sc13d06588pen_02152008.htm

0000921895-08-000560.txt : 20080219 0000921895-08-000560.hdr.sgml : 20080218 20080219130030 ACCESSION NUMBER: 0000921895-08-000560 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20080219 DATE AS OF CHANGE: 20080219 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PENWEST PHARMACEUTICALS CO CENTRAL INDEX KEY: 0001047188 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 911513032 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-55303 FILM NUMBER: 08625786 BUSINESS ADDRESS: STREET 1: 39 OLD RIDGEBURY ROAD STREET 2: SUITE 11 CITY: DANBURY STATE: CT ZIP: 06810-5120 BUSINESS PHONE: 877-736-9378 MAIL ADDRESS: STREET 1: 39 OLD RIDGEBURY ROAD STREET 2: SUITE 11 CITY: DANBURY STATE: CT ZIP: 06810-5120 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ACCIPITER CAPITAL MANAGEMENT, LLC CENTRAL INDEX KEY: 0001280190 IRS NUMBER: 134220800 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 399 PARK AVENUE STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127058700 MAIL ADDRESS: STREET 1: 399 PARK AVENUE STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: ACCIPITER CAPITAL MANAGEMENT DATE OF NAME CHANGE: 20040213 SC 13D 1 sc13d06588pen_02152008.htm sc13d06588pen_02152008.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. )1

Penwest Pharmaceuticals Co.

(Name of Issuer)

Class A Common Stock, $0.001 par value per share

(Title of Class of Securities)

709754105

(CUSIP Number)

STEVEN WOLOSKY, ESQ.

OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

February 15, 2008

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box x.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON ACCIPITER LIFE SCIENCES FUND, LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 555,745
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 555,745
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 555,745
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON ACCIPITER LIFE SCIENCES FUND (OFFSHORE), LTD.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 557,048
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 557,048
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 557,048
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4%
14	TYPE OF REPORTING PERSON CO

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON ACCIPITER LIFE SCIENCES FUND II, LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 254,029
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 254,029
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 254,029
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.1%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON ACCIPITER LIFE SCIENCES FUND II (OFFSHORE), LTD.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 511,061
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 511,061
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 511,061
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.2%
14	TYPE OF REPORTING PERSON CO

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON ACCIPITER LIFE SCIENCES FUND II (QP), LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 290,330
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 290,330
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 290,330
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.2%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON CANDENS CAPITAL, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 1,100,104
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 1,100,104
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,100,104
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.7%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON ACCIPITER CAPITAL MANAGEMENT, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 1,068,109
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 1,068,109
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,068,109
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.6%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON GABE HOFFMAN
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,168,213
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,168,213
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,168,213
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.3%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON DAVID LOHMAN
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER - 0 -**
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER - 0 -**
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 -**
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% **
14	TYPE OF REPORTING PERSON IN

** See Item 5.

CUSIP NO. 709754105

1	NAME OF REPORTING PERSON EUGENE I. DAVIS
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER - 0 -**
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER - 0 -**
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 -**
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% **
14	TYPE OF REPORTING PERSON IN

** See Item 5.

CUSIP NO. 709754105

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1.

Security and Issuer

This statement relates to shares of the Common Stock, $0.001 par value per share (the “Shares”), of Penwest Pharmaceuticals Co., a Washington corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 39 Old Ridgebury Road, Suite 11, Danbury, Connecticut 06810-5120.

Item 2.

Identity and Background.

(a) This statement is jointly filed by Accipiter Life Sciences Fund, LP, a Delaware limited partnership (“ALS Fund”), Accipiter Life Sciences Fund (Offshore), Ltd., a Cayman Islands company (“ALS Fund Offshore”), Accipiter Life Sciences Fund II, LP, a Delaware limited partnership (“ALS Fund II”), Accipiter Life Sciences Fund II (Offshore), Ltd., a Cayman Islands company (“ALS Fund II Offshore”), Accipiter Life Sciences Fund II (QP), LP, a Delaware limited partnership (“ALS Fund II QP”) (together with ALS Fund, ALS Fund Offshore, ALS Fund II, ALS Fund II Offshore, ALS Fund II QP, the “Accipiter Entities”), Accipiter Capital Management, LLC, a Delaware limited liability company (“Accipiter Management”), Candens Capital, LLC, a Delaware limited liability company (“Candens Capital”), Gabe Hoffman, David Lohman and Eugene I. Davis. Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing and Solicitation Agreement as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

Candens Capital is the general partner of each of ALS Fund, ALS Fund II and ALS Fund II QP. Accipiter Management is the investment adviser of each of ALS Fund Offshore and ALS Fund II Offshore. Gabe Hoffman is the managing member of each of Candens Capital and Accipiter Management. By virtue of his positions with Candens Capital and Accipiter Management, Mr. Hoffman has the power to vote and dispose of the Issuer’s Shares owned by the Accipiter Entities.

(b) The principal business address of each of ALS Fund, ALS Fund II, ALS Fund II QP, Candens Capital, Accipiter Management, Mr. Hoffman and Mr. Lohman is 399 Park Avenue, 38th Floor, New York, New York 10022. The principal business address of ALS Fund Offshore and ALS Fund II Offshore is c/o Ogier Fiduciary Services (Cayman) Limited, Queensgate House, South Church Street, P.O. Box 1234, George Town, Grand Cayman, Cayman Islands. The principal business address of Mr. Davis is c/o PIRINATE Consulting Group, L.L.C., 5 Canoe Brook Drive, Livingston, New Jersey 07038.

(c) The principal business of each of the Accipiter Entities is investing in securities. The principal business of Candens Capital is acting as the general partner of each of ALS Fund, ALS Fund II and ALS Fund II QP. The principal business of Accipiter Management is acting as the investment adviser of ALS Fund Offshore and ALS Fund II Offshore. The principal occupation of Mr. Hoffman is acting as managing member of Accipiter Management and Candens Capital. The principal occupation of Mr. Lohman is acting as Senior Specialty Pharmaceuticals Analyst at Accipiter Management. The principal occupation of Mr. Davis is serving as the Chairman and Chief Executive Officer of PIRINATE Consulting Group, L.L.C.

(d) No Reporting Person, nor any person listed on Schedule A annexed hereto, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

CUSIP NO. 709754105

(e) No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Each of Messrs. Hoffman, Lohman and Davis are citizens of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

The aggregate purchase price of the 555,745 Shares owned by ALS Fund is $4,993,758, including brokerage commissions. The Shares owned by ALS Fund were acquired with partnership funds.

The aggregate purchase price of the 254,029 Shares owned by ALS Fund II is $3,319,966 including brokerage commissions. The Shares owned by ALS Fund II were acquired with partnership funds.

The aggregate purchase price of the 290,330 Shares owned by ALS Fund II QP is $3,481,506, including brokerage commissions. The Shares owned by ALS Fund II QP were acquired with partnership funds.

The aggregate purchase price of the 557,048 Shares owned by ALS Fund Offshore is $4,699,444, including brokerage commissions. The Shares owned by ALS Fund Offshore were acquired using its working capital.

The aggregate purchase price of the 511,061 Shares owned by ALS Fund II Offshore is $5,459,480, including brokerage commissions. The Shares owned by ALS Fund II Offshore were acquired using its working capital.

Item 4.

Purpose of Transaction.

The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase of additional Shares desirable, the Reporting Persons may endeavor to increase their position in the Issuer through, among other things, the purchase of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

On February 15, 2008, ALS Fund delivered a letter dated February 15, 2008 to the Corporate Secretary of the Issuer (the “Nomination Letter”) nominating Messrs. Hoffman, Lohman and Davis, as set forth therein, for election to the Board at the Issuer’s 2008 annual meeting of shareholders, or any other meeting of shareholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the “2008 Annual Meeting”).

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed above. The Reporting Persons intend to review their investment in the Issuer on a continuing basis and engage in discussions with management and the Board of Directors of the Issuer concerning the business, operations and future plans of the Issuer. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, making proposals to the Issuer concerning changes to the capitalization, ownership structure or operations of the Issuer, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares or changing their intention with respect to any and all matters referred to in Item 4.

5.	Interest in Securities of the Issuer.

(a) The aggregate percentage of Shares reported owned by each person named herein is based upon 23,413,977 Shares outstanding, which is the total number of Shares outstanding as of November 2, 2007 as reported in the Issuer’s Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission on November 8, 2007.

As of the close of business on February 14, 2008, ALS Fund, ALS Fund II and ALS Fund II QP beneficially owned 555,745 Shares, 254,029 Shares and 290,330 Shares, respectively, constituting approximately 2.4%, 1.1% and 1.2% of the Shares outstanding, respectively. As the general partner of each of ALS Fund, ALS Fund II and ALS Fund II QP, Candens Capital may be deemed to beneficially own the 1,100,104 Shares collectively owned by ALS Fund, ALS Fund II and ALS Fund II QP, constituting approximately 4.7% of the Shares outstanding.

As of the close of business on February 14, 2008, ALS Fund Offshore and ALS Fund II Offshore beneficially owned 557,048 Shares and 511,061 Shares, respectively, constituting approximately 2.4% and 2.2% of the Shares outstanding, respectively. As the investment manager of each of ALS Fund Offshore and ALS Fund II Offshore, Accipiter Management may be deemed to beneficially own the 1,068,109 Shares collectively owned by ALS Fund Offshore and ALS Fund II Offshore, constituting approximately 4.6% of the Shares outstanding.

As the managing member of each of Accipiter Management and Candens Capital, Mr. Hoffman may be deemed to beneficially own 2,168,213 Shares collectively owned by the Accipiter Entities, constituting approximately 9.3% of the Shares outstanding.

Neither of Messrs. Lohman and Davis directly owns any Shares nor have they entered into any transactions in the Shares during the last sixty days. Each of Messrs. Lohman and Davis as members of a “group” for the purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, may be deemed to beneficially own the 2,168,213 Shares owned by the Accipiter Entities. Each of Messrs. Lohman and Davis disclaims beneficial ownership of such Shares.

(b) By virtue of his positions with Accipiter Management and Candens Capital, Mr. Hoffman has the sole power to vote and dispose of the Shares reported in this Schedule 13D.

(c) Schedule B annexed hereto lists all transactions by the Reporting Persons in the Issuer’s securities effected during the last sixty days. All of such transactions were effected in the open market.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

(e) Not applicable.

CUSIP NO. 709754105

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On February 15, 2008, the Reporting Persons entered into a Joint Filing and Solicitation Agreement in which, among other things, (a) the parties agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer, (b) the parties agreed to solicit proxies or written consents for the election of Messrs. Hoffman, Lohman and Davis, or any other person(s) nominated by ALS Fund, to the Issuer’s Board at the 2008 Annual Meeting (the “Solicitation”), and (c) ALS Fund agreed to bear all expenses incurred in connection with the Reporting Persons’ activities, including approved expenses incurred by any of the parties in connection with the Solicitation, subject to certain limitations.

Pursuant to a letter agreement, ALS Fund has agreed to indemnify Mr. Davis against claims arising from the solicitation of proxies from the Issuer’s shareholders in connection with the Annual Meeting. Mr. Davis’ indemnification letter is attached hereto as an exhibit and is incorporated herein by reference.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Item 7.

Material to be Filed as Exhibits.

	99.1	Joint Filing Agreement by and among Accipiter Life Sciences Fund, LP, Accipiter Life Sciences Fund II, LP, Accipiter Life Sciences Fund II (QP), LP, Accipiter Life Sciences Fund (Offshore), Ltd., Accipiter Life Sciences Fund II (Offshore), Ltd., Accipiter Capital Management, LLC, Candens Capital, LLC, Gabe Hoffman, David Lohman and Eugene I. Davis, dated February 15, 2008.

	99.2	Form of Eugene I. Davis Indemnification Letter.

CUSIP NO. 709754105

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: February 15, 2008	ACCIPITER LIFE SCIENCES FUND, LP

	By:	Candens Capital, LLC its general partner

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND II, LP

	By:	Candens Capital, LLC its general partner

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND (OFFSHORE), LTD.

	By:	Accipiter Capital Management, LLC its investment manager

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND II (OFFSHORE), LTD.

	By:	Accipiter Capital Management, LLC its investment manager

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND II (QP), LP

	By:	Candens Capital, LLC its general partner

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

CUSIP NO. 709754105

	ACCIPITER CAPITAL MANAGEMENT, LLC

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	CANDENS CAPITAL, LLC

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	/s/ Gabe Hoffman
	GABE HOFFMAN

	/s/ David Lohman
	DAVID LOHMAN

	/s/ Eugene I. Davis
	EUGENE I. DAVIS

CUSIP NO. 709754105

SCHEDULE A

Directors and Officers of Accipiter Life Sciences Fund (Offshore), Ltd.

Name and Position	Principal Occupation	Principal Business Address
Gabe Hoffman, Director	Managing member of Accipiter Capital Management, LLC, and Candens Capital, LLC	399 Par Avenue, 38th Floor New York, New York 10022

Tom Davis, Director	President and CEO of Meridian Fund Services Limited	c/o Meridian Fund Services Limited 73 Front Street Hamilton HM 12 P.O. Box HM 528 Hamilton HMCX Bermuda

Cary Marr, Director	Senior Vice President - Operations, for Meridian Fund Services Limited	c/o Meridian Fund Services Limited 73 Front Street Hamilton HM 12 P.O. Box HM 528 Hamilton HMCX Bermuda

Directors and Officers of Accipiter Life Sciences Fund II (Offshore), Ltd.

Name and Position	Principal Occupation	Principal Business Address
Gabe Hoffman, Director	Managing member of Accipiter Capital Management, LLC, and Candens Capital, LLC	399 Par Avenue, 38th Floor New York, New York 10022

Tom Davis, Director	President and CEO of Meridian Fund Services Limited	c/o Meridian Fund Services Limited 73 Front Street Hamilton HM 12 P.O. Box HM 528 Hamilton HMCX Bermuda

Cary Marr, Director	Senior Vice President - Operations, for Meridian Fund Services Limited	c/o Meridian Fund Services Limited 73 Front Street Hamilton HM 12 P.O. Box HM 528 Hamilton HMCX Bermuda

CUSIP NO. 709754105

SCHEDULE B

Transactions in the Shares During the Last 60 Days

Shares of Common

Stock

Purchased/(Sold)

Price Per

Share($U.S.)

Date of

Purchase/Sale

ACCIPITER LIFE SCIENCES FUND, LP

None

ACCIPITER LIFE SCIENCES FUND II, LP


94		3.9800	02/08/2008

ACCIPITER LIFE SCIENCES FUND (OFFSHORE), LTD

None

ACCIPITER LIFE SCIENCES FUND II (OFFSHORE), LTD


3,179		3.9800	02/08/2008

ACCIPITER LIFE SCIENCES FUND II (QP), LP


(3,273)		3.9800	02/08/2008

CANDENS CAPITAL, LLC

None

ACCIPITER CAPITAL MANAGEMENT, LLC

None

GABE HOFFMAN

None

DAVID LOHMAN

None

EUGENE I. DAVIS

None

EX-99.1 2 ex991to13d06588pen_02152008.htm ex991to13d06588pen_02152008.htm

Exhibit 99.1

JOINT FILING AND SOLICITATION AGREEMENT

WHEREAS, certain of the undersigned are shareholders, direct or beneficial, of Penwest Pharmaceuticals Co., a Washington corporation (“Penwest”);

WHEREAS, Accipiter Life Sciences Fund, LP, a Delaware limited partnership (“Accipiter Life Sciences”), Accipiter Life Sciences Fund II, LP, a Delaware limited partnership (“ALSF II”), Accipiter Life Sciences Fund (Offshore), Ltd., a Cayman Islands company (“ALSF Offshore”), Accipiter Life Sciences Fund II (Offshore), Ltd., a Cayman Islands company (“ALSF II Offshore”), Accipiter Life Sciences Fund II (QP), LP, a Delaware limited partnership (“ALSF II QP”), Accipiter Capital Management, LLC, a Delaware limited liability company (“Management”), Candens Capital, LLC, a Delaware limited liability company (“Candens”), David Lohman, Gabe Hoffman and Eugene I. Davis wish to form a group for the purpose of seeking representation on the Board of Directors of Penwest;

WHEREAS, Accipiter Life Sciences intends to nominate David Lohman, Gabe Hoffman and Eugene I. Davis as nominees to be elected to the Board of Directors of Penwest at the 2008 annual meeting of shareholders of Penwest, or any other meeting of shareholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the “Annual Meeting”).

NOW, IT IS AGREED, this 15th day of February 2008 by the parties hereto:

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, each of the undersigned (collectively, the “Group”) agrees to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of Penwest. Each member of the Group shall be responsible for the accuracy and completeness of his/her own disclosure therein.

So long as this agreement is in effect, each of the undersigned shall provide written notice to Olshan Grundman Frome Rosenzweig & Wolosky LLP (“Olshan”) of (i) any of their purchases or sales of securities of Penwest; or (ii) any securities of Penwest over which they acquire or dispose of beneficial ownership. Notice shall be given no later than 24 hours after each such transaction.

Each of the undersigned agrees to solicit proxies or written consents for the election of David Lohman, Gabe Hoffman and Eugene I. Davis, or any other person(s) nominated by Accipiter Life Sciences, to the Board of Directors of Penwest at the Annual Meeting.

Accipiter Life Sciences agrees to bear all expenses incurred in connection with the Group’s activities, including expenses incurred by any of the parties in a solicitation of proxies or written consents by the members of the Group in connection with the Annual Meeting. Notwithstanding the foregoing, Accipiter Life Sciences shall not be required to reimburse any party for (i) out-of-pocket expenses incurred by a party in the aggregate in excess of $250 without Accipiter Life Sciences’ prior written approval; (ii) the value of the time of any party; (iii) legal fees incurred without Accipiter Life Sciences’ prior written approval; or (iv) the costs of any counsel, other than Olshan, employed in connection with any pending or threatened litigation without Accipiter Life Sciences’ prior written approval.

The relationship of the parties hereto shall be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any party to act as an agent for any other party, or to create a joint venture or partnership, or to constitute an indemnification. Nothing herein shall restrict any party’s right to purchase or sell securities of Penwest, as he/she deems appropriate, in his/her sole discretion, provided that all such sales are made in compliance with all applicable securities laws.

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute but one and the same instrument, which may be sufficiently evidenced by one counterpart.

In the event of any dispute arising out of the provisions of this Agreement, the parties hereto consent and submit to the exclusive jurisdiction of the Federal and State Courts in the State of New York.

Any party hereto may terminate his or her obligations under this agreement at any time on 24 hours’ written notice to all other parties, with a copy by fax to Steven Wolosky at Olshan, Fax No. (212) 451-2222.

Each party acknowledges that Olshan shall act as counsel for both the Group and Accipiter Life Sciences.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto caused this Agreement to be executed as of the day and year first above written.

	ACCIPITER LIFE SCIENCES FUND, LP

	By:	Candens Capital, LLC its general partner

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND II, LP

	By:	Candens Capital, LLC its general partner

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND II (QP), LP

	By:	Candens Capital, LLC its general partner

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND (OFFSHORE), LTD.

	By:	Accipiter Capital Management, LLC its investment manager

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER LIFE SCIENCES FUND II (OFFSHORE), LTD.

	By:	Accipiter Capital Management, LLC its investment manager

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	ACCIPITER CAPITAL MANAGEMENT, LLC

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	CANDENS CAPITAL, LLC

	By:	/s/ Gabe Hoffman
		Gabe Hoffman, Managing Member

	/s/ Gabe Hoffman
	GABE HOFFMAN

	/s/ David Lohman
	DAVID LOHMAN

	/s/ Eugene I. Davis
	EUGENE I. DAVIS

EX-99.2 3 ex992to13d06588pen_02152008.htm ex992to13d06588pen_02152008.htm

Exhibit 99.2

ACCIPITER LIFE SCIENCES FUND, LP

399 Park Avenue, 38th Floor

New York, New York 10022

February 14, 2008

Eugene I. Davis

c/o PIRINATE Consulting Group, L.L.C.

5 Canoe Brook Drive

Livingston, New Jersey 07038

Re: Penwest Pharmaceuticals Co.

Dear Mr. Davis:

Thank you for agreeing to serve as a nominee for election to the Board of Directors of Penwest Pharmaceuticals Co. (“Penwest”) in connection with the proxy solicitation that Accipiter Life Sciences Fund, LP (“Accipiter”) and its affiliates are considering undertaking to elect directors at Penwest’s 2008 Annual Meeting of Shareholders, or any other meeting of shareholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the “Accipiter Solicitation”). Your outstanding qualifications, we believe, will prove a valuable asset to Penwest and all of its shareholders. This letter will set forth the terms of our agreement.

Accipiter agrees to jointly and severally indemnify and hold you harmless against any and all claims of any nature, whenever brought, arising from the Accipiter Solicitation and any related transactions, irrespective of the outcome; provided, however, that you will not be entitled to indemnification for claims arising from your own criminal actions, fraud, negligence, bad faith or willful misconduct; provided further, that this indemnification agreement and all of the Accipiter’s obligations hereunder shall terminate upon your becoming a director of Penwest. This indemnification will include any and all (each, a “Loss”) losses, liabilities, damages, demands, claims, suits, actions, judgments, or causes of action, assessments, costs and expenses, including, without limitation, interest, penalties, reasonable attorneys’ fees, and any and all reasonable costs and expenses incurred in investigating, preparing or defending against any litigation, commenced or threatened, any civil, criminal, administrative or arbitration action, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation asserted against, resulting, imposed upon, or incurred or suffered by you, directly or indirectly, as a result of or arising from the Accipiter Solicitation and any related transactions.

In the event of a claim against you pursuant to the prior paragraph or the occurrence of a Loss, you shall give Accipiter written notice of such claim or Loss. Upon receipt of such written notice, Accipiter will provide you with counsel to represent you. Such counsel shall be reasonably acceptable to you. In addition, you will be reimbursed promptly for all Losses suffered by you and as incurred as provided herein. Accipiter may not enter into any settlement of loss or claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim. Accipiter will not be responsible for fees, costs or expenses of separate counsel retained by you. You may not enter into any settlement of loss or claim without the written consent of Accipiter, which consent will not be unreasonably withheld.

If you agree to the foregoing terms, please sign below to indicate your acceptance.

Very truly yours,

ACCIPITER LIFE SCIENCES FUND, LP

By: Candens Capital, LLC

its general partner

/s/ Gabe Hoffman

By: Gabe Hoffman, Managing Member

ACCEPTED AND AGREED:

/s/ Eugene I. Davis

EUGENE I. DAVIS