under development may not prove to be safe and
effective; our clinical development work may not be completed; and the
anticipated products may not be commercially viable or successfully marketed.
Commercial sales of our products cannot begin until we receive final FDA
approval. The earliest time for such final approval of the first product which
may be approved, Alprox-TD(R), is sometime in late 2005. We intend to focus our
current development efforts on the Alprox-TD(R) cream treatment, which is in the
late clinical development stage.

WE WILL NEED ADDITIONAL PARTNER ARRANGEMENTS TO OBTAIN EFFECTIVE SALES,
MARKETING AND DISTRIBUTION.

We currently have no sales force or marketing organization and will
need, but may be unable, to attract or afford qualified or experienced marketing
and sales personnel. On July 1, 2004 we entered into a license supply and
distribution agreement with Schering AG, Germany. This agreement provides
Schering with exclusive commercialization rights to Alprox-TD(R) in Europe,
Russia, the Middle East, South Africa, Australia and New Zealand. We will retain
the intellectual property relating to Alprox-TD(R) and will manufacture and
supply the product to Schering. Under the terms of this partnership, we will
receive future milestone payments as well as a share of the revenue through
transfer price payments based on the supply of Alprox-TD(R). The overall
financial terms are intended, depending upon performance levels, to approximate
an equal sharing of the value of the product. As requisite license approval is
obtained for countries in these areas, it is expected that Schering will devote
substantial marketing efforts to achieve market acceptance for Alprox-TD(R).
However, for Alprox-TD(R) in other areas and for our other proprietary products
under development, additional marketing partner(s) will need to spend
significant funds to inform potential customers, including third-party
distributors, of the distinctive characteristics and benefits of our products.
Our operating results and long term success will depend, among other things, on
our ability to establish (1) successful arrangements with domestic and
additional international distributors and marketing partners and (2) an
effective internal marketing organization. We are currently engaged in
discussions with several pharmaceutical companies regarding possible strategic
marketing partnership(s) for the Alprox-TD(R) cream in other markets, including
the U.S. However, in each case consummation of the transaction is subject to the
negotiation of complex contractual relationships, and we may not be able to
negotiate such agreements on a timely basis, if at all, or on terms acceptable
to us.

In Asia, our subsidiary, NexMed International Limited, and our Asian
licensee, Vergemont International Limited, entered into a license agreement in
1999 pursuant to which (1) Vergemont International Limited has an exclusive
right to manufacture and to market in Asian Pacific countries, our Alprox-TD(R),
Femprox(R) and three other of our proprietary products under development, and
(2) we receive a royalty on sales and supply, on a cost plus basis, the
NexACT(R) enhancers that are essential in the formulation and production of our
proprietary topical products. In 2003, we recorded only modest payments from our
Asian licensee for royalties on sales of Befar(R) in China and Hong Kong and for
manufacturing supplies purchased from us.

PRE-CLINICAL AND CLINICAL TRIALS ARE INHERENTLY UNPREDICTABLE. IF WE DO NOT
SUCCESSFULLY CONDUCT THESE TRIALS, WE MAY BE UNABLE TO MARKET OUR PRODUCTS.

Through pre-clinical studies and clinical trials, we must demonstrate
that our products are safe and effective for their indicated uses. Results from
pre-clinical studies and early clinical trials may not allow us to predict
results in later-stage testing. Our future clinical trials may not demonstrate
the safety and effectiveness of our products or may not result in regulatory
approval to market our products. The failure of the FDA to approve our products
for commercial sales will have a material adverse effect on our prospects.

PATENTS AND INTELLECTUAL PROPERTY RIGHTS ARE IMPORTANT TO US BUT COULD BE
CHALLENGED.

Proprietary protection for our pharmaceutical products is of material
importance to our business in the U.S. and most other countries. We have sought
and will continue to seek proprietary protection for our products to attempt to
prevent others from commercializing equivalent products in substantially less
time and at substantially lower expense. Our success may depend on our ability
to (1) obtain effective patent protection within the U.S. and internationally
for our proprietary technologies and products, (2) defend patents we own, (3)
preserve our trade secrets, and (4) operate without infringing upon the
proprietary rights of others.

We have nine U.S. patents either acquired or received out of a series
of patent applications that we have filed in connection with our NexACT(R)
technology and our NexACT(R)-based products under development, such as
Alprox-TD(R), Femprox(R), and our non-steroidal anti-inflammatory cream. To
further strengthen our global patent position on our proprietary products under
development, and to expand the patent protection to other markets, we have filed
under the Patent Cooperation Treaty, corresponding international applications
for our issued U.S. patents and pending U.S. patent applications.

The following table identifies our nine U.S. patents issued for
NexACT(R) technology and/or our NexACT-based products under development, and the
year of expiration for each patent:

Patent Name Expiration Date
----------- ---------------

Biodegradable Absorption Enhancers 2008
Biodegradable Absorption Enhancers 2009
Compositions and Methods for Amelioration of Human Female Sexual Dysfunction 2017
Topical Compositions for PGE1 Delivery 2017
Topical Compositions for Non-Steroidal Anti-Inflammatory Drug Delivery 2017
Medicament Dispenser 2019
Crystalline Salts of dodecyl 2-(N, N-Dimethylamino) 2019
Topical Compositions Containing Prostaglandin E1 2019
Prostaglandin Composition and Methods of Treatment of Male Erectile Dysfunction 2020

While we have obtained patents and have several patent applications
pending, the extent of effective patent protection in the U.S. and other
countries is highly uncertain and involves complex legal and factual questions.
No consistent policy addresses the breadth of claims allowed in or the degree of
protection afforded under patents of medical and pharmaceutical companies.
Patents we currently own or may obtain might not be sufficiently broad to
protect us against competitors with similar technology. Any of our patents could
be invalidated or circumvented.

There have been patents issued to others such as Vivus, Inc. and
MacroChem Corporation on the use of alprostadil for the treatment of male or
female sexual dysfunction. While we believe that our patents will prevail in any
potential litigation, the holders of these competing patents could determine to
commence a lawsuit against us and even prevail in any such lawsuit. Litigation
could result in substantial cost to and diversion of effort by us, which may
harm our business. In addition, our efforts to protect or defend our proprietary
rights may not be successful or, even if successful, may result in substantial
cost to us.

WE DEPEND UPON THIRD PARTY MANUFACTURERS FOR OUR CHEMICAL MANUFACTURING
SUPPLIES.

In 2002, we completed the construction of a 31,500 square foot
industrial facility, located in East Windsor, New Jersey, which we are in the
process of developing and validating as a manufacturing facility designed to
meet the Good Manufacturing Practice (GMP) standards required by the FDA. We
anticipate that our manufacturing facility will have the capacity to meet our
anticipated needs for full-scale commercial production. Initially, we are
utilizing the facility to manufacture Alprox-TD(R) and other NexACT(R)-based
products under development for continuing clinical testing purposes. We are also
validating the facility for GMP compliance, which is a requirement for our new
drug application filing with the FDA. If we do not successfully pass the
Pre-Approved Inspection conducted by the FDA, our new drug application filing
will be delayed.

We depend on third party chemical manufacturers for alprostadil, the
active drugs in Alprox-TD(R) and in other NexACT-based products under
development, and for the supply of our NexACT(R) enhancers that are essential in
the formulation and production of our topical products on a timely basis and at
satisfactory quality levels. If our validated third party chemical manufacturers
fail to produce quality products on time and in sufficient quantities, our
results would suffer, as we would encounter costs and delays in revalidating new
third party suppliers.

WE FACE SEVERE COMPETITION.

We are engaged in a highly competitive industry. We expect competition
from numerous existing companies, including large international enterprises, and
others entering the industry. Most of these companies have greater research and
development, manufacturing, marketing, financial, technological, personnel and
managerial resources. Acquisitions of competing companies by large
pharmaceutical or healthcare companies could further enhance such competitors'
financial, marketing and other resources. Competitors may complete clinical
trials, obtain regulatory approvals and commence commercial sales of their
products before we could enjoy a significant competitive advantage. Products
developed by our competitors may be more effective than our products.

Certain treatments for erectile dysfunction, such as needle injection
therapy, vacuum constriction devices, penile implants, transurethral absorption
and oral medications, currently exist, have been approved for sale in certain
markets and are being improved. Currently known products for the treatment of
erectile dysfunction developed or under development by our competitors include
the following: (1) Caverject(R), Pfizer, Inc.'s needle injection therapy; (2)
Viagra(R), Pfizer, Inc.'s oral product to treat erectile dysfunction; (3)
Cialis(R), an oral formulation marketed in the U.S. through a joint venture
between ICOS and Eli Lilly & Co.; (4) Levitra(R), an oral medication marketed
through a collaborative effort of Bayer AG and GlaxoSmithKline, Inc. and (5)
Muse(R), Vivus, Inc.'s device for intra-urethral delivery of a suppository
containing alprostadil. In addition, products currently under development
include the following: (1) Topiglan(R), a topical treatment containing
alprostadil based on a proprietary drug delivery system under development by
MacroChem Corporation; (2) PT-141, an intra-nasal treatment containing a new
peptide under development by Palatin Technologies; (3) an intranasal apomorphine
treatment under development by Nastech.

WE ARE THE SUBJECT OF SEVERAL LAWSUITS AND MAY BE SUBJECT TO POTENTIAL PRODUCT
LIABILITY AND OTHER CLAIMS, CREATING RISK AND EXPENSE.

We have been the subject of a number of lawsuits. On March 22, 2003
four former employees (who were later joined by a fifth former employee) filed a
lawsuit in the Superior Court of New Jersey against the Company, Y. Joseph Mo,
and Administaff (the co-employer who until December 31, 2003, provided the
Company's benefits), claiming their termination at the time of their November
2002 lay-off was due to age discrimination, and seeking unspecified damages.
This complaint is covered by a labor insurance policy the Company maintains
through Administaff and the insurance company has appointed counsel. The parties
to this lawsuit have recently entered into a settlement agreement and release in
full contingent upon the entry of a final order by the court dismissing the
complaint. The settlement agreement provides for the issuance of shares of our
common stock representing the value of the settlement amount of $180,783, in the
aggregate, to the plaintiffs. At current market prices this amounts to an
estimated 100,000 shares of common stock to be issued upon the acceptance of the
final order by the court.

Another lawsuit was filed with the Superior court of New Jersey on
April 1, 2003 by one of the above five employees against the Company for a
$800,000 bonus amount that he believes he should have received upon completion
of the construction of the Company's East Windsor facility. The Company has
engaged counsel to defend its position.

On December 29, 2003, a consultant previously engaged by us filed a
suit in the Superior Court of New Jersey Chancery Division: Mercer County,
alleging a breach by us of a consulting agreement entered into with that

consultant in January 2003. The plaintiff alleged that we failed to issue
warrants provided for under that agreement, which we terminated in April 2003.
The complaint did not specify any particular amount of monetary damages. The
company has engaged counsel to defend its position.

The Company intends to defend itself vigorously against the latter two
above-mentioned claims and believes it has valid defenses; however, each of
these cases is still in the preliminary stages and the likely outcomes can not
be predicted, nor can a reasonable estimate of the amount of loss, if any, be
made.

We are also exposed to potential product liability risks inherent in
the development, testing, manufacturing, marketing and sale of human therapeutic
products. Product liability insurance for the pharmaceutical industry is
extremely expensive, difficult to obtain and may not be available on acceptable
terms, if at all. We currently have liability insurance to cover claims related
to our products that may arise from clinical trials, with coverage of $1 million
for any one claim and coverage of $3 million in total, but we do not maintain
product liability insurance and we may need to acquire such insurance coverage
prior to the commercial introduction of our products. If we obtain such
coverage, we have no guarantee that the coverage limits of such insurance
policies will be adequate. A successful claim against us if we are uninsured, or
which is in excess of our insurance coverage, if any, could have a material
adverse effect upon us and on our financial condition.

OUR STOCK MAY BE DELISTED FROM NASDAQ, WHICH MAY MAKE IT MORE DIFFICULT FOR YOU
TO SELL YOUR SHARES.

Currently, our common stock trades on the Nasdaq National Market. NASD
Marketplace Rule 4450 provides that a company must comply with continuing
listing criteria to maintain its Nasdaq listing. Included in such criteria is a
minimum bid price per share of $1.00. Failure to maintain such price for a
period of time and beyond a grace period could lead to delisting from the Nasdaq
National Market.

If we were to be delisted from the Nasdaq National Market, our common
stock would be listed on the Nasdaq SmallCap Market, assuming we meet those
listing requirements. If we failed to meet the Nasdaq SmallCap listing
requirements, our stock would be considered a penny stock under regulations of
the Securities and Exchange Commission and would therefore be subject to rules
that impose additional sales practice requirements on broker-dealers who sell
our securities. The additional burdens imposed upon broker-dealers by these
requirements could discourage broker-dealers from effecting transactions in our
common stock, which could severely limit the market liquidity of the common
stock and your ability to sell our securities in the secondary market. In
addition, if we fail to obtain a SmallCap listing, we will be subject to cash
penalties under the Investor Rights Agreement until a listing is obtained.

INDUSTRY RISKS

WE ARE VULNERABLE TO VOLATILE MARKET CONDITIONS.

The market prices for securities of biopharmaceutical and biotechnology

companies, including ours, have been highly volatile. The market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. In addition, future
announcements, such as the results of testing and clinical trials, the status of
our relationships with third-party collaborators, technological innovations or
new therapeutic products, governmental regulation, developments in patent or
other proprietary rights, litigation or public concern as to the safety of
products developed by us or others and general market conditions, concerning us,
our competitors or other biopharmaceutical companies, may have a significant
effect on the market price of our common stock.

The following table sets forth the range of high and low bid prices of
our Common Stock for the calendar quarters indicated. The quotes listed below
reflect inter-dealer prices or transactions solely between market-makers,
without retail mark-up, mark-down or commission and may not represent actual
transactions.

High Bid Price Low Bid Price

2002
First Quarter $4.86 $2.36
Second Quarter $5.00 $2.40
Third Quarter $2.55 $1.67
Fourth Quarter $1.82 $0.40

2003
First Quarter $1.99 $0.80
Second Quarter $4.95 $1.12
Third Quarter $4.40 $3.44
Fourth Quarter $4.90 $3.53

2004
First Quarter $4.70 $2.20
Second Quarter $3.45 $1.46
Third Quarter (through August 13) $2.44 $1.44

WE ARE SUBJECT TO NUMEROUS AND COMPLEX GOVERNMENT REGULATIONS WHICH COULD RESULT
IN DELAY AND EXPENSE.

Governmental authorities in the U.S. and other countries heavily
regulate the testing, manufacture, labeling, distribution, advertising and
marketing of our proposed products. None of our proprietary products under
development has been approved for marketing in the U.S. Before we market any
products we develop, we must obtain FDA and comparable foreign agency approval
through an extensive clinical study and approval process.

The studies involved in the approval process are conducted in three
phases. In Phase 1 studies, researchers assess safety or the most common acute
adverse effects of a drug and examine the size of doses that patients can take
safely without a high incidence of side effects. Generally, 20 to 100 healthy
volunteers or patients are studied in the Phase 1 study for a

period of several months. In Phase 2 studies, researchers determine the drug's
efficacy with short-term safety by administering the drug to subjects who have
the condition the drug is intended to treat, assess whether the drug favorably
affects the condition, and begin to identify the correct dosage level. Up to
several hundred subjects may be studied in the Phase 2 study for approximately 6
to 12 months, depending on the type of product tested. In Phase 3 studies,
researchers further assess efficacy and safety of the drug. Several hundred to
thousands of patients may be studied during the Phase 3 studies for a period of
from 12 months to several years. Upon completion of Phase 3 studies, a New Drug
Application is submitted to the FDA or foreign governmental regulatory authority
for review and approval.

Our failure to obtain requisite governmental approvals timely or at all
would delay or preclude us from licensing or marketing our products or limit the
commercial use of our products, which could adversely affect our business,
financial condition and results of operations.

Because we intend to sell and market our products outside the U.S., we
will be subject to foreign regulatory requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursements. These
requirements vary widely from country to country. Our failure to meet each
foreign country's requirements could delay the introduction of our proposed
products in the respective foreign country and limit our revenues from sales of
our proposed products in foreign markets.

Successful commercialization of our products may depend on the
availability of reimbursement to the consumer from third-party healthcare
payers, such as government and private insurance plans. Even if we succeed in
bringing one or more products to market, reimbursement to consumers may not be
available or sufficient to allow us to realize an appropriate return on our
investment in product development or to sell our products on a competitive
basis. In addition, in certain foreign markets, pricing or profitability of
prescription pharmaceuticals is subject to governmental controls. In the U.S.,
federal and state agencies have proposed similar governmental control and the
U.S. Congress has recently considered legislative and regulatory reforms that
may affect companies engaged in the healthcare industry. Pricing constraints on
our products in foreign markets and possibly in the U.S. could adversely affect
our business and limit our revenues.

RISKS RELATED TO THE OFFERING

WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE FUTURE.

Although our shareholders may receive dividends if, as and when
declared by our board of directors, we do not intend to pay dividends on our
Common Stock in the foreseeable future. Therefore, you should not purchase our
Common Stock if you need immediate or future income by way of dividends from
your investment.

WE MAY ISSUE ADDITIONAL SHARES OF OUR CAPITAL STOCK THAT COULD DILUTE THE VALUE
OF YOUR SHARES OF COMMON STOCK.

We are authorized to issue 90,000,000 shares of our capital stock,
consisting of 80,000,000 shares of our Common Stock and 10,000,000 shares of our
preferred stock of which 1,000,000 is designated as Series A Junior
Participating Preferred Stock. As of August 13, 2004, 45,959,181 shares of our
Common Stock were issued and outstanding and 15,534,435 shares of our Common
Stock were issuable upon the exercise of options, warrants, or other convertible
securities (including convertible notes held by the selling shareholders). There
were no shares of Preferred Stock outstanding at August 13, 2004. In light of
our need for additional financing, we may issue authorized and unissued shares
of Common Stock at below current market prices or additional convertible
securities that could dilute the earnings per share and book value of your
shares of our Common Stock.

In addition to provisions providing for proportionate adjustments in
the event of stock splits, stock dividends, reverse stock splits and similar
events, certain warrants provide (with certain exceptions) for an adjustment of
the exercise price if we issue shares of common stock at prices lower than the
exercise price or the then prevailing market price. This means that if we need
to raise equity financing at a time when the market price for our common stock
is lower than the exercise price, or if we need to provide a new equity investor
with a discount from the then prevailing market price, then the exercise price
will be reduced and the dilution to shareholders increased.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of
Common Stock offered by this prospectus. All proceeds from the sale of the
shares covered by this prospectus will be for the account of the selling
shareholders named herein. See "Selling Shareholders" and "Plan of
Distribution."

SELLING SHAREHOLDERS

This prospectus covers only the resale of shares of our Common Stock by
selling shareholders. The number of shares of Common Stock that may be actually
sold by the selling shareholders will be determined by such selling
shareholders.

The selling shareholders are the entities listed in the table below who
purchased their shares of Common Stock and their warrants from us. We are
registering the shares held by the selling shareholders as well as the shares of
our Common Stock issuable on exercise of warrants held by such selling
shareholders, in each case for resale, pursuant to the terms of an Investor
Rights Agreement dated as of June 18, 2004.

In connection with the sale of the common stock and warrants we paid a
finder's fee to Tail Wind Advisory and Management Ltd. of $214,375. In addition,
we paid $236,250 to UBS Securities LLC, which acted as placement agent.

The following table sets forth, as of July 12, 2004 (except as
otherwise indicated in the footnotes): (1) the name of each selling

shareholder, (2) the number and percentage of shares of our Common Stock
beneficially owned by each selling shareholder, including the number of shares
purchasable upon exercise of warrants and conversion of convertible notes, (3)
the maximum number of shares of Common Stock which the selling shareholders can
sell pursuant to this prospectus and (4) the number and percentage of shares of
Common Stock that the selling shareholders would own if they sold all their
shares registered by this prospectus. Each selling shareholder will receive all
of the net proceeds from the sale of its shares of Common Stock offered by this
prospectus.

Because the selling shareholders may sell all or part of their shares
of Common Stock pursuant to this prospectus and this offering is not being
underwritten on a firm commitment basis, we cannot estimate the number and
percentage of shares of Common Stock that the selling shareholders will hold in
the aggregate at the end of the offering covered by this prospectus.

PERCENTAGE
OF CLASS
OWNED BY NUMBER OF PERCENTAGE
NUMBER OF THE SHARES NUMBER OF OF CLASS TO
SHARES OF SELLING OF COMMON SHARES OF BE OWNED BY
COMMON SHAREHOLDER STOCK COMMON STOCK THE SELLING
STOCK OWNED BEFORE BEING REGISTERED TO BE OWNED SHAREHOLDER
NAME OF BEFORE THIS THIS BY THIS AFTER THIS AFTER THIS
SELLING SHAREHOLDER (1) OFFERING (2) OFFERING (3) PROSPECTUS OFFERING OFFERING (4)
----------------------- ------------ ------------ ---------- -------- ------------

Allison Berman Trust 22,500 * 22,500 0 *
Ann Berman Credit Shelter
Trust 45,000 * 45,000 0 *
Ari Berman Trust 22,500 * 22,500 0 *
BayStar Capital II, L.P. (7) 1,769,420 3.69% 1,350,000 969,273 (5) 2.08%
Chula Partners, L.P. 530,117 1.15% 360,000 252,595 (5) *
Clarion Capital Corporation 362,207 * 135,000 337,178 (5) *
Clarion Offshore Fund, Ltd. 114,688 * 45,001 91,681 (5) *
Clarion Partners, L.P. 114,689 * 45,001 157,665 (5) *
Midsummer Investment, Ltd. (9) 547,222 1.19% 450,000 372,149 (5) *
Winchester Global Trust
Company Limited as Trustee
for Caduceus Capital Trust (6) 1,849,500 4.02% 1,849,500 0 *
Caduceus Capital II, L.P. (6) 918,000 2.00% 918,000 0 *
HFR SHC Aggressive Fund (6) 270,000 * 270,000 0 *
Penfield Partners, L.P. 1,165,000 2.53% 540,000 625,000 1.36%
SDS Capital Group SPC, Ltd. (8) 675,000 1.47% 675,000 824,780 (5) 1.76%
Summit Capital Partners, LP 690,000 1.50% 270,000 420,000 *
The Tail Wind Fund Ltd. (10) 2,307,724 4.89% 450,000 2,187,636 (5) 4.60%

TOTALS 11,403,567 24.12% 7,447,502 6,237,957 12.58%

* less than 1%

(1) None of the selling shareholders nor any of their officers, directors or
principal equity holders has held any position or office or has had any
material relationship with us within the past three years.

(2) Includes shares of Common Stock and shares of Common Stock issuable upon
the exercise of warrants or conversion of convertible securities (including
convertible notes) which may be held by the selling shareholder which are
exercisable or convertible within 60 days of July 1, 2004 (excluding
conversion of accreted amounts under convertible notes). Each Selling
Stockholder owns warrants which provide that the number of shares of our
common stock that may be acquired by any holder of the warrants upon
exercise of the warrants is limited to the extent necessary to ensure that,
following such exercise, the number of shares of our common stock then
beneficially owned by such holder and any other persons or entities whose
beneficial ownership of common stock would be aggregated with the holder's
for purposes of the Exchange Act, does not exceed 4.95% of the total number
of shares of our common stock then outstanding.

(3) This percentage is calculated using as the numerator, the number of shares
of Common Stock included in the prior column and as the denominator,
45,959,181 shares of Common Stock outstanding as of August 13, 2004 plus
the number of shares of Common Stock, if any, issuable upon the exercise of
warrants or conversion of convertible securities held by the selling
shareholder which are exercisable or convertible within 60 days.

(4) This percentage is calculated using as the numerator, the number of shares
of Common Stock included in the prior column and as the denominator,
45,959,181 shares of Common Stock outstanding as of August 13, 2004 plus
the number of shares of Common Stock, if any, issuable upon the exercise of
warrants or conversion of convertible securities held by the selling
shareholder, assuming the sale by the selling shareholder of all of its
shares covered by this prospectus.

(5) Includes shares of Common Stock and all shares of Common Stock issuable
upon the exercise of warrants or conversion of convertible securities held
by the selling shareholder (including shares that are issuable upon the
exercise of warrants that are not exercisable until 2005), but assumes the
sale of all of the shares of Common Stock being registered by this
prospectus.

(6) Information regarding share ownership is as of June 18, 2004.

(7) Information regarding share ownership is as of July 14, 2004. BayStar
Capital Management, LLC is the General Partner of BayStar Capital II, L.P.
Bay East, L.P., Lawrence Goldfarb, and Steven M. Lamar are the three
Managing Members of the General Partner, and acting together exercise
shared voting and investment control over the securities beneficially owned
by BayStar Capital II, L.P. Steve Derby is the General Partner of Bay East,
L.P. BayStar Capital II, L.P. may be deemed to be an affiliate of SDS
Capital Group SPC, Ltd. and therefore may be deemed to beneficially own
shares held by SDS Capital Group SPC, Ltd. See footnote 8 below.

(8) Information regarding share ownership is as of July 14, 2004. SDS
Management, LLC is the investment advisor of SDS Capital Group SPC, Ltd.
Steve Derby is the Managing Member of SDS Management, LLC, and as such, has
voting and investment control over the securities beneficially owned by SDS
Capital Group SPC, Ltd. SDS Captial Group SPC, Ltd. may be deemed to be an
affiliate of BayStar Capital II, L.P. and therefore may be deemed to
beneficially own shares held by BayStar Capital II, L.P. See footnote 7
above.

(9) Information regarding share ownership is as of July 15, 2004.

(10) Information regarding share ownership is as of July 1, 2004.

PLAN OF DISTRIBUTION

We are registering the shares of Common Stock on behalf of the selling
shareholders. Sales of shares may be made by selling shareholders, including
their respective donees, transferees, pledgees or other successors-in-interest
directly to purchasers or to or through underwriters, broker-dealers or through
agents. Sales may be made from time to time on the Nasdaq National Market, any
other exchange upon which our shares may trade in the future, in the
over-the-counter market or otherwise, at market prices prevailing at the time of
sale, at prices related to market prices, or at negotiated or fixed prices. The
shares may be sold by one or more of, or a combination of, the following:

- a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction (including crosses in
which the same broker acts as agent for both sides of the transaction);

- purchases by a broker-dealer as principal and resale by such
broker-dealer, including resales for its account, pursuant to this
prospectus;

- ordinary brokerage transactions and transactions in which the broker
solicits purchases;

- through options, swaps or derivatives;

- in privately negotiated transactions;

- in making short sales or in transactions to cover short sales; and

- put or call option transactions relating to the shares.

The selling shareholders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling shareholders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling
shareholders have advised us that they have not

entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities.

The selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
shareholders. The selling shareholders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery of shares offered by this prospectus to those broker-dealers or
other financial institutions. The broker-dealer or other financial institution
may then resell the shares pursuant to this prospectus (as amended or
supplemented, if required by applicable law, to reflect those transactions).

The selling shareholders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling shareholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling shareholders and
each selling shareholder has agreed, severally and not jointly, to indemnify us
against some liabilities in connection with the offering of the shares,
including liabilities arising under the Securities Act.

The selling shareholders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling shareholders
that the anti-manipulative provisions of Regulation M promulgated under the
Securities Exchange Act of 1934 may apply to their sales in the market.

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

Upon being notified by a selling shareholder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act,
disclosing:

- the name of each such selling shareholder and of the participating
broker-dealer(s);

- the number of shares involved;

- the initial price at which the shares were sold;

- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;

- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and

- other facts material to the transactions.

In addition, if required under applicable law or the rules or
regulations of the Commission, we will file a supplement to this prospectus when
a selling shareholder notifies us that a donee or pledgee intends to sell more
than 500 shares of common stock.

We are paying all expenses and fees in connection with the registration
of the shares. The selling shareholders will bear all brokerage or underwriting
discounts or commissions paid to broker-dealers in connection with the sale of
the shares.

Wells Fargo Bank Minnesota, N.A., located at P.O. Box 64854, South St.
Paul, MN 55164-0854, is the transfer agent and registrar for our common stock.

LEGAL MATTERS

Certain legal matters with respect to the validity of the issuance of
the shares of Common Stock offered by this prospectus have been passed upon on
behalf of the Company by Schreck Brignone, Las Vegas, Nevada.

EXPERTS

The financial statements incorporated in this prospectus by reference
to our Annual Report on Form 10-K for the year ended December 31, 2003, have
been so incorporated in reliance on the report (which contains an explanatory
paragraph relating to the Company's ability to continue as a going concern as
described in Note 1 to the financial statements) of PricewaterhouseCoopers LLP,
an independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting.

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NEXMED, INC.

7,447,502 SHARES

COMMON STOCK

----------------------------

PROSPECTUS

----------------------------

August 23, 2004

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