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<SEC-DOCUMENT>0000927016-01-001419.txt : 20010321
<SEC-HEADER>0000927016-01-001419.hdr.sgml : 20010321
ACCESSION NUMBER:		0000927016-01-001419
CONFORMED SUBMISSION TYPE:	S-3/A
PUBLIC DOCUMENT COUNT:		5
FILED AS OF DATE:		20010320

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SHEFFIELD PHARMACEUTICALS INC
		CENTRAL INDEX KEY:			0000894158
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				133808303
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-3/A
		SEC ACT:		
		SEC FILE NUMBER:	333-54446
		FILM NUMBER:		1572972

	BUSINESS ADDRESS:	
		STREET 1:		425 WOODSMILL RD
		CITY:			ST LOUIS
		STATE:			MO
		ZIP:			63017
		BUSINESS PHONE:		3145799899

	MAIL ADDRESS:	
		STREET 1:		425 WOODSMILL RD
		CITY:			ST LOUIS
		STATE:			MO
		ZIP:			63017

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SHEFFIELD MEDICAL TECHNOLOGIES INC
		DATE OF NAME CHANGE:	19940606
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3/A
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM S-3 AMENDMENT #1
<TEXT>

<PAGE>

                                     Registration Statement No. 333-54446
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           __________________________

                              Amendment No. 1 to

                           REGISTRATION STATEMENT ON
                                    FORM S-3
                                     UNDER
                           THE SECURITES ACT OF 1933
                           __________________________
                        SHEFFIELD PHARMACEUTICALS, INC.
             (Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S>                                            <C>                                   <C>
Delaware                                                   2834                           13-3808303
(State or Other Jurisdiction                   (Primary Standard Industry            (I.R.S. Employer
of Incorporation or Organization)              Classification Code Number)            Identification No.)
</TABLE>
                           __________________________

                      425 South Woodsmill Road, Suite 270
                              St. Louis, MO 63017
                                 (314) 579-9899
   (Address, Including Zip Code and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)
                           __________________________

                               Loren G. Peterson
                            Chief Executive Officer
                        Sheffield Pharmaceuticals, Inc.
                      425 South Woodsmill Road, Suite 270
                              St. Louis, MO 63017
                                 (314) 579-9899
(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of
                               Agent For Service)
                           __________________________

                                    Copy to:
                             David A. Cifrino, P.C.
                            William O. Fabbri, Esq.
                            McDermott, Will & Emery
                                28 State Street
                             Boston, MA 02109-1775
                                 (617) 535-4034
                           __________________________

  Approximate date of commencement of proposed sale to the public:  As soon as
practicable after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]

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

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

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

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

     The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

================================================================================

<PAGE>

The information in this prospectus is not complete and may be changed. The
Selling Stockholders may not sell these securities until registration statement
filed the Securities and Exchange commission is effective. The prospectus is not
an offer to sell securities, and we are not soliciting offers to buy these
securities, in any state where the offer or sale is not permitted.

                  SUBJECT TO COMPLETION, DATED MARCH 20, 2001


                                913,258 Shares

                        SHEFFIELD PHARMACEUTICALS, INC.

                                    [LOGO]

                                 Common Stock


     This prospectus relates to the offer and resale from time to time by the
selling stockholders of:

     .    626,950 shares of our common stock issued to The Tail Wind Fund Ltd.
          in a private placement by the Company completed in December 2000,
     .    112,500 shares of our common stock issuable upon exercise of a warrant
          issued to The Tail Wind Fund Ltd. in the December 2000 private
          placement,
     .    53,808 shares of our common stock issuable upon exercise of warrants
          issued to Gruntal & Co., and
     .    100,000 shares of our common stock issuable upon exercise of a warrant
          issued to Continental Capital & Equity Corporation.
     .    20,000 shares of our common stock issuable upon exercise of a warrant
          issued to The P. L. Thomas Group.

     The selling stockholders may sell the shares from time to time at fixed
prices, market prices or at negotiated prices, and may engage a broker or dealer
to sell the shares.  For additional information on the selling shareholders'
possible methods of sales, you should refer to the section of this prospectus
entitled "Plan of Distribution" on page 11.  We will not receive any proceeds
from the sale of the shares, but will bear the costs relating to the
registration of the shares.

     Selling stockholders identified in this prospectus are offering all of
these shares and will receive all of the proceeds of this offering.  Our common
stock presently trades on the American Stock Exchange, or AMEX, under the symbol
"SHM".  On March 19, 2001, the closing sale price of common stock on the AMEX
was $3.24.

                                _______________

     Investing in our common stock involves risks.  See "Risk Factors" beginning
on page 3.
                                _______________


     The Securities and Exchange Commission and state securities regulators have
not approved or disapproved 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 March __, 2001.
<PAGE>

                               TABLE OF CONTENTS


                                                                         Page
                                                                         ----
Prospectus Summary.....................................................     1

Risk Factors...........................................................     3

Note on Forward Looking Statements.....................................     9

Use of Proceeds........................................................     9

Selling Stockholders...................................................    10

Plan of Distribution...................................................    11

Legal Matters..........................................................    12

Experts................................................................    12

Where You Can Find More Information....................................    12

                                          i
<PAGE>

                              PROSPECTUS SUMMARY


This is only a summary and may not contain all of the information that you
should consider before investing in our common stock. You should read the entire
prospectus carefully, including the "Risk Factors" section and our financial
statements and the notes thereto included elsewhere in this prospectus.


                        SHEFFIELD PHARMACEUTICALS, INC.


     We are a specialty pharmaceutical company focused on the development and
commercialization of later stage pharmaceutical opportunities, utilizing
proprietary pulmonary delivery technologies over a range of therapeutic areas.
Through our alliances with Elan Corporation plc, Zambon Group SpA, and Siemens
AG, we are currently developing nine respiratory and systemic (non-respiratory)
therapies to be delivered through our Metered Solution Inhaler, or MSI and
Aerosol Drug Delivery System, or ADDS. We believe these pulmonary delivery
technologies will allow us to capitalize on the growing drug delivery market by
providing both advanced respiratory treatments and patient-friendly alternatives
for therapies that can currently be administered only by injection or other
inconvenient means.

     In 1997, we acquired the rights to MSI through a worldwide exclusive
license and supply arrangement with Siemens AG. In June 1998, we sublicensed to
Zambon Group SpA worldwide marketing and development rights to respiratory
products to be delivered by the MSI. During the second half of 1998, we acquired
the ADDS from Aeroquip-Vickers, Inc. Additionally, during 1998, we licensed from
Elan Corporation, plc, the Ultrasonic Pulmonary Drug Absorption System, a novel
disposable unit dose nebulizer system, and Elan's Absorption Enhancing
Technology, a therapeutic agent to increase the systemic absorption of drugs. In
October 1999, we licensed Elan's NanoCrystal technology to be used in developing
certain steroid products.

     Our lead drug delivery technology, the MSI, is a patented, multi-dose
nebulizer delivery system. The pocket-sized inhaled drug delivery system
features an ultrasonic nebulizer that emits high-frequency sound waves that turn
liquid medication into a fine cloud or soft mist. Our MSI system combines the
therapeutic benefits of nebulization with the convenience of pressurized metered
dose inhalers, or MDIs, in one patient-friendly device. Our MSI is comprised of
a hand-held ultrasonic nebulizer and interchangeable, drug-filled cartridges
that are inserted into the inhaler unit. The interchangeable cartridges provide
patients who must take multiple respiratory medications with a single, easy-to-
use system. We believe the soft mist created by the MSI provides multiple drug
administration advantages over the high-velocity MDIs and dry powder inhalers.
Furthermore, our MSI system is fast and portable as compared to conventional
tabletop nebulizers, which are large, cumbersome and more time consuming to use.
The MSI system targets younger and older asthma patients, as well as older
chronic obstructive pulmonary disease patients who have difficulty using MDIs
and currently depend on tabletop nebulizers for delivery of their medications.

     Our ADDS is a patented, new generation MDI that we believe has significant
efficiency and performance advantages over standard MDIs. Our ADDS technology
utilizes a standard aerosol MDI canister, encased in a compact device that
provides an aerosol flow-control chamber and a synchronized triggering
mechanism. The aerosol flow-control chamber allows the patient to inhale through
the device at a normal breathing rate, instead of a forced breath. The
inspiratory breath establishes flow fields within the device that mix and
uniformly disperse the drug in the breath. At the mouthpiece, nearly all the
propellant is evaporated leaving only drug particles to be inspired, allowing a
significant increase in the amount of drug delivered to the lungs. Our ADDS
system, like our MSI system, is designed to reduce patient coordination problems
and enhance compliance with the prescribed treatment.

     Sheffield Pharmaceuticals, Inc. (formerly Sheffield Medical Technologies
Inc.) is a Delaware corporation. Our principal executive offices are located at
425 South Woodsmill Road, Suite 270, St. Louis, Missouri, 63017, and our
telephone number is (314) 579-9899. Our common stock trades on the American
Stock Exchange under the symbol "SHM". Our web site address is
www.sheffieldpharm.com. Information contained on our web site is not intended to
be part of this prospectus and is not incorporated by reference herein.
<PAGE>

                              Summary of Offering



Common stock offered by selling stockholders...........  913,258 shares/(1)/

Shares of common stock outstanding
after the offering.....................................  29,115,584 shares/(2)/

Use of proceeds........................................  All proceeds from the
                                                         sale of the shares of
                                                         common stock in this
                                                         offering will be
                                                         received by the selling
                                                         stockholders.

AMEX Ticker symbol.....................................  SHM


  (1) Consists of 626,950 shares of common stock and 286,308 shares of common
      stock issuable upon the exercise of outstanding warrants.

  (2) Based on the number of shares actually outstanding on March 6, 2001.
      Includes all the shares being offered pursuant to this prospectus and
      excludes, as of March 6, 2001:

      .  4,499,100 shares of common stock issuable on the exercise of
         outstanding options at a weighted average exercise price of $3.19 per
         share,

      .  2,146,361 shares of common stock issuable upon exercise of outstanding
         warrants at a weighted average exercise price of $2.62 per share,

      .  1,189,200 shares of common stock available for future issuance under
         our 1993 Stock Option Plan, 1993 Restricted Stock Plan and 1996
         Directors Stock Option Plan,

      .  15,464,235 shares of common stock issuable upon conversion of
         outstanding shares of preferred stock, and

      .  1,362,578 shares of common stock issuable upon conversion of
         outstanding convertible promissory notes.

                                       2
<PAGE>

                                 RISK FACTORS


     You should carefully consider the risk factors in addition to the remainder
of this prospectus before purchasing our common stock. The risks described below
are not the only risks we face. Additional risks of which we do not yet know or
that we currently think are immaterial may also impair our business operations.
If any of the following risks occur, our business, financial condition or
operating results could be adversely affected. In that case, the trading price
of our common stock could decline, and you may lose all or part of your
investment.

We have experienced significant operating losses throughout our history and
expect these losses to continue for the foreseeable future.

     Our operations to date have consumed substantial amounts of cash and we
have generated to date only limited revenues from contract research and
licensing activities. We have incurred approximately $80.8 million of operating
losses since our inception, including $6.1 million during the year ended
December 31, 2000. Our operating losses and negative cash flow from operations
are expected to continue in the foreseeable future.

We will need additional financing, which if not available, could prevent us from
funding or expanding our operations.

     Cash available for funding our operations as of December 31, 2000 was $3.0
million. As of such date, we had trade payables of $1.2 million and current
research obligations of $.2 million. In addition, committed and/or anticipated
funding of research and development after December 31, 2000 is estimated at
approximately $3.1 million, of which $3.0 million has been committed to be
funded by Elan through the issuance of our Series E cumulative convertible
preferred stock. Since December 31, 2000 we have received $1.0 million as an
interest-free advance against future milestone payments, and anticipate that we
have sufficient cash to meet our cash requirements through December 31, 2001,
assuming we do not incur unexpected costs.

     We need to raise substantial additional capital to fund our operations. The
development of our technologies and proposed products will require a commitment
of substantial funds to conduct costly and time-consuming research, preclinical
and clinical testing, and to bring any such products to market. Our future
capital requirements will depend on many factors, including continued progress
in developing and out-licensing our pulmonary delivery technologies, our ability
to establish and maintain collaborative arrangements with others and to comply
with the terms thereof, receipt of payments due from partners under research and
development agreements, progress with preclinical and clinical trials, the time
and costs involved in obtaining regulatory approvals, the cost involved in
preparing, filing, prosecuting, maintaining and enforcing patent claims, the
need to acquire licenses to new technology and the status of competitive
products.

     We intend to seek such additional funding through collaborative or
partnering arrangements, the extension of existing arrangements, or through
public or private equity or debt financings. Additional financing may not be
available on acceptable terms or at all. If we raise additional funds by issuing
equity securities, stockholders may be further diluted and such equity
securities might have rights, preferences and privileges senior to those of our
current stockholders. If adequate funds are not available, we may be required to
delay, reduce the scope of, or eliminate one or more of our research or
development programs or obtain funds through arrangements with collaborative
partners or others that may require us to relinquish rights to certain of our
technologies, product candidates or products that we would otherwise seek to
develop or commercialize. If adequate funds are not available from operations or
additional sources of funding, our business will suffer a material adverse
effect.

Our products are still in development and we may be unable to bring our products
to market.

     We have not yet begun to generate revenues from the sale of products. Our
products will require significant additional development, clinical testing and
investment prior to their commercialization. We do not expect regulatory
approval for commercial sales of any of our products in the immediate future.
Potential products that appear to be promising at early stages of development
may not reach the market for a number of reasons. Such reasons include the
possibility that products will not be proven to be safe and efficacious in
clinical trials, that they

                                       3
<PAGE>

will not be able to meet applicable regulatory standards or obtain required
regulatory approvals, that they cannot be produced in commercial quantities at
reasonable costs or that they fail to be successfully commercialized or fail to
achieve market acceptance.

If our products are not accepted by the medical community, our business will
suffer.

     Commercial sales of our products will substantially depend upon the
products' efficacy and on their acceptance by the medical community. Widespread
acceptance of our products will require educating the medical community as to
the benefits and reliability of the products. Our products may not be accepted
and, even if accepted, we are unable to estimate the length of time it would
take to gain such acceptance.

We will be required to make royalty payments on products we may develop,
reducing the amount of revenues with which we could fund ongoing operations.

     The owners and licensors of the technology rights acquired by us are
entitled to receive a certain percentage of all revenues received by us from
commercialization, if any, of products in respect of which we hold licenses.
Accordingly, in addition to our substantial investment in product development,
we will be required to make substantial payments to others in connection with
revenues derived from commercialization of products, if any, developed under
licenses we hold. Consequently, we will not receive the full amount of any
revenues that may be derived from commercialization of products to fund ongoing
operations.

Our dependence on third parties for rights to technology and the development of
our products could harm our business.

     Under the terms of existing license agreements, we are obligated to make
certain payments to our licensors. In the event that we default on the payment
of an installment under the terms of an existing licensing agreement, our rights
thereunder could be forfeited. As a consequence, we could lose all rights under
a license agreement to the related licensed technology, notwithstanding the
total investment made through the date of the default. Unforeseen obligations or
contingencies may deplete our financial resources and, accordingly, sufficient
resources may not be available to fulfill our commitments. If we were to lose
our rights to technology, we may be unable to replace the licensed technology or
be unable to do so on commercially reasonable terms, which would materially
adversely affect our ability to bring products based on that technology to
market. In addition, we depend on our licensors for assistance in developing
products from licensed technology. If these licensors fail to perform or their
performance is not satisfactory, our ability to successfully bring products to
market may be delayed or impeded.

We face intense competition and rapid technological changes and our failure to
successfully compete or adapt to changing technology could make it difficult to
successfully bring products to market.

     The medical field is subject to rapid technological change and innovation.
Pharmaceutical and biomedical research and product development are rapidly
evolving fields in which developments are expected to continue at a rapid pace.
Reports of progress and potential breakthroughs are occurring with increasing
frequency. Our success will depend upon our ability to develop and maintain a
competitive position in the research, development and commercialization of
products and technologies in our areas of focus. Competition from
pharmaceutical, chemical, biomedical and medical companies, universities,
research and other institutions is intense and is expected to increase. All, or
substantially all, of these competitors have substantially greater research and
development capabilities, experience, and manufacturing, marketing, financial
and managerial resources. Further, acquisitions of competing companies by large
pharmaceutical or other companies could enhance such competitors' financial,
marketing and other capabilities. Developments by others may render our products
or technologies obsolete or not commercially viable and we may not be able to
keep pace with technological developments.

We have granted anti-dilutions rights to The Tail Wind Fund Ltd. which may
require us to issue additional shares to Tail Wind, make cash payments to Tail
Wind and may hinder our ability to raise additional funds.

     Pursuant to our December 2000 private placement with The Tail Wind Fund
Ltd., until at least August 29, 2002, if we sell shares of our common stock or
securities convertible into or exercisable for common stock for less

                                       4
<PAGE>

than $3.5888 per share, we are obligated to issue to Tail Wind additional shares
so that the number of shares purchased by Tail Wind in the December 2000 private
placement plus the additional shares issued to Tail Wind equals the number of
shares that Tail Wind could have purchased for $2,250,000 at the price per share
at which the new shares are sold. The presence of these anti-dilution rights may
negatively affect our ability to obtain additional financing. In addition, in
the event that we are required to issue additional shares to Tail Wind, we may
not issue an aggregate of over 5,630,122 shares of our common stock in total to
Tail Wind in connection with the December 2000 private placement. If we would
otherwise be required to issue more than 5,630,122 shares to Tail Wind, we must
instead pay Tail Wind 105% of the cash value of such shares we do not issue.

We are subject to significant government regulation and failure to achieve
regulatory approval for our products would severely harm our business.

     Our ongoing research and development projects are subject to rigorous FDA
approval procedures. The preclinical and clinical testing requirements to
demonstrate safety and efficacy in each clinical indication (the specific
condition intended to be treated) and regulatory approval processes of the FDA
can take a number of years and will require us to expend substantial resources.
We may be unable to obtain FDA approval for our products, and even if we do
obtain approval, delays in such approval would adversely affect the marketing of
products to which we have rights and our ability to receive product revenues or
royalties. Moreover, even if FDA approval is obtained, a marketed product, its
manufacturer and its manufacturing facilities are subject to continual review
and periodic inspections by the FDA, and a later discovery of previously unknown
problems with a product, manufacturer or facility may result in restrictions on
such product or manufacturer. Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecution.
Additional government regulation may be established which could prevent or delay
regulatory approval of our products. Sales of pharmaceutical products outside
the United States are subject to foreign regulatory requirements that vary
widely from country to country. Even if FDA approval has been obtained, approval
of a product by comparable regulatory authorities of foreign countries must be
obtained prior to the commencement of marketing the product in those countries.
The time required to obtain such approval may be longer or shorter than that
required for FDA approval. We have no experience in manufacturing or marketing
in foreign countries nor in matters such as currency regulations, import-export
controls or other trade laws. To date, we have not received final regulatory
approval from the FDA or any other comparable foreign regulatory authority for
any of our products or technologies.

Our failure to meet product release schedules would make it difficult to predict
our quarterly results and may cause our operating results to vary significantly.

     Delays in the planned release of our products may adversely affect
forecasted revenues and create operational inefficiencies resulting from
staffing levels designed to support the forecasted revenues. Our failure to
introduce new products on a timely basis could delay or hinder market acceptance
and allow competitors to gain greater market share.

If our intellectual property and proprietary rights are infringed, or infringe
upon the rights of others, our business will suffer.

     Our success will depend in part on our ability to obtain patent protection
for our technologies, products and processes and to maintain trade secret
protection and operate without infringing the proprietary rights of others. The
degree of patent protection to be afforded to pharmaceutical, biomedical or
medical inventions is an uncertain area of the law. In addition, the laws of
foreign countries do not protect our proprietary rights to the same extent as do
the laws of the United States. We may not develop or receive sublicenses or
other rights related to proprietary technology that are patentable, patents that
are pending may be not issued, and any issued patents may not provide us with
any competitive advantages and may be challenged by third parties. Furthermore,
others may independently duplicate or develop similar products or technologies
to those developed by or licensed to us. If we are required to defend against
charges of patent infringement or to protect our own proprietary rights against
third parties, substantial costs will be incurred and we could lose rights to
certain products and technologies or be required to enter into costly royalty or
licensing agreements.

                                       5
<PAGE>

We do not have any marketing or manufacturing capabilities and will likely rely
on third parties for these capabilities in order to bring products to market.

     We do not currently have our own sales force or an agreement with another
pharmaceutical company to market all of our products that are in development.
When appropriate, we may build or otherwise acquire the necessary marketing
capabilities to promote our products. However, we may not have the resources
available to build or otherwise acquire our own marketing capabilities, and we
may be unable to reach agreements with other pharmaceutical companies to market
our products on terms acceptable to us, if at all.

     In addition, we do not intend to manufacture our own products.  While we
have already entered into two manufacturing and supply agreements related to the
MSI system and one related to the ADDS, these manufacturing and supply
agreements may not be adequate and we may not be able to enter into future
manufacturing and supply agreements on acceptable terms, if at all. Our reliance
on independent manufacturers involves a number of risks, including the absence
of adequate capacity, the unavailability of, or interruptions in, access to
necessary manufacturing processes and reduced control over product quality and
delivery schedules.  If our manufacturers are unable or unwilling to continue
manufacturing our products in required volumes, we will have to identify
acceptable alternative manufacturers.  The use of a new manufacturer may cause
significant interruptions in supply if the new manufacturer has difficulty
manufacturing products to our specifications.  Further, the introduction of a
new manufacturer may increase the variation in the quality of our products.

Healthcare reimbursement policies are uncertain and may adversely impact the
sale of our products.

     Our ability to commercialize human therapeutic and diagnostic products may
depend in part on the extent to which costs for such products and technologies
are reimbursed by private health insurance or government health programs. The
uncertainty regarding reimbursement may be especially significant in the case of
newly approved products. Reimbursement price levels may be insufficient to
provide a return to us on our investment in new products and technologies. In
the United States, government and other third-party payers have sought to
contain healthcare costs by limiting both coverage and the level of
reimbursement for new pharmaceutical products approved for marketing by the FDA,
including some cases refusal to cover such approved products. Healthcare reform
may increase these cost containment efforts. We believe that managed care
organizations may seek to restrict the use of new products, delay authorization
to use new products or limit coverage and the level of reimbursement for new
products. Internationally, where national healthcare systems are prevalent,
little if any funding may be available for new products, and cost containment
and cost reduction efforts can be more pronounced than in the United States.

We may become subject to product liability claims and our product liability
insurance may be inadequate.

     The use of our proposed products and processes during testing, and after
approval, may entail inherent risks of adverse effects that could expose us to
product liability claims and associated adverse publicity. Although we currently
maintain general liability insurance, the coverage limits of our insurance
policies may not be adequate. We currently maintain clinical trial product
liability insurance of $2.0 million per event for certain clinical trials and
intend to obtain insurance for future clinical trials of products under
development. However, we may be unable to obtain or maintain insurance for any
future clinical trials. Such insurance is expensive, difficult to obtain and may
not be available in the future on acceptable terms, or at all. A successful
claim brought against us in excess of our insurance coverage would have a
material adverse effect upon us and our financial condition. We intend to
require our licensees to obtain adequate product liability insurance. However,
licensees may be unable to maintain or obtain adequate product liability
insurance on acceptable terms and such insurance may not provide adequate
coverage against all potential claims.

If our common stock is delisted from the American Stock Exchange, the price of
our common stock and its liquidity could decline.

     Our common stock is listed for trading on the American Stock Exchange, or
AMEX, under the symbol "SHM". We do not satisfy discretionary AMEX guidelines
for continued listing, including a guideline that a listed company that has
sustained losses from operations and/or net losses in three of its four most
recent fiscal years, have

                                       6
<PAGE>

stockholders' equity of at least $4,000,000. We had net capital deficiency of
$413,720 at December 31, 2000. We also do not satisfy a guideline against
continued losses for each of the issuer's five most recent fiscal years. Our
continued failure to meet the listing guidelines has been regularly reviewed by
AMEX and may ultimately result in our common stock being delisted from AMEX. If
our common stock were delisted from AMEX, trading of our common stock, if any,
would thereafter likely be conducted in the over-the-counter market, unless we
were able to list our common stock on The Nasdaq Stock Market or another
national securities exchange, which cannot be assured. If our common stock were
to trade in the over-the-counter market it may be more difficult for investors
to dispose of, or to obtain accurate quotations as to the market value of our
common stock. In addition, it may become more difficult for us to raise funds
through the sale of our securities.

     In the event of the delisting of our common stock from the AMEX and our
inability to list our common stock on The Nasdaq Stock Market or another
national securities exchange, the regulations of the SEC under the Securities
Exchange Act of 1934, as amended, require additional disclosure relating to the
market for penny stocks. SEC regulations generally define a penny stock to be an
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. A disclosure schedule explaining the penny stock market and
the risks associated therewith is required to be delivered to a purchaser and
various sales practice requirements are imposed on broker-dealers who sell penny
stocks to persons other than established customers and accredited investors
(generally institutions). In addition, the broker-dealer must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. If our securities become subject to the regulations
applicable to penny stocks, the market liquidity for our securities could be
severely affected. In such an event, the regulations on penny stocks could limit
the ability of broker-dealers to sell our securities.

The price of biotechnology/pharmaceutical company stocks has been volatile which
could result in substantial losses to our stockholders.

     The market price of securities of companies in the
biotechnology/pharmaceutical industries has tended to be volatile. Announcements
of technological innovations by us or our competitors, developments concerning
proprietary rights and concerns about safety and other factors may have a
material effect on our business or financial condition. The market price of our
common stock may be significantly affected by announcements of developments in
the medical field generally or our research areas specifically. The stock market
has experienced volatility in market prices of companies similar to us that has
been unrelated to the operating results of such companies. This volatility may
have a material adverse effect on the market price of our common stock.

Our ability to issue "blank check" preferred stock may make it more difficult
for a change in our control.

     Our certificate of incorporation authorizes the issuance of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors, without shareholder
approval. In the event of issuance, such preferred stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in our control and preventing shareholders from receiving a premium for
their shares in connection with a change of control. We issued Series A and
Series B cumulative convertible redeemable preferred stock in connection with
private placements in February 1997 and April 1998, respectively. All of the
Series A preferred stock was converted into common stock during 1998. On July
31, 1998, all of the Series B Preferred stock was redeemed for cash. We also
issued shares of our Series C cumulative convertible preferred stock in
connection with the consummation of an agreement with Elan International
Services, Ltd. ("Elan") in June 1998. In October 1999, in conjunction with a
licensing agreement with Elan, we issued shares of our Series D cumulative
convertible exchangeable preferred stock and Series F cumulative convertible
preferred stock. In addition, we also have a commitment from Elan to purchase
shares of Series E cumulative convertible non-exchangeable preferred stock at
our option (subject to satisfaction of certain conditions). Except for the
previously mentioned purchase commitment for Series E preferred stock, and
additional shares of Series C, D and E preferred stock that may be payable as
dividends to Elan, as holder of the outstanding Series C, D and E preferred
stock, we have no present intention to issue any additional shares of our
preferred stock; however, we may issue additional shares of our preferred stock
in the future.

                                       7
<PAGE>

We are obligated to issue additional securities in the future diluting our
stockholders.

     As of December 31, 2000, we had reserved approximately 6,921,629 shares of
our common stock for issuance upon exercise of outstanding options and warrants
convertible into shares of our common stock, including by our officers and
directors. In addition, as of December 31, 2000, we had $2,000,000 principal
amount of a convertible promissory note, 13,712 shares of our Series C preferred
stock, 12,870 shares of our Series D preferred stock, 1,004 shares of our Series
E preferred stock and 5,000 shares of our Series F preferred stock outstanding.
Each of the convertible securities provides for conversion into shares of our
common stock at a discount to the market price at December 31, 2000. Our Series
C, D, E and F preferred stock are convertible into 9,724,823 shares, 2,648,148
shares, 258,098 shares and 1,470,588 shares, respectively, of common stock. The
convertible promissory note is convertible into 1,362,578 shares of common
stock. The exercise of options and outstanding warrants, the conversion of such
other securities and sales of common stock issuable thereunder could have a
significant dilutive effect on the market price of our common stock and could
materially impair our ability to raise capital through the future sale of our
equity securities.

                                       8
<PAGE>

                      NOTE ON FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements typically are identified by use of terms such as
"may", "should", "plan", "expect", "anticipate", "estimate" and similar words
although some forward-looking statements are expressed differently. Forward-
looking statements represent our management's judgment regarding future events.
Although we believe that the expectations reflected in such forward-looking
statements are reasonable, such expectations may prove to be incorrect. All
statements other than statements of historical fact included in this prospectus
and the exhibits hereto regarding our financial position, business strategy,
products, products under development and clinical trials, markets, budgets,
plans, or objectives for future operations are forward-looking statements. We
cannot guarantee the accuracy of the forward-looking statements, and you should
be aware that our actual results could differ materially from those contained in
the forward-looking statements due to a number of factors, including those
identified under the heading "Risk Factors" and other sections of this
prospectus and in the exhibits hereto.

                                USE OF PROCEEDS

     All of the proceeds from the sale of the shares of common stock in this
offering will be received by the selling stockholders.

                                       9
<PAGE>

                             SELLING STOCKHOLDERS

      The following table sets forth information regarding beneficial ownership
of our common stock by the selling stockholders as of March 6, 2001. For
purposes of presentation, we have assumed that the selling stockholders will
sell all shares offered hereby including the shares issuable on exercise of
warrants and options.

<TABLE>
<CAPTION>
                          Shares Beneficially Owned       Shares to be      Shares Beneficially Owned
                            Prior to Offering (1)            Offered              After Offering
                            ---------------------            -------              --------------
Name                      Number             Percent                       Number               Percent
- ----                      ------             -------                       ------               -------
<S>                       <C>                <C>          <C>              <C>                  <C>
The Tail Wind Fund Ltd.   739,450/(2)/        2.6%           739,450          -                    -
Gruntal & Co.              53,808/(3)/          *             53,808          -                    -
Continental Capital &     100,000/(4)/          *            100,000          -                    -
 Equity Corporation
The P. L. Thomas Group     20,000/(5)/          *             20,000          -                    -
</TABLE>
_______________
* Less than 1%

  (1) The persons named in the table, to our knowledge, have sole voting and
      investment power with respect to all shares shown as beneficially owned by
      them, subject to community property laws where applicable.

  (2) Consists of (i) 626,950 shares issued to The Tail Wind Fund Ltd. in a
      private placement, and (ii) 112,500 shares of common stock issuable upon
      exercise of an outstanding warrant held by The Tail Wind Fund Ltd.

  (3) Consists of 53,808 shares of common stock issuable upon exercise of
      warrants issued to Gruntal & Co. in consideration of services provided to
      us.

  (4) Consists of 100,000 shares of common stock issuable upon exercise of a
      warrant issued to Continental Capital & Equity Corporation in
      consideration of services provided to us.

  (5) Consists of 20,000 shares of common stock issuable upon exercise of a
      warrant issued to The P. L. Thomas Group in consideration of services
      provided to us.


      On December 29, 2000 we entered into a purchase agreement with The Tail
Wind Fund Ltd. Under that agreement, we issued and sold 626,950 shares of our
common stock and a warrant to purchase 112,500 shares of common stock at an
exercise price of $4.9844 per share for a total cash consideration of $2.25
million.

      Pursuant to a registration rights agreement with Tail Wind, we filed a
registration statement, of which this prospectus forms a part, in order to
permit Tail Wind to resell to the public the shares of common stock that it
purchased pursuant to the securities purchase agreement and that it may acquire
upon any exercise of the warrant.

      In the purchase agreement, we granted Tail Wind anti-dilution rights. If
we sell common stock or securities exercisable for or convertible into shares of
our common stock for less than $3.5888 per share, we must issue additional
shares to Tail Wind so that the 626,950 shares purchased by Tail Wind in the
December 2000 private placement plus the additional shares issued to Tail Wind
equals the number of shares that Tail Wind could have purchased for $2,250,000
at the new per share purchase price. We have agreed to register for resale any
additional shares issued pursuant to these anti-dilution rights on a future
registration statement. In addition, under the terms of the purchase agreement,
we may not issue more than a total of 5,630,122 shares of common stock to Tail
Wind in connection with the December 2000 private placement and the anti-
dilution provisions. If we would otherwise be required to issue more than
5,630,122 shares to Tail Wind, we must instead pay 105% of the cash value of the
shares we do not issue to Tail Wind.

      We granted a warrant to Gruntal & Co. to purchase 35,000 shares at $6.125
per share on October 2, 2000, in connection with investment banking services
provided to us. We also granted a warrant to Gruntal & Co. to purchase 18,808
shares at $4.9844 per share on December 29, 2000, in connection with investment
banking services

                                       10
<PAGE>

provided to us. The shares issuable under these warrants have
been included in this prospectus in order to permit Gruntal & Co. to resell the
shares.

     We granted a warrant to Continental Capital & Equity Corporation to
purchase 100,000 shares at $2.25 per share on September 17, 1998, in connection
with investor relation services provided to us. The shares issuable under that
warrant have been included in this prospectus in order to permit Continental
Capital & Equity Corporation to resell the shares.

     We granted a warrant to The P. L. Thomas Group to purchase 20,000 shares at
$3.00 per share on September 30, 1997. The shares issuable under that warrant
have been included in this prospectus in order to permit The P. L. Thomas Group
to resell the shares.


                             PLAN OF DISTRIBUTION

     The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:

     .  ordinary brokerage transactions and transactions in which the broker-
        dealer solicits purchasers;

     .  block trades in which the broker-dealer will attempt to sell the shares
        as agent but may position and resell a portion of the block as principal
        to facilitate the transaction;

     .  purchases by a broker-dealer as principal and resale by the broker-
        dealer for its account;

     .  an exchange distribution in accordance with the rules of the applicable
        exchange;

     .  privately negotiated transactions;

     .  broker-dealers may agree with the selling stockholders to sell a
        specified number of such shares at a stipulated price per share;

     .  a combination of any such methods of sale; and

     .  any other method permitted pursuant to applicable law.

     The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

     Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

     The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. We have agreed to indemnify The Tail Wind
Fund Ltd. against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

                                       11
<PAGE>

                                 LEGAL MATTERS

     The validity of the issuance of the securities being offered hereby has
been passed upon for us by McDermott, Will & Emery.

                                    EXPERTS

     The consolidated financial statements of Sheffield Pharmaceuticals, Inc.
and subsidiaries (a development stage enterprise) as of and for the year ended
December 31, 2000 appearing in Sheffield Pharmaceuticals, Inc.'s Annual Report
(Form 10-K) for the year ended December 31, 2000, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon the report of
Ernst & Young LLP pertaining to such financial statements given upon the
authority of such firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information about the Public
Reference Room. Our SEC filings are also available to the public from the SEC's
web site at http://www.sec.gov.

     The SEC allows us to incorporate by reference the information we file with
them into this prospectus, which mean that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede the information
already incorporated by reference. We are incorporating by reference the
documents listed below, which we have already filed with the SEC, and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, until the selling stockholders sell all of the
shares that are being offered in this prospectus.

     We incorporate by reference the following documents heretofore filed with
the Commission pursuant to the Exchange Act:

     1.  Our Annual Report on Form 10-K for the year ended December 31, 2000.

     2.  Current Report of the Company on Form 8-K filed with the Commission on
         November 14, 2000.

     3.  The description of our common stock set forth in our registration
         statement on Form 8-B filed with the Commission on July 6, 1995.

     We hereby undertake to provide without charge to each person to whom a copy
of this prospectus has been delivered, on the written or oral request of any
such person, a copy of any or all of the documents referred to above which have
been or may be incorporated in this prospectus by reference, other than exhibits
to such documents. Written requests for such copies should be directed to
Sheffield Pharmaceuticals, Inc., 425 South Woodsmill Road, Suite 270, St. Louis,
Missouri 63017, Attention: Scott A. Hoffmann, Chief Financial Officer. Oral
requests should be directed to Mr. Hoffmann at (314) 579-9899.

     You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone to provide you with different information. The selling stockholders are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or the
documents incorporated by reference is accurate as of any date other than the
date on the front of this prospectus or those documents.

                                       12
<PAGE>

                        SHEFFIELD PHARMACEUTICALS, INC.

                                    PART II
                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

         The following table sets forth an itemized statement of all estimated
expenses in connection with the issuance and distribution of the securities
being registered:
                                                               Amount
                                                               ------
          SEC Registration Fees........................         $   899
          AMEX Listing Fees............................          17,500
          Legal Expenses...............................          12,500
          Accounting Fees and Expenses.................           5,000
          Miscellaneous................................          10,101
                                                              ---------
               Total...................................         $46,000

          The amounts set forth above, except for the Securities and Exchange
Commission registration and AMEX listing fees, are in each case estimated.

Item 15. Indemnification of Directors and Officers.

         Except as hereinafter set forth, there is no statute, charter
provision, by-law, contract or other arrangement under which any controlling
person, director or officer of the Corporation is insured or indemnified in any
manner against liability which he may incur in his capacity as such.

         Article TENTH of the Corporation's Certificate of Incorporation
provides as follows:

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

         Section 5.1 of the By-laws of the Corporation provides as follows:

         (a)  The Corporation shall indemnify, subject to the requirements of
subsection (d) of this Section, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner her reasonably believed to be in or not opposed to
the best interests of the Corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.  The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

         (b)  The Corporation shall indemnify, subject to the requirements of
subsection (d) of this Section, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in

                                     II-1
<PAGE>

the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonable incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonable believed
to be in or not opposed to the best interest of the Corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability buy in view of all
the circumstances of the case, such person is fairly and reasonable entitled to
indemnity for such expense which the Court of Chancery of the State of Delaware
or such other court shall deem proper.

         (c)  To the extent that a director, officer, employee or agent of the
Corporation, or a person serving in any other enterprise at the request of the
Corporation, has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsection (a) and (b) of this
Section, or in defense of any claim, issue or matter therein, the Corporation
shall indemnify him against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.

         (d)  Any indemnification under subsections (a) and (b) of this Section
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
Section.  Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors, or (3) by independent legal
counsel in a written opinion, or (4) by the stockholders.

         (e)  Expenses incurred by a directors, officer, employee or agent in
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suite or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Section.

         (f)  The indemnification and advancement of expenses provided by or
granted pursuant to, the other subsections of this Section shall not limit the
Corporation from providing any other indemnification or advancement of expenses
permitted by law nor shall it be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.

         (g)  The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or who is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.

         (h)  The indemnification and advancement of expenses provided by, or
granted pursuant to this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

         (i)  For the purposes of this Section, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
f such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation of its separate existence had continued.

                                     II-2
<PAGE>

         (j)  This Section 5.1 shall be construed to give the Corporation the
broadest power permissible by the Delaware General Corporation Law, as it now
stands and as heretofore amended.

         Section 145 of the General Corporation Law of the State of Delaware
provides as follows:

         (a)  A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.  The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

         (b)  A corporation may indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonable incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

         (c)  To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.

         (d)  Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section.  Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.

         (e)  Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil criminal administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director of officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.

         (f)  The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or

                                     II-3
<PAGE>

advancement of expenses may be entitles under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.

         (g)  A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.

         (h)  For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.

         (i)  For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service s a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "no
opposed to the best interests of the corporation" as referred to in this
section.

         (j)  The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

         The Company has purchased a Directors and Officer Liability Insurance
policy for coverage of up to $5,000,000.

  Item 16.  Exhibits.

            The following Exhibits are included pursuant to regulation S-K.


<TABLE>
<CAPTION>
      No.    Description                                                                  Reference
     ----    -----------                                                                  ---------
     <S>     <C>                                                                          <C>
      4.1    Purchase Agreement dated December 29, 2000 by and between Sheffield              *
             Pharmaceuticals, Inc. and The Tail Wind Fund Ltd.
      4.2    Registration Rights Agreement dated December 29, 2000 by and between             *
             Sheffield Pharmaceuticals, Inc. and The Tail Wind Fund, Ltd.
      4.3    Warrant dated December 29, 2000 issued to The Tail Wind Fund, Ltd.               *
      4.4    Warrant dated October 2, 2000 issued to Gruntal & Co.                           (1)
      4.5    Warrant dated December 29, 2000 issued to Gruntal & Co.                         (1)
      4.6    Warrant dated September 17, 1998 issued to Continental Capital & Equity          *
             Corporation
      4.7    Warrant dated September 30, 1997 issued to The P.L. Thomas Group                 *
      5.1    Opinion of McDermott, Will & Emery (includes Consent)                           (1)
     23.1    Consent of McDermott, Will & Emery included in Exhibit 5.1                      (1)
     23.2    Consent of Ernst & Young LLP relating to the use of Financial Statements         *
     24.1    Power of Attorney, included in Part II of the Registration Statement             *
</TABLE>


                                     II-4
<PAGE>

- ---------------
        *   Previously filed.
       (1)  Filed herewith.


Item 17. Undertakings.


The undersigned registrant hereby undertakes:

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

     (2)  That, for the purpose of determining any liability under the
          Securities Act of 1933, each such post-effective amendment shall be
          deemed to be a new registration statement relating to the securities
          offered therein, and the offering of such securities at that time
          shall be deemed to be the initial bona fide offering thereof;

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

     (4)  That, for purposes of determining any liability under the Securities
          Act of 1933, each filing of the registrant's annual report pursuant to
          Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
          where applicable, each filing of an employee benefit plan's annual
          report pursuant to Section 15(d) of the Securities Exchange Act of
          1934) that is incorporated by reference in the registration statement
          shall be deemed to be a new registration statement relating to the
          securities offered therein, and the offering of such securities at
          that time shall be deemed to be the initial bona fide offering
          thereof; and

       Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                     II-5
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the County of St. Louis, State of Missouri on
March 20, 2001.


                                      Sheffield Pharmaceuticals, Inc.

                                      By:  /s/ Loren G. Peterson
                                           ---------------------------------
                                           Loren G. Peterson
                                           President and Chief Executive Officer


     Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
            Signature                             Title                                          Date
            ---------                             -----                                          ----
<S>                                      <C>                                     <C>
/s/ Thomas M. Fitzgerald                 Director and Chairman                              March 20, 2001
- --------------------------------
Thomas M. Fitzgerald

/s/ Loren G. Peterson                    Director, President and Chief                      March 20, 2001
- --------------------------------
Loren G. Peterson                        Executive Officer

         *                               Director                                           March 20, 2001
- --------------------------------
John M. Bailey

         *                               Director                                           March 20, 2001
- --------------------------------
Digby W. Barrios

         *                               Director                                           March 20, 2001
- --------------------------------
Todd C. Davis

        *                                Director                                           March 20, 2001
- --------------------------------
Roberto Rettani

/s/ Scott A. Hoffmann                    Vice President Finance and                         March 20, 2001
- --------------------------------
Scott A. Hoffmann                        Administration
                                         Secretary and Treasurer
* By /s/ Loren G. Peterson
- --------------------------------
Attorney-in-Fact
</TABLE>

                                     II-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>COMMON STOCK PURCHASE WARRANT
<TEXT>

<PAGE>

                                                                     Exhibit 4.4

     NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK FOR WHICH THIS
     WARRANT IS EXERCISABLE (THE "SECURITIES") HAVE BEEN REGISTERED UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
     THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR
     TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE
     SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT
     TO THE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
     REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON THE HOLDER HEREOF
     FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE
     CORPORATION, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE
     CORPORATION, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL
     APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE
     "BLUE SKY" OR OTHER STATE SECURITIES LAW.


                         COMMON STOCK PURCHASE WARRANT

               For the Purchase of 35,000 Shares of Common Stock

                                      of

                        SHEFFIELD PHARMACEUTICALS, INC.

                           (A Delaware Corporation)


1.   Warrant.
     -------

          THIS CERTIFIES THAT, for value received, Gruntal & Co., L.L.C.
(together with any of the transferees permitted under Section 3.1, the "Holder"
or "Holders"), as registered owner of this Warrant, is entitled during the
period commencing October 2, 2001 and ending at 5:00 p.m., St. Louis, Missouri
time, on October 1, 2004, but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to Thirty-Five Thousand (35,000) shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
Sheffield Pharmaceuticals, Inc., a Delaware corporation (the "Company") in
accordance with the terms hereof.

          The exercise price (the "Exercise Price") per Share of Common Stock
shall be $6.125 per share.

<PAGE>

2.   Exercise.
     --------

     2.1  Cash Exercise. In order to exercise this Warrant for cash, the
          -------------
exercise form attached hereto must be duly executed, completed and delivered to
the Company, together with this Warrant and payment of the applicable Exercise
Price for the shares of the Common Stock being purchased. If the rights
represented hereby shall not have been exercised before 5:00 p.m., St. Louis,
Missouri time, on October 1, 2004, this Warrant shall become and be void and
without further force or effect and all rights represented hereby shall cease
and expire.

     2.2  Cashless Exercise.
          -----------------

     (a)  In lieu of exercising this Warrant for cash, the Holder may elect to
receive Shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
the Holder as of the date specified in such notice a number of shares of the
Common Stock computed using the following formula:

                                   X= Y(A-B)
                                      ------
                                        A
     Where

          X = the number of shares of Common Stock to be issued to the
          holder.

          Y = the number of shares of Common Stock purchasable under this
          Warrant.

          A = the fair market value of one share of the Company's Common Stock.

          B = the Exercise Price (as adjusted to the date of such calculations
          as provided in Section 6).

     (b)  For purposes of this Section 2.2, fair market value of one share of
the Company's Common Stock shall be based on the average of the closing sales
prices of the Company's Common Stock reported on the American Stock Exchange,
The Nasdaq Stock Market, the OTC Electronic Bulletin Board, the National Daily
Quotation Service, or the closing price quoted on any other exchange on which
the Common Stock is listed, whichever is applicable, as published in The Wall
                                                                     --------
Street Journal for the ten trading days prior to the date of determination of
- --------------
fair market value. If the Common Stock is not quoted in The Nasdaq Stock Market,
the OTC Electronic Bulletin Board, or the National Daily Quotation Service, or
traded on an exchange, the fair market value of the Company's Common Stock shall
be the price per share which the Company could obtain from a willing buyer for
shares sold by the Company from authorized but unissued shares, as such price
shall be agreed by the Company and the holder of this Warrant.

                                      -2-
<PAGE>

3.   Transfer.
     --------

          3.1  General Restrictions; Permitted Transferees.  The registered
               -------------------------------------------
Holder of this Warrant, by his acceptance hereof, agrees that it shall not sell,
transfer or assign or hypothecate this Warrant without the prior written consent
of the Company except that such a transfer may be made to the bona fide
officers, directors and employees of Gruntal & Co., L.L.C. without the prior
written consent of the Company. Any transfer will be registered on the books of
the Company upon delivery to the Company of notice thereof duly endorsed by the
Holder or by its duly authorized attorneys or representatives. Upon any such
registration of transfer the Company shall deliver a new warrant or new warrants
to the persons entitled thereto. Notwithstanding the foregoing, the Company
shall have no obligation to cause a Warrant to be transferred on its books to
any person, unless the Holder thereof shall furnish to the Company evidence of
compliance with the Securities Act, in accordance with Section 3.2 below. The
shares of Common Stock issuable upon exercise of this Warrant shall be subject
to the additional transfer restrictions set forth below.

          3.2  Restrictions Imposed by the Securities Act.  This Warrant and the
               ------------------------------------------
shares of Common Stock purchased upon exercise of this Warrant shall not be
transferred unless and until (i) the Company has received the opinion of counsel
for the Holder that this Warrant and such shares may be sold pursuant to an
exemption from registration under the Securities Act of 1933, as amended (the
"Securities Act"), the availability of which is established to the reasonable
satisfaction of the Company, or (ii) in the case of a sale of the shares only, a
registration statement relating to such shares has been filed by the Company and
declared effective by the Securities and Exchange Commission.

          Each certificate for securities purchased upon exercise of this
Warrant shall bear a legend substantially as follows unless such securities have
been registered under the Securities Act:

          "The securities represented by this certificate have not been
          registered under the Securities Act of 1933 (the "Act"), or any
          state securities laws. The securities may not be offered for
          sale, sold or otherwise transferred except (i) pursuant to an
          effective registration statement under the Act or (ii) pursuant
          to an exemption from registration under the Act in respect of
          which the Company has received an opinion of counsel
          satisfactory to the Company to such effect. Copies of the
          agreement covering both the purchase of the securities and
          restricting their transfer may be obtained at no cost by written
          request made by the holder of record of this certificate to the
          Secretary of the Company at the principal executive offices of
          the Company."

4.   New Warrants to be Issued.
     -------------------------

                                      -3-
<PAGE>

          4.1  Partial Exercise.  Subject to the restrictions in Section 3
               ----------------
hereof, this Warrant may be exercised in whole or in part. In the event of the
exercise hereof in part, upon surrender of this Warrant for cancellation,
together with the duly executed exercise form, the Company shall cause to be
delivered to the Holder without charge a new warrant or new warrants of like
tenor with this Warrant in the name of the Holder evidencing the right to
purchase, in the aggregate, the remaining number of underlying shares of Common
Stock purchasable hereunder after giving effect to any such partial exercise.

          4.2  Lost Certificate.  Upon receipt by the Company of evidence
               ----------------
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of an indemnification in favor of the Company, reasonably satisfactory to
it, the Company shall execute and deliver a new warrant of like tenor and date.
Any such new warrants executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute an additional contractual obligation
on the part of the Company.

          4.3  Warrant Register; Transfer of the Warrant.  Any warrants issued
               -----------------------------------------
upon the transfer or exercise in part of this Warrant shall be numbered and
shall be registered in a warrant register (the "Warrant Register") as they are
issued. The Company shall be entitled to treat the registered holder of any
warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such warrant on the part of any other person, and shall not be liable for any
registration or transfer of warrants which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. This Warrant shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by the Holder's duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment, or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall delivery a new warrant or warrants to the person
entitled thereto. Notwithstanding the foregoing, the Company shall have no
obligation to cause warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act and the rules and regulations thereunder.

5.   Reservation.  The Company shall at all times reserve and keep available out
     -----------
of its authorized shares of Common Stock, solely for the purpose of issuance
upon exercise of the Warrant, such number of authorized but unissued shares of
Common Stock, free from preemptive rights, as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon exercise of the
Warrant and payment of the applicable Exercise Price therefor, all shares of
Common Stock shall be duly and validly issued, fully paid and nonassessable and
not subject to preemptive rights of any stockholder. If the Common Stock is then
listed on a national securities exchange, all shares of Common Stock issued upon
exercise of this Warrant shall also be duly listed thereon.

                                      -4-
<PAGE>

6.   Adjustments.  The Exercise Price and the number of shares purchasable
     -----------
hereunder are subject to adjustment from to time as follows.

          6.1  Merger, Sale of Assets, Etc.  If at any time while this Warrant,
               ----------------------------
or any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then as a part of such
reorganization, merger, consolidation, sale or transfer lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
payment of the Exercise Price then in effect, the number of shares of stock or
other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 6. The foregoing provisions of this Section 6 shall similarly
apply to successive reorganization, consolidations, mergers, sales and transfers
and to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection with any such transaction
is in a form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.

          6.2  Reclassification, Etc.  If the Company, at any time while this
               ----------------------
Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 6.

          6.3  Split Subdivision or Combination of Shares.  If the Company at
               ------------------------------------------
any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide

                                      -5-
<PAGE>

or combine the securities as to which purchase rights under this Warrant exist,
into a different number of securities of the same class, the Exercise Price for
such securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.

          6.4  Certificate as to Adjustments.  Upon the occurrence of each
               -----------------------------
adjustment or readjustment pursuant to this Section 6, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Holder of this Warrant a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.

7.   Certain Notice Requirements.
     ---------------------------

          7.1  Holder's Right to Receive Notice.  Nothing herein shall be
               --------------------------------
construed as conferring upon the Holder the right to vote or consent or to
receive notice as a stockholder for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the Company prior
to the exercise hereof (including the right to receive dividends). If, however,
at any time prior to the expiration of the Warrant and its exercise, any of the
events described in Section 6 shall occur, then, in one or more of said events,
the Company shall give written notice of such event at least ten (10) days prior
to the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up, merger, consolidation,
reorganization or sale. Such notice shall specify such record date or the date
of the closing of the transfer books, as the case may be.

          7.2  Transmittal of Notices.  Any notice or other communication or
               ----------------------
delivery required or permitted hereunder shall be in writing and shall be
delivered personally or sent by certified mail, postage prepaid, or by a
nationally recognized overnight courier service, and shall be deemed given when
so delivered personally or by overnight courier service, or, if mailed, three
(3) days after the date of deposit in the United States mails, as follows:

          (i)  if to the Company, to:

               Sheffield Pharmaceuticals, Inc.
               425 South Woodsmill Road, Suite 270
               St. Louis, Missouri 63017-3441
               Attention: Chief Financial Officer

          (ii) if to the Holder, to the address of such Holder as shown on the
books of the Company.

                                      -6-
<PAGE>

Either of the Holder or the Company may change the foregoing address by notice
given pursuant to this Section 7.2.

8.   Investment Representations; Registration Rights.
     -----------------------------------------------

          8.1  Purchase for Investment.  By his acceptance of this Warrant, the
               -----------------------
Holder represents and warrants that the Holder has acquired this Warrant and
will acquire the Shares for the Holder's own account for investment and not with
the view to the distribution thereof, except in accordance with applicable
federal and state securities laws. The Holder represents that he is an
"accredited investor" as such term is defined under Rule 501 of Regulation D
promulgated under the Securities Act. The Holder confirms that he has been
advised that the Warrants have not been, and the Shares of Common Stock issuable
upon exercise of this Warrant Shares will not be (except in the event of a
registration pursuant to Section 8), registered under the Securities Act and
that he has consulted with and been advised by counsel as to the restrictions on
resale to which this Warrant and such Shares will be subject.

          8.2  Notice of Registration.  If at any time or from time to time the
               ----------------------
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders, other than in connection
with a registration relating to employee benefit plans or a registration
relating to a business combination transaction, the Company will:

          (i)  promptly give to the Holders written notice thereof; and

          (ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Shares specified in written requests, made within 20 days after receipt
of such written notice from the Company, by the Holders or any one or more of
them.

          8.3  Underwriting.  If the registration of which the Company gives
               ------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 8.2. In such event the right of a Holder to registration
pursuant to Section 8.2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of Shares in the underwriting to the extent
provided herein. If a Holder proposes to distribute its securities through such
underwriting it shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 8, if the managing underwriter determines that marketing factors
require a limitation of the number of securities to be underwritten, the
managing underwriter may limit the Shares to be included in such registration.
The Company shall so advise the participating Holders and other holders
distributing their securities through such underwriting and the number of Shares
that may be included in the registration and underwriting shall be allocated
among the participating Holders

                                      -7-
<PAGE>

and such other holders in proportion, as nearly as practicable, to the
respective amounts of Shares held by the participating Holders and such other
holders at the time of filing the registration statement. To facilitate the
allocation of securities in accordance with the above provisions, the Company
may round the number of securities allocated to the participating Holders or
holder to the nearest 1,000 shares.

          8.4  Right to Terminate Registration.  The Company shall have the
               -------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 8 prior to the effectiveness of such registration whether or not any
Holder has elected to include Shares in such registration.

     8.5  Expenses of Registration.  The Company shall pay all expenses incurred
          ------------------------
by the Company in connection with the registration, qualification and/or
exemption of the Shares, registered pursuant to Sections 8.2 and 8.3 above,
including any Securities and Exchange Commission ("SEC") and state securities
law registration and filing fees, printing expenses, fees and disbursements of
the Company's counsel and accountants, transfer agents' and registrars' fees,
fees and disbursements of experts used by the Company in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the registration statement or prospectuses contained
therein. The Company shall not, however, be liable for any sales, broker's or
underwriting discount or commissions upon sale by any Holder of any of the
Shares.

     8.6  Amendments and Supplements; Restrictions on Use.  The Company shall
          -----------------------------------------------
prepare and promptly file with the SEC and promptly notify the Holders of the
filing of such amendments or supplements to the registration statement or
prospectuses contained therein as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to the Shares is required
to be delivered under the Securities Act, any event shall have occurred as a
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided, however,
that the Company shall be entitled to delay any such filing and the use of the
prospectus if the Company determines that such filing or use would impede,
delay, or interfere with any significant financing, acquisition, or other
transaction involving the Company, or require disclosure of material information
which the Company has a bona fide business purpose for preserving as
confidential. The Company shall also advise the Holders promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of the registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its reasonable efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued.

     8.7  Further Information.  If Shares owned by a Holder are included in any
          -------------------
registration, such Holder shall furnish the Company such information regarding
itself as the Company may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Warrant.

                                      -8-
<PAGE>

     8.8  Duration.  Notwithstanding anything to the contrary in this Section 8,
          --------
the Company shall have no obligation to register or maintain a registration
statement with respect to Shares after the second anniversary of their issuance
date.

     9.   Indemnification.  (a)  The Company agrees to indemnify, defend and
          ---------------
hold harmless, to the full extent permitted by law, the Holder and each of the
Holder's affiliates, each of their respective officers, directors, employees,
agents, representatives, successors and assigns and each person who controls the
Holder or such affiliate (within the meaning of the Securities Act) against any
and all actions, causes of action, suits, losses, liabilities, obligations,
damages, judgments and expenses, including, without limitation, reasonable
attorneys' fees and disbursements (collectively, "Losses") incurred by any such
person in any capacity and caused by any untrue statement of a material fact
contained in the registration statement or in any prospectus or prospectus
supplement, or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or prospectus supplement, in light of the circumstances in which they
were made) not misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Company by or on behalf of any
Holder or its representative expressly for use therein.

     (b)  In connection with the performance by the Company of its obligations
under Section 8, the Holder shall promptly furnish to the Company in writing
such information and affidavits with respect to the Holder and with respect to
the planned distribution of the Shares issuable upon exercise of this Warrant
that the Company may reasonably request for use in connection with the
registration statement or any prospectus and agrees to indemnify, defend and
hold harmless, to the full extent permitted by law, the Company, the Company's
directors, officers, employees, agents, representatives, successors and assigns
and each person who controls the Company (within the meaning of the Securities
Act) against any and all Losses incurred by any such person in any capacity and
caused by any untrue statement of a material fact contained in the registration
statement or in any prospectus or prospectus supplement, in light of the
circumstances in which they were made) not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information with respect to the Holder furnished in writing by or on behalf of
the Holder or its representatives to the Company specifically for inclusion in
such registration statement or any prospectus.

     (c)  Any person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. Notwithstanding the foregoing, any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
the defense of such claim, but the reasonable fees and expenses of such counsel
shall be at the expense of such person unless (x) the indemnifying party has
agreed in writing to pay such fees or expenses, or (y) the indemnifying party
declines to assume the defense of such claim (it being understood that in the
case of each of (x) and (y) above, the reasonable fees and expenses of such

                                      -9-
<PAGE>

notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party.
Notwithstanding the foregoing, any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate in the
defense of such claim, but the reasonable fees and expenses of such counsel
shall be at the expense of such person unless (x) the indemnifying party has
agreed in writing to pay such fees or expenses, or (y) the indemnifying party
declines to assume the defense of such claim (it being understood that in the
case of each of (x) and (y) above, the reasonable fees and expenses of such
separate counsel to such person shall be paid by the indemnifying party). If
such defense is not assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without its
consent (but such consent may not be unreasonably withheld or delayed). No
indemnifying party shall consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the indemnified party of a release from all
liability with respect to such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the reasonable fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim.

     (d)  If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party in respect of any
Losses by reason of such indemnification being unenforceable as a matter of law
or public policy, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the actions that resulted in such Losses,
as well as any other equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by any method of
allocation that does not take into account the equitable considerations referred
to in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

     10.  Representations and Warranties of the Company.  The Company hereby
          ----------------------------------------------
represents and warrants that:

                                      -10-
<PAGE>

          (iii) the execution and delivery of this Warrant are not, and the
                issuance of the shares of Common Stock upon exercise of this
                Warrant in accordance with terms hereof will not be,
                inconsistent with the Company's certificate of incorporation or
                by-laws, do not and will not contravene any law, government rule
                or regulation, judgment or order applicable to the Company, and,
                except for consents that already have been obtained by the
                Company, do not and will not conflict with or contravene any
                provision of, or constitute a default under, any indenture,
                mortgage, contract or other instrument of which the Company is a
                party or by which it is bound or require the consent or approval
                of, the giving of notice to, the registration with or the taking
                of any action in respect of or by, any Federal, state or local
                government authority or agency or other person.


11.  Miscellaneous.
     -------------

          11.1 Amendments.  All modifications or amendments to this Warrant
               ----------
shall require the written consent of each party.

          11.2 Headings.  The headings contained herein are for the sole purpose
               --------
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Warrant.

          11.3 Entire Agreement.  This Warrant constitutes the entire agreement
               ----------------
of the parties hereto with respect to the subject matter hereof, and supersede
all prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.

          11.4 Binding Effect.  This Warrant shall inure solely to the benefit
               --------------
of and shall be binding upon, the Holder and the Company and their permitted
assignees, respective successors, legal representatives and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Warrant or any
provisions herein contained.

                                      -11-
<PAGE>

          11.5 Governing Law.  This Warrant shall be governed by and construed
               -------------
and enforced in accordance with the laws of the State of New York, without
giving effect to conflict of law principles thereof.

          11.6 Waiver, Etc.  The failure of the Company or the Holder to at any
               -----------
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, noncompliance or nonfulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, noncompliance or
nonfulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, noncompliance or nonfulfillment.

                                     *****

                                      -12-
<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer as of the 2nd day of October, 2000.


                                             SHEFFIELD PHARMACEUTICALS, INC.



                                             By:  ______________________________
                                                  Loren G. Peterson
                                                  President and CEO


AGREED AND ACCEPTED:

Gruntal & Co., L.L.C.

By__________________________

                                      -13-
<PAGE>

Form to be used to exercise Warrant:

Sheffield Pharmaceuticals, Inc.
425 South Woodsmill Road, Suite 270
St. Louis, Missouri 63017-3441
Attention: Chief Financial Officer

Date: ________________, 20__

          The Undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase __________ shares of Common Stock of Sheffield
Pharmaceuticals, Inc. and hereby makes payment of $_____________ (at the rate of
$______________ per share) in payment of the Exercise Price pursuant thereto.
Please issue the shares as to which this Warrant is exercised in accordance with
the instructions given below.

                                             ___________________________________
                                             Signature


                                             ___________________________________
                                             Signature Guaranteed


                  INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name____________________________________________________________________________
                           (Print in Block Letters)

Address_________________________________________________________________________

          NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.

                                      -14-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>COMMON STOCK PURCHASE WARRANT
<TEXT>

<PAGE>

                                                                     EXHIBIT 4.5

     NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK FOR WHICH THIS
     WARRANT IS EXERCISABLE (THE "SECURITIES") HAVE BEEN REGISTERED UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
     THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR
     TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE
     SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT
     TO THE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
     REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON THE HOLDER HEREOF
     FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE
     CORPORATION, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE
     CORPORATION, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL
     APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE
     "BLUE SKY" OR OTHER STATE SECURITIES LAW.


                         COMMON STOCK PURCHASE WARRANT

               For the Purchase of 18,808 Shares of Common Stock

                                      of

                        SHEFFIELD PHARMACEUTICALS, INC.

                           (A Delaware Corporation)


1.   Warrant.
     -------

          THIS CERTIFIES THAT, for value received, Gruntal & Co., L.L.C.
(together with any of the transferees permitted under Section 3.1, the "Holder"
or "Holders"), as registered owner of this Warrant, is entitled during the
period commencing December 29, 2000 and ending at 5:00 p.m., St. Louis, Missouri
time, on December 29, 2004, but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to Eighteen Thousand Eight Hundred Eight
(18,808) shares (the "Shares") of Common Stock, par value $.01 per share (the
"Common Stock"), of Sheffield Pharmaceuticals, Inc., a Delaware corporation (the
"Company") in accordance with the terms hereof.

          The exercise price (the "Exercise Price") per Share of Common Stock
shall be $4.9844 per share.

<PAGE>

2.   Exercise.
     --------

     2.1  Cash Exercise. In order to exercise this Warrant for cash, the
          -------------
exercise form attached hereto must be duly executed, completed and delivered to
the Company, together with this Warrant and payment of the applicable Exercise
Price for the shares of the Common Stock being purchased. If the rights
represented hereby shall not have been exercised before 5:00 p.m., St. Louis,
Missouri time, on December 29, 2004, this Warrant shall become and be void and
without further force or effect and all rights represented hereby shall cease
and expire.

     2.2  Cashless Exercise.
          -----------------

     (a)  In lieu of exercising this Warrant for cash, the Holder may elect to
receive Shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
the Holder as of the date specified in such notice a number of shares of the
Common Stock computed using the following formula:

                                   X= Y(A-B)
                                      ------
                                        A
     Where

          X = the number of shares of Common Stock to be issued to the
          holder.

          Y = the number of shares of Common Stock purchasable under this
          Warrant.

          A = the fair market value of one share of the Company's Common Stock.

          B = the Exercise Price (as adjusted to the date of such calculations
          as provided in Section 6).

     (b)  For purposes of this Section 2.2, fair market value of one share of
the Company's Common Stock shall be based on the average of the closing sales
prices of the Company's Common Stock reported on the American Stock Exchange,
The Nasdaq Stock Market, the OTC Electronic Bulletin Board, the National Daily
Quotation Service, or the closing price quoted on any other exchange on which
the Common Stock is listed, whichever is applicable, as published in The Wall
                                                                     --------
Street Journal for the ten trading days prior to the date of determination of
- --------------
fair market value. If the Common Stock is not quoted in The Nasdaq Stock Market,
the OTC Electronic Bulletin Board, or the National Daily Quotation Service, or
traded on an exchange, the fair market value of the Company's Common Stock shall
be the price per share which the Company could obtain from a willing buyer for
shares sold by the Company from authorized but

                                      -2-
<PAGE>

unissued shares, as such price shall be agreed by the Company and the holder of
this Warrant.

3.   Transfer.
     --------

          3.1  General Restrictions; Permitted Transferees.  The registered
               -------------------------------------------
Holder of this Warrant, by his acceptance hereof, agrees that it shall not sell,
transfer or assign or hypothecate this Warrant without the prior written consent
of the Company except that such a transfer may be made to the bona fide
officers, directors and employees of Gruntal & Co., L.L.C. without the prior
written consent of the Company. Any transfer will be registered on the books of
the Company upon delivery to the Company of notice thereof duly endorsed by the
Holder or by its duly authorized attorneys or representatives. Upon any such
registration of transfer the Company shall deliver a new warrant or new warrants
to the persons entitled thereto. Notwithstanding the foregoing, the Company
shall have no obligation to cause a Warrant to be transferred on its books to
any person, unless the Holder thereof shall furnish to the Company evidence of
compliance with the Securities Act, in accordance with Section 3.2 below. The
shares of Common Stock issuable upon exercise of this Warrant shall be subject
to the additional transfer restrictions set forth below.

          3.2  Restrictions Imposed by the Securities Act.  This Warrant and the
               ------------------------------------------
shares of Common Stock purchased upon exercise of this Warrant shall not be
transferred unless and until (i) the Company has received the opinion of counsel
for the Holder that this Warrant and such shares may be sold pursuant to an
exemption from registration under the Securities Act of 1933, as amended (the
"Securities Act"), the availability of which is established to the reasonable
satisfaction of the Company, or (ii) in the case of a sale of the shares only, a
registration statement relating to such shares has been filed by the Company and
declared effective by the Securities and Exchange Commission.

          Each certificate for securities purchased upon exercise of this
Warrant shall bear a legend substantially as follows unless such securities have
been registered under the Securities Act:

          "The securities represented by this certificate have not been
          registered under the Securities Act of 1933 (the "Act"), or any
          state securities laws. The securities may not be offered for
          sale, sold or otherwise transferred except (i) pursuant to an
          effective registration statement under the Act or (ii) pursuant
          to an exemption from registration under the Act in respect of
          which the Company has received an opinion of counsel
          satisfactory to the Company to such effect. Copies of the
          agreement covering both the purchase of the securities and
          restricting their transfer may be obtained at no cost by written
          request made by the holder of record of this certificate to the
          Secretary of the Company at the principal executive offices of
          the Company."

4.   New Warrants to be Issued.
     -------------------------

                                      -3-
<PAGE>

          4.1  Partial Exercise. Subject to the restrictions in Section 3
               ----------------
hereof, this Warrant may be exercised in whole or in part. In the event of the
exercise hereof in part, upon surrender of this Warrant for cancellation,
together with the duly executed exercise form, the Company shall cause to be
delivered to the Holder without charge a new warrant or new warrants of like
tenor with this Warrant in the name of the Holder evidencing the right to
purchase, in the aggregate, the remaining number of underlying shares of Common
Stock purchasable hereunder after giving effect to any such partial exercise.

          4.2  Lost Certificate.  Upon receipt by the Company of evidence
               ----------------
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of an indemnification in favor of the Company, reasonably satisfactory to
it, the Company shall execute and deliver a new warrant of like tenor and date.
Any such new warrants executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute an additional contractual obligation
on the part of the Company.

          4.3  Warrant Register; Transfer of the Warrant.  Any warrants issued
               -----------------------------------------
upon the transfer or exercise in part of this Warrant shall be numbered and
shall be registered in a warrant register (the "Warrant Register") as they are
issued. The Company shall be entitled to treat the registered holder of any
warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such warrant on the part of any other person, and shall not be liable for any
registration or transfer of warrants which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. This Warrant shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by the Holder's duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment, or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall delivery a new warrant or warrants to the person
entitled thereto. Notwithstanding the foregoing, the Company shall have no
obligation to cause warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act and the rules and regulations thereunder.

5.   Reservation.  The Company shall at all times reserve and keep available out
     -----------
of its authorized shares of Common Stock, solely for the purpose of issuance
upon exercise of the Warrant, such number of authorized but unissued shares of
Common Stock, free from preemptive rights, as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon exercise of the
Warrant and payment of the applicable Exercise Price therefor, all shares of
Common Stock shall be duly and validly issued, fully paid and nonassessable and
not subject to preemptive rights of any stockholder. If the Common Stock is then
listed on a national securities exchange, all shares of Common Stock issued upon
exercise of this Warrant shall also be duly listed thereon.

                                      -4-
<PAGE>

6.   Adjustments.  The Exercise Price and the number of shares purchasable
     -----------
hereunder are subject to adjustment from to time as follows.

          6.1  Merger, Sale of Assets, Etc.  If at any time while this Warrant,
               ----------------------------
or any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then as a part of such
reorganization, merger, consolidation, sale or transfer lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
payment of the Exercise Price then in effect, the number of shares of stock or
other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 6. The foregoing provisions of this Section 6 shall similarly
apply to successive reorganization, consolidations, mergers, sales and transfers
and to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection with any such transaction
is in a form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.

          6.2  Reclassification, Etc.  If the Company, at any time while this
               ----------------------
Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 6.

          6.3  Split Subdivision or Combination of Shares.  If the Company at
               ------------------------------------------
any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide

                                      -5-
<PAGE>

or combine the securities as to which purchase rights under this Warrant exist,
into a different number of securities of the same class, the Exercise Price for
such securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.

          6.4  Certificate as to Adjustments.  Upon the occurrence of each
               -----------------------------
adjustment or readjustment pursuant to this Section 6, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Holder of this Warrant a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.

7.   Certain Notice Requirements.
     ---------------------------

          7.1  Holder's Right to Receive Notice.  Nothing herein shall be
               --------------------------------
construed as conferring upon the Holder the right to vote or consent or to
receive notice as a stockholder for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the Company prior
to the exercise hereof (including the right to receive dividends). If, however,
at any time prior to the expiration of the Warrant and its exercise, any of the
events described in Section 6 shall occur, then, in one or more of said events,
the Company shall give written notice of such event at least ten (10) days prior
to the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up, merger, consolidation,
reorganization or sale. Such notice shall specify such record date or the date
of the closing of the transfer books, as the case may be.

          7.2  Transmittal of Notices.  Any notice or other communication or
               ----------------------
delivery required or permitted hereunder shall be in writing and shall be
delivered personally or sent by certified mail, postage prepaid, or by a
nationally recognized overnight courier service, and shall be deemed given when
so delivered personally or by overnight courier service, or, if mailed, three
(3) days after the date of deposit in the United States mails, as follows:

          (i)  if to the Company, to:

               Sheffield Pharmaceuticals, Inc.
               425 South Woodsmill Road, Suite 270
               St. Louis, Missouri 63017-3441
               Attention: Chief Financial Officer

          (ii) if to the Holder, to the address of such Holder as shown on the
books of the Company.

                                      -6-
<PAGE>

Either of the Holder or the Company may change the foregoing address by notice
given pursuant to this Section 7.2.

8.   Investment Representations; Registration Rights.
     -----------------------------------------------

          8.1  Purchase for Investment.  By his acceptance of this Warrant, the
               -----------------------
Holder represents and warrants that the Holder has acquired this Warrant and
will acquire the Shares for the Holder's own account for investment and not with
the view to the distribution thereof, except in accordance with applicable
federal and state securities laws. The Holder represents that he is an
"accredited investor" as such term is defined under Rule 501 of Regulation D
promulgated under the Securities Act. The Holder confirms that he has been
advised that the Warrants have not been, and the Shares of Common Stock issuable
upon exercise of this Warrant Shares will not be (except in the event of a
registration pursuant to Section 8), registered under the Securities Act and
that he has consulted with and been advised by counsel as to the restrictions on
resale to which this Warrant and such Shares will be subject.

          8.2  Notice of Registration.  If at any time or from time to time the
               ----------------------
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders, other than in connection
with a registration relating to employee benefit plans or a registration
relating to a business combination transaction, the Company will:

          (i)  promptly give to the Holders written notice thereof; and

          (ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Shares specified in written requests, made within 20 days after receipt
of such written notice from the Company, by the Holders or any one or more of
them.

          8.3  Underwriting.  If the registration of which the Company gives
               ------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 8.2. In such event the right of a Holder to registration
pursuant to Section 8.2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of Shares in the underwriting to the extent
provided herein. If a Holder proposes to distribute its securities through such
underwriting it shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 8, if the managing underwriter determines that marketing factors
require a limitation of the number of securities to be underwritten, the
managing underwriter may limit the Shares to be included in such registration.
The Company shall so advise the participating Holders and other holders
distributing their securities through such underwriting and the number of Shares
that may be included in the registration and underwriting shall be allocated
among the participating Holders

                                      -7-
<PAGE>

and such other holders in proportion, as nearly as practicable, to the
respective amounts of Shares held by the participating Holders and such other
holders at the time of filing the registration statement. To facilitate the
allocation of securities in accordance with the above provisions, the Company
may round the number of securities allocated to the participating Holders or
holder to the nearest 1,000 shares.

     8.4  Right to Terminate Registration. The Company shall have the right to
          -------------------------------
terminate or withdraw any registration initiated by it under this Section 8
prior to the effectiveness of such registration whether or not any Holder has
elected to include Shares in such registration.

     8.5  Expenses of Registration.  The Company shall pay all expenses incurred
          ------------------------
by the Company in connection with the registration, qualification and/or
exemption of the Shares, registered pursuant to Sections 8.2 and 8.3 above,
including any Securities and Exchange Commission ("SEC") and state securities
law registration and filing fees, printing expenses, fees and disbursements of
the Company's counsel and accountants, transfer agents' and registrars' fees,
fees and disbursements of experts used by the Company in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the registration statement or prospectuses contained
therein. The Company shall not, however, be liable for any sales, broker's or
underwriting discount or commissions upon sale by any Holder of any of the
Shares.

     8.6  Amendments and Supplements; Restrictions on Use.  The Company shall
          -----------------------------------------------
prepare and promptly file with the SEC and promptly notify the Holders of the
filing of such amendments or supplements to the registration statement or
prospectuses contained therein as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to the Shares is required
to be delivered under the Securities Act, any event shall have occurred as a
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided, however,
that the Company shall be entitled to delay any such filing and the use of the
prospectus if the Company determines that such filing or use would impede,
delay, or interfere with any significant financing, acquisition, or other
transaction involving the Company, or require disclosure of material information
which the Company has a bona fide business purpose for preserving as
confidential. The Company shall also advise the Holders promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of the registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its reasonable efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued.

     8.7  Further Information.  If Shares owned by a Holder are included in any
          -------------------
registration, such Holder shall furnish the Company such information regarding
itself as the Company may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Warrant.

                                      -8-
<PAGE>

     8.8  Duration.  Notwithstanding anything to the contrary in this Section 8,
          --------
the Company shall have no obligation to register or maintain a registration
statement with respect to Shares after the second anniversary of their issuance
date.

     9.   Indemnification.  (a)  The Company agrees to indemnify, defend and
          ---------------
hold harmless, to the full extent permitted by law, the Holder and each of the
Holder's affiliates, each of their respective officers, directors, employees,
agents, representatives, successors and assigns and each person who controls the
Holder or such affiliate (within the meaning of the Securities Act) against any
and all actions, causes of action, suits, losses, liabilities, obligations,
damages, judgments and expenses, including, without limitation, reasonable
attorneys' fees and disbursements (collectively, "Losses") incurred by any such
person in any capacity and caused by any untrue statement of a material fact
contained in the registration statement or in any prospectus or prospectus
supplement, or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or prospectus supplement, in light of the circumstances in which they
were made) not misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Company by or on behalf of any
Holder or its representative expressly for use therein.

     (b)  In connection with the performance by the Company of its obligations
under Section 8, the Holder shall promptly furnish to the Company in writing
such information and affidavits with respect to the Holder and with respect to
the planned distribution of the Shares issuable upon exercise of this Warrant
that the Company may reasonably request for use in connection with the
registration statement or any prospectus and agrees to indemnify, defend and
hold harmless, to the full extent permitted by law, the Company, the Company's
directors, officers, employees, agents, representatives, successors and assigns
and each person who controls the Company (within the meaning of the Securities
Act) against any and all Losses incurred by any such person in any capacity and
caused by any untrue statement of a material fact contained in the registration
statement or in any prospectus or prospectus supplement, in light of the
circumstances in which they were made) not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information with respect to the Holder furnished in writing by or on behalf of
the Holder or its representatives to the Company specifically for inclusion in
such registration statement or any prospectus.

     (c)  Any person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. Notwithstanding the foregoing, any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
the defense of such claim, but the reasonable fees and expenses of such counsel
shall be at the expense of such person unless (x) the indemnifying party has
agreed in writing to pay such fees or expenses, or (y) the indemnifying party
declines to assume the defense of such claim (it being understood that in the
case of each of (x) and (y) above, the reasonable fees and expenses of such

                                      -9-
<PAGE>

separate counsel to such person shall be paid by the indemnifying party). If
such defense is not assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without its
consent (but such consent may not be unreasonably withheld or delayed). No
indemnifying party shall consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the indemnified party of a release from all
liability with respect to such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the reasonable fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim.

     (d)  If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party in respect of any
Losses by reason of such indemnification being unenforceable as a matter of law
or public policy, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the actions that resulted in such Losses,
as well as any other equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by any method of
allocation that does not take into account the equitable considerations referred
to in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

     10.  Representations and Warranties of the Company. The Company hereby
          ----------------------------------------------
represents and warrants that:

          (i)  this Warrant has been duly authorized and executed by the Company
               and is a valid and binding obligation of the Company enforceable
               in accordance with its terms;
          (ii) the shares of Common Stock issuable upon exercise of this Warrant
               have been duly authorized and reserved for issuance by the
               Company and, when issued in accordance with the terms hereof,
               will be validly issued, fully paid and nonassessable; and

                                      -10-
<PAGE>

          (iii) the execution and delivery of this Warrant are not, and the
                issuance of the shares of Common Stock upon exercise of this
                Warrant in accordance with terms hereof will not be,
                inconsistent with the Company's certificate of incorporation or
                by-laws, do not and will not contravene any law, government rule
                or regulation, judgment or order applicable to the Company, and,
                except for consents that already have been obtained by the
                Company, do not and will not conflict with or contravene any
                provision of, or constitute a default under, any indenture,
                mortgage, contract or other instrument of which the Company is a
                party or by which it is bound or require the consent or approval
                of, the giving of notice to, the registration with or the taking
                of any action in respect of or by, any Federal, state or local
                government authority or agency or other person.


11.  Miscellaneous.
     -------------

          11.1  Amendments.  All modifications or amendments to this Warrant
                ----------
shall require the written consent of each party.

          11.2  Headings.  The headings contained herein are for the sole
                --------
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this Warrant.

          11.3  Entire Agreement.  This Warrant constitutes the entire agreement
                ----------------
of the parties hereto with respect to the subject matter hereof, and supersede
all prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.

          11.4  Binding Effect.  This Warrant shall inure solely to the benefit
                --------------
of and shall be binding upon, the Holder and the Company and their permitted
assignees, respective successors, legal representatives and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Warrant or any
provisions herein contained.

                                      -11-
<PAGE>

          11.5 Governing Law.  This Warrant shall be governed by and construed
               -------------
and enforced in accordance with the laws of the State of New York, without
giving effect to conflict of law principles thereof.

          11.6 Waiver, Etc.  The failure of the Company or the Holder to at any
               -----------
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, noncompliance or nonfulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, noncompliance or
nonfulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, noncompliance or nonfulfillment.

                                     *****

                                      -12-
<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer as of the 29th day of December, 2000.


                                             SHEFFIELD PHARMACEUTICALS, INC.



                                             By:  ______________________________
                                                  Loren G. Peterson
                                                  President and CEO


AGREED AND ACCEPTED:

Gruntal & Co., L.L.C.

By__________________________

                                      -13-
<PAGE>

Form to be used to exercise Warrant:

Sheffield Pharmaceuticals, Inc.
425 South Woodsmill Road, Suite 270
St. Louis, Missouri 63017-3441
Attention: Chief Financial Officer

Date: ________________, 20__

          The Undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase __________ shares of Common Stock of Sheffield
Pharmaceuticals, Inc. and hereby makes payment of $_____________ (at the rate of
$______________ per share) in payment of the Exercise Price pursuant thereto.
Please issue the shares as to which this Warrant is exercised in accordance with
the instructions given below.

                                             ___________________________________
                                             Signature



                                             ___________________________________
                                             Signature Guaranteed


                  INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name____________________________________________________________________________
                            (Print in Block Letters)

Address_________________________________________________________________________

          NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.

                                      -14-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>CONSENT OF MCDERMOTT, WILL & EMERY
<TEXT>

<PAGE>

                                                                     Exhibit 5.1

                                   A Partnership Including      Boston
                                   Professional Corporations    Chicago
                                   28 State Street              London
                                   Boston, MA 02109-1775        Los Angeles
                                   617-535-4000                 Miami
                                   Facsimile 617-535-3800       Moscow
                                   http://www.mwe.com           Orange County
                                                                New York
                                                                St. Petersburg
                                                                Silicon Valley
                                                                Vilnius
                                                                Washington, D.C.

McDermott, Will & Emery

                                   March 15, 2001


Sheffield Pharmaceuticals, Inc.
425 South Woodsmill Road, Suite 270
St. Louis, MO 63017

          Re:  Registration Statement on Form S-3
               ----------------------------------

Dear Ladies & Gentlemen:

          At your request, we have examined the form of Registration Statement
on Form S-3 (the "Registration Statement"), to be filed by Sheffield
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission in connection with the registration under the
Securities Act of 1933 for resale of an aggregate of up to 913,258 shares of
common stock, par value $.01 per share, of the Company (the "Common Stock")
representing: (i) 626,950 shares of Common Stock issued to The Tail Wind Fund
Ltd. in a private placement by the Company completed in December 2000, (ii)
112,500 shares of Common Stock issuable upon exercise of a warrant issued to The
Tail Wind Fund Ltd. in the December 2000 private placement, (iii) 53,808 shares
of Common Stock issuable upon exercise of warrants issued to Gruntal & Co., (iv)
100,000 shares of Common Stock issuable upon exercise of a warrant issued to
Continental Capital & Equity Corporation, and (v) 20,000 shares of Common Stock
issuable upon exercise of a warrant issued to The P.L. Thomas Group
(collectively, the "Shares"). The Shares may be sold from time to time for the
account of the foregoing stockholders of the Company.

          We have examined the proceedings heretofore taken by the Company in
connection with the authorization, issuance and sale of the securities referred
to above.

          Based on the foregoing, and assuming that the full consideration for
each Share issuable upon exercise of the warrants is received by the Company in
accordance with the terms of the warrants, it is our opinion that the Shares
covered by the Registration Statement will, when issued, be validly issued and
outstanding, fully paid and nonassessable.

          We consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus which is part of the Registration Statement.


                                        Very truly yours,

                                        /s/ Mcdermott, Will & Emery

                                        McDermott, Will & Emery
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG LLP
<TEXT>

<PAGE>

                                                                    Exhibit 23.2


                        Consent of Independent Auditors
                        -------------------------------


We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 333-54446) and related Prospectus of
Sheffield Pharmaceuticals, Inc. for the registration of 913,258 shares of its
common stock and to the incorporation by reference therein of our report dated
February 28, 2001, with respect to the consolidated financial statements of
Sheffield Pharmaceuticals, Inc. and subsidiaries as of and for the year ended
December 31, 2000 included in its annual Report (Form 10-K) for the year ended
December 31, 2000, filed with the Securities and Exchange Commission.

                                                   ERNST & YOUNG LLP

St. Louis, Missouri

March 16, 2001

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
