FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NOS. 333-108278 AND 333-117677
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 23, 2004)
782,608 Shares
Immtech International, Inc.
Common Stock
The Company is selling all of the 782,608 shares of common stock offered
by this prospectus supplement.
Our common stock is listed on the American Stock Exchange ("AMEX") under
the symbol "IMM". On July 26, 2004, the last reported sale price of our common
stock on AMEX was $12.45 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE
BUYING ANY SHARES, YOU SHOULD READ THE DISCUSSION OF MATERIAL RISKS OF INVESTING
IN OUR COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE S-8 OF THIS PROSPECTUS
SUPPLEMENT AND PAGE 1 OF THE ATTACHED PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PER SHARE TOTAL
--------- ----------
Public offering price.................... $10.25 $8,021,732
Underwriting discounts and commissions... $0.615 $ 481,304
Proceeds to us (before expenses)......... $9.635 $7,540,428
The underwriter may also purchase from us up to an additional 117,391
shares of our common stock at the public offering price less the underwriting
discounts, to cover over-allotments, if any, within 30 days of the date of this
prospectus supplement.
The shares of common stock will be ready for delivery on or about July 30,
2004.
Jefferies & Company, Inc.
The date of this prospectus supplement is July 26, 2004.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS SUPPLEMENT............................................................................... S-1
FORWARD-LOOKING STATEMENTS..................................................................................... S-1
SUMMARY........................................................................................................ S-3
The Offering................................................................................................... S-6
Summary Consolidated Financial Data............................................................................ S-7
USE OF PROCEEDS................................................................................................ S-7
RISK FACTORS................................................................................................... S-8
CAPITALIZATION................................................................................................. S-10
DILUTION....................................................................................................... S-11
UNDERWRITING................................................................................................... S-12
LEGAL MATTERS.................................................................................................. S-13
EXPERTS........................................................................................................ S-14
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION OF DOCUMENTS BY REFERENCE................................... S-14
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus, including any information
incorporated by reference herein and therein. We have not authorized anyone to
provide you with information different from that contained in this prospectus
supplement or the prospectus. We are not making an offer to sell or seeking
offers to buy these securities in any jurisdiction where the offer or sale is
not permitted. Neither the delivery of this prospectus supplement nor any sale
made hereunder shall, under any circumstances, create any implication that the
information contained or incorporated by reference herein is correct as of any
time other than the date of this prospectus supplement.
As used in this prospectus supplement, the terms "we," "us," "our," the
"Company" and "Immtech" means Immtech International, Inc. and its subsidiaries
(unless the context indicates a different meaning), and the term "common stock"
means our common stock, $0.01 par value per share.
i
ABOUT THIS PROSPECTUS SUPPLEMENT
We provide information to you about this offering of our common stock in
two separate documents: (a) the accompanying prospectus, which provides general
information, some of which may not apply to this offering or may have been
superseded by subsequent events or filings with the Securities and Exchange
Commission ("SEC") and (b) this prospectus supplement, which describes the
specific details regarding this offering. Generally, when we refer to this
"prospectus," we are referring to both documents combined. This prospectus
supplement is not complete without, and may not be delivered or used except in
connection with, the accompanying prospectus. You should read this entire
prospectus supplement and the accompanying prospectus, as well as the
information incorporated by reference herein and therein, before making an
investment decision. To the extent the information contained in this prospectus
supplement or the documents incorporated by reference in this prospectus
supplement differs or varies from the information contained in the accompanying
prospectus, the information in this prospectus supplement, or any documents
incorporated by reference in this prospectus supplement, will modify and
supercede the information in the accompanying prospectus.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus supplement and
accompanying prospectus and in the documents incorporated by reference in this
prospectus supplement and accompanying prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact may be deemed
to be forward-looking statements. Forward-looking statements frequently, but not
always, use the words "may," "intend," "plan," "believe," "will," "anticipate"
or "expect" or similar words and may include statements concerning our
strategies, goals and plans. Forward-looking statements involve a number of
significant risks and uncertainties that could cause our actual results or
achievements or other events to differ materially from those reflected in such
forward-looking statements. Such factors include, among others described in this
prospectus, the following:
- we are in an early stage of product development,
- the possibility that favorable relationships with collaborators
cannot be established or, if established, will be abandoned by the
collaborators before completion of product development,
- the possibility that we or our collaborators will not successfully
develop any marketable products,
- the possibility that advances by competitors will cause our product
candidates not to be viable,
- uncertainties as to the requirement that a drug product be found to
be safe and effective after extensive clinical trials and the
possibility that the results of such trials, if completed, will not
establish the safety or efficacy of our drug product candidates,
S-1
- risks relating to requirements for approvals by governmental
agencies, such as the Food and Drug Administration, before products
can be marketed and the possibility that such approvals will not be
obtained in a timely manner or at all or will be conditioned in a
manner that would impair our ability to market our product
candidates successfully,
- the risk that our patents could be invalidated or narrowed in scope
by judicial actions or that our technology could infringe upon the
patent or other intellectual property rights of third parties,
- the possibility that we will not be able to raise adequate capital
to fund our operations through the process of commercializing a
successful product or that future financing will be completed on
unfavorable terms,
- the possibility that any products successfully developed by us will
not achieve market acceptance and
- other risks and uncertainties that may not be described herein.
We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise
unless required by law.
Before purchasing our common stock, you should carefully consider the
risks, uncertainties and other events described in the "Risk Factors" section of
this prospectus supplement, the accompanying prospectus and in our Annual Report
on Form 10-K/A for the fiscal year ended March 31, 2004 filed with the SEC on
July 20, 2004 ("Form 10-K/A"), in addition to the other information contained
elsewhere in the prospectus and in the documents incorporated by reference in
this prospectus supplement and the accompanying prospectus. These risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus
supplement and the accompanying prospectus and in the documents incorporated by
reference herein and therein could have a material adverse effect on our
business, operating results, and financial condition.
S-2
SUMMARY
The items in the following summary are described in more detail in this
prospectus supplement and the accompanying prospectus or in documents
incorporated by reference herein or therein. This summary provides an overview
of selected information and does not contain all the information you should
consider. Therefore, you should also read the more detailed information set
forth in this prospectus supplement, the financial statements and the
information incorporated by reference in this prospectus supplement. This
prospectus supplement contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from the results
anticipated in these forward-looking statements as a result of many factors,
including those described herein and under the heading "Risk Factors" in the
accompanying prospectus and the risks incorporated by reference herein and
therein from our Form 10-K/A.
IMMTECH INTERNATIONAL, INC.
Immtech International, Inc. is a pharmaceutical company advancing the
development and commercialization of oral drugs to treat infectious diseases and
neoplastic (cancer) and metabolic (diabetes) disorders. We are developing
treatments for fungal infections, malaria, tuberculosis, cancer, diabetes,
Pneumocystis carinii pneumonia ("PCP") and tropical diseases, including African
sleeping sickness (trypanosomiasis) and leishmaniasis. We have a worldwide,
exclusive license to commercialize a dicationic pharmaceutical platform from
which a pipeline of products may be developed to target large, global markets.
STRATEGY
Our strategy is to develop oral drugs effective against infectious
diseases and neoplastic and metabolic disorders utilizing a dicationic
technology platform. Infectious diseases in the global population have increased
significantly during the past 20 years and are the most common cause of death
worldwide according to the World Health Organization ("WHO"). Relatively few new
drugs for treatment of infectious diseases have been brought to market during
this period. New antibiotics are needed to overcome the problems of multi-drug
resistance and the increasing number of new pathogens that are causing diseases
in the world. Neoplastic and metabolic disorders, including cancer and diabetes,
cause illness and death worldwide. Scientists have struggled for decades to find
effective treatments for both cancer and diabetes. In our initial laboratory
studies, the dication platform demonstrated positive therapeutic activity to
treat these two devastating disorders.
Since our formation in October 1984, we have engaged in pharmaceutical
research and drug development, expanding our scientific capabilities and
collaborative network, developing technology licensing agreements, and advancing
the commercialization of our proprietary technologies, including the development
of aromatic cations (which include dications) commencing in 1997. In addition to
our internal resources, we use the expertise and resources of strategic partners
and third parties in a number of areas, including (i) discovery research, (ii)
pre-clinical and human clinical trials and (iii) manufacture of pharmaceutical
drugs.
We intend to continue to work with our scientific and foundation partners
to validate our technology platform, illustrating dications' low toxicity, broad
application, and oral deliverability. We believe we will be permitted to sell
drugs in niche markets in certain African nations as we further develop drugs to
target multi-billion dollar markets such as antifungal, tuberculosis, cancer and
diabetes treatments. Because we demonstrated to the United States
S-3
Food and Drug Administration ("FDA") DB289's potential to provide improvement
over currently available alternative therapies for African sleeping sickness,
the FDA granted "fast-track" designation to DB289 for treatment of African
sleeping sickness. Fast-track designation may allow for accelerated FDA review
of DB289 for treatment of African sleeping sickness, however, there is no
guarantee that fast-track designation will result in faster product development
or impact the likelihood and timing of product approval.
The table below summarizes our clinical trial programs:
MALARIA
----------------------------------------------------------------------------------------------------------------------------
- CLINICAL TRIALS TRIAL DESIGN / PHASE (1) END POINTS SITES
----------------------------------------------------------------------------------------------------------------------------
- DB289 in combination with - Phase II (1) - Drug interactions - Thailand
a synthetic analog of - Oral Dosing 3 days - Safety
Artemisinin - Artemisinin & DB289 - Parasite clearance
- Clinical improvement
- DB289 alone - Phase I (1) - Maximum tolerable - France
- Healthy volunteers dose
- Single doses for 3 days - Safety
- Compare 3 and 5 day dosing - Pharmacokinetics
- Different ethnic groups
AFRICAN SLEEPING SICKNESS
----------------------------------------------------------------------------------------------------------------------------
- CLINICAL TRIALS TRIAL DESIGN / PHASE (1) END POINTS SITES
----------------------------------------------------------------------------------------------------------------------------
- DB289 Pivotal
Trial
- African sleeping - Oral dosing for 5 to 10 - Safety - Democratic
sickness days (BID) - Clearance of Republic of
- Randomized comparison to parasite from blood the Congo
pentamidine after treatment and 3, 6 (4 sites)
- Phase IIb (1) months - Angola
- 110 patients - stage 1 - Improvement of (1 site)
disease symptoms
- Phase III (1)
- 250 patients - stage 1
disease
PNEUMOCYSTIS CARINII PNEUMONIA
----------------------------------------------------------------------------------------------------------------------------
- CLINICAL TRIALS TRIAL DESIGN / PHASE (1) END POINTS SITES
----------------------------------------------------------------------------------------------------------------------------
- DB289
- PCP - Phase IIb(1) - Safety - Peru
- Patients who failed - Improvement in lung
standard treatment function (fungal
- Oral dosing for 21 days clearance)
- Twice daily dosages of 100 - Improvement in
mg clinical symptoms
(1) For a description of attributes of Phase I, Phase II and Phase III trials,
see "Business - Governmental Regulation" disclosure in our Form 10-K/A.
We have several other pharmaceutical development programs testing the
effectiveness of DB289 and other dications for various indications. Those
research programs include treatments for fungal infections, tuberculosis, cancer
and diabetes.
S-4
ABOUT IMMTECH
A predecessor of our Company was incorporated under the laws of the State
of Wisconsin on October 15, 1984, and subsequently merged into the current
Delaware corporation on April 1, 1993. Our executive offices are located at 150
Fairway Drive, Suite 150, Vernon Hills, Illinois 60061, telephone number (847)
573- 0033 or toll-free (877) 898- 8038. Our common stock is listed on The
American Stock Exchange under the ticker symbol "IMM". Trading on the AMEX
commenced on August 11, 2003.
S-5
THE OFFERING
Common stock offered by us................ 782,608 shares
Common stock to be outstanding
after this offering.................... 10,617,894 shares
Use of proceeds........................... We intend to use the net proceeds for general corporate
purposes, including clinical trials, research and
development expenses, general and administrative
expenses, and for net proceeds for working capital and
other general corporate purposes.
American Stock Exchange symbol............ "IMM"
The number of shares of our common stock to be outstanding after this
offering in the table above is based on 9,835,286 shares outstanding as of March
31, 2004 and excludes, as of that date:
- 2,987,710 shares of common stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $7.70
per share;
- 962,574 shares of common stock issuable upon exercise of stock
options outstanding under our stock option plans at a weighted
average exercise price of $8.63 per share;
- 340,250 additional shares of common stock reserved for future
issuance under our stock option plans;
- 1,546,043 shares of common stock issuable upon conversion of our
Series A, Series B, Series C and Series D preferred stock (excluding
any accrued but unpaid dividends).
Unless otherwise specifically stated, all information contained in this
prospectus supplement assumes that the underwriter does not exercise their
over-allotment option.
S-6
SUMMARY CONSOLIDATED FINANCIAL DATA
You should read the summary consolidated financial data set forth below in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes incorporated by reference to our Form 10-K/A. The as adjusted balance
sheet data reflect the sale of 782,608 shares of our common stock at a public
offering price of $10.25 per share in this offering and our receipt of the
estimated net proceeds from the offering.
BALANCE SHEET DATA (IN `000S):
March 31, 2004
Actual As Adjusted
Cash and cash equivalents............................... $ 6,745 $ 13,865
Restricted funds on deposit............................. 2,155 2,155
Working capital......................................... 6,136 13,256
Total assets............................................ 12,586 19,706
Convertible preferred stock............................. 9,522 9,522
Deficit accumulated during
development stage.................................... (58,539) (58,539)
-------- --------
Stockholders' equity.................................... 9,748 16,868
USE OF PROCEEDS
We expect to receive approximately $7.1 million from the sale of the
782,608 shares of common stock offered by us in this offering, or $8.3 million
if the underwriter exercises its over-allotment option in full, at a public
offering price of $10.25 per share and after deducting the underwriting
discounts and commissions and our estimated offering expenses.
We intend to use the net proceeds for general corporate purposes,
including clinical trials, research and development expenses, general and
administrative expenses, and for working capital and other general corporate
purposes. We have not identified precisely the amounts we plan to spend on each
of these areas or the timing of such expenditures. The amounts actually expended
for each purpose may vary significantly depending on numerous factors, including
progress with the regulatory approval, manufacturing and commercialization of
DB289 for treatment of malaria, African sleeping sickness and PCP and our other
development programs. Accordingly, our management will have significant
flexibility in applying such proceeds. We reserve the right, at the discretion
of our Board of Directors and management, to reallocate our use of proceeds in
response to these and other factors. Pending such uses, we intend to invest the
net proceeds from the offering in short-term, interest-bearing, investment grade
securities.
S-7
RISK FACTORS
Potential investors are urged to read and consider the risk factors
relating to an investment in Immtech International, Inc. contained or
incorporated by reference herein. Before making an investment decision, you
should carefully consider these risks as well as other information we include or
incorporate by reference in this prospectus supplement and the accompanying
prospectus. The risks and uncertainties we have described are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently consider immaterial may also affect our business
operations. You should also read the "Risk Factors" incorporated by reference
herein from Part I of our Annual Report on Form 10-K/A for our fiscal year ended
March 31, 2004, filed with the SEC on July 20, 2004, and the "Risk Factors"
section beginning on page 1 of the accompanying prospectus.
RISKS RELATED TO THE OFFERING
THE MARKET PRICE OF OUR COMMON STOCK HAS EXPERIENCED SIGNIFICANT VOLATILITY.
The market price of our common stock has been highly volatile and is likely to
continue to be volatile. For example, in the 52-week period ended July 23, 2004,
our common stock had a low of $6.20 and high of $32.51. The securities markets
from time to time experience significant price and volume fluctuations unrelated
to the operating performance of particular companies. In addition, the market
prices of the common stock of many publicly traded pharmaceutical and
biotechnology companies have been and can be expected to be especially volatile.
Factors affecting our stock price include:
- announcements of technological innovations or new products by us or
our competitors;
- developments or disputes concerning patents or proprietary rights;
- publicity regarding actual or potential clinical trials results
relating to products under development by us or our competitors;
- regulatory developments in both the United States and foreign
countries;
- delays in our testing and development schedules;
- public concern as to the safety of pharmaceutical drugs and other
external factors; and
- period-to-period fluctuations in our financial results.
If any of the risks described in these and other "Risk Factors"
incorporated by reference herein actually occur, such events could have a
significant adverse impact on the market price of our common stock.
OUR MANAGEMENT WILL HAVE BROAD DISCRETION WITH RESPECT TO THE USE OF PROCEEDS OF
THIS OFFERING, AND WE MAY NOT USE THE PROCEEDS EFFECTIVELY.
We have not designated the amount of net proceeds we will use for any
particular purpose. Accordingly, our management will have broad discretion as to
the application of the net proceeds
S-8
and could use them for purposes other than those contemplated at the time of
this offering. Our stockholders may not agree with the manner in which our
management chooses to allocate and spend the net proceeds. Moreover, our
management may use the net proceeds for corporate purposes that may not increase
our profitability or market value.
YOU WILL EXPERIENCE IMMEDIATE DILUTION IN THE BOOK VALUE PER SHARE OF THE COMMON
STOCK YOU PURCHASE.
Since the price per share of our common stock being offered is
substantially higher than the book value per share of our common stock, you will
suffer substantial dilution in the net tangible book value of the common stock
you purchase in this offering. Based on an offering price to the public of
$10.25 per share, if you purchase shares of common stock in this offering, you
will suffer immediate and substantial dilution of $8.86 per share in the net
tangible book value of the common stock. See the section entitled "Dilution"
beginning on page S-11.
FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET OR THE EXERCISE OF OPTIONS
OR WARRANTS WILL DILUTE CURRENT STOCKHOLDERS AND COULD CAUSE OUR STOCK PRICE TO
FALL.
Sales of a substantial number of shares of our common stock in the public
market after this offering, or the perception that these sales might occur,
could adversely affect the market price of our common stock. Similarly, if we
raise additional funds through the issuance of common stock or securities
convertible into or exercisable for common stock, the percentage ownership of
our stockholders will be reduced and the price of our common stock may fall.
As of June 30, 2004, stock options to purchase 964,057 shares of common
stock were outstanding, of which options to purchase 634,027 shares were
exercisable. Also outstanding as of the same date were warrants exercisable for
2,885,312 shares of common stock. You will incur dilution upon exercise of any
outstanding stock options or warrants.
S-9
CAPITALIZATION
The following table sets forth our cash, cash equivalents and short-term
investments and our capitalization as of March 31, 2004:
- on an actual basis; and
- on an as adjusted basis to give effect to the issuance and sale by
us of 782,608 shares of common stock in this offering at a public
offering price of $10.25 and our receipt of the estimated net
proceeds from the offering.
MARCH 31, 2004
---------------------------------
ACTUAL AS ADJUSTED
-------- -----------
(In thousands, except share data)
Cash, cash equivalents and short-term investments ...................... $ 6,745 $ 13,865
-------- --------
Restricted funds on deposit ............................................ 2,155 2,155
-------- --------
Convertible preferred stock ............................................ 9,522 9,522
-------- --------
Shareholders' equity:
Common stock; 100,000,000 shares authorized; 9,835,286 shares issued and
outstanding, actual; 10,617,894 shares issued and
outstanding, as adjusted ............................................ 98 106
-------- --------
Deficit accumulated during
development stage ................................................... (58,539) (58,539)
-------- --------
Total shareholders' equity ............................................. 9,748 16,868
-------- --------
This table above should be read in conjunction with "Summary Consolidated
Financial Data" and our consolidated financial statements and related notes
incorporated by reference to our Form 10-K/A.
The table assumes no exercise of the underwriter's over-allotment option
and excludes, as of March 31, 2004:
- 2,987,710 shares of common stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $7.70
per share;
- 962,574 shares of common stock issuable upon exercise of stock
options outstanding under our stock option plans at a weighted
average exercise price of $8.63 per share;
- 340,250 additional shares of common stock reserved for future
issuance under our stock option plans;
- 1,546,043 shares of common stock issuable upon conversion of our
Series A, Series B, Series C and Series D preferred stock (excluding
any accrued but unpaid dividends).
S-10
DILUTION
Our net tangible book value on March 31, 2004 was $9.7 million, or
approximately $0.86 per share. "Net tangible book value" is total assets minus
the sum of liabilities and intangible assets. "Net tangible book value per
share" is net tangible book value divided by the total number of shares of
common stock (and preferred stock on an as-if-converted basis) outstanding.
Net tangible book value dilution per share to new investors represents the
difference between the amount per share paid by purchasers of shares of common
stock in this offering and the net tangible book value per share of our common
stock immediately after completion of this offering. After giving effect to the
sale of 782,608 shares of our common stock in this offering and after deducting
the underwriting discount and our estimated offering expenses, at a public
offering price of $10.25 per share, our net tangible book value as of March 31,
2004 would have been $1.39 per share. This amount represents an immediate
increase in net tangible book value of $0.53 per share to existing shareholders
and an immediate dilution of $8.86 per share to purchasers of common stock in
this offering, as illustrated in the following table:
Public offering price per share $10.25
Net tangible book value per share as of March 31, 2004 .86
Increase in net tangible book value per share attributable to this offering .53
Pro forma net tangible book value per share as of March 31, 2004 after giving effect to this
offering 1.39
------
Dilution per share to new investors in this offering 8.86
------
If the underwriter exercises its over-allotment option in full, there will
be an additional increase in pro forma net tangible book value of $0.08 per
share to existing stockholders and an immediate dilution of $8.78 per share to
new investors.
The table above assumes no exercise of the underwriter's over-allotment
option and excludes, as of March 31, 2004, the potential dilutive effect of the
following securities:
- 2,987,710 shares of common stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $7.70
per share;
- 962,574 shares of common stock issuable upon exercise of stock
options outstanding under our stock option plans at a weighted
average exercise price of $8.63 per share;
- 340,250 additional shares of common stock reserved for future
issuance under our stock option plans;
- 1,546,043 shares of common stock issuable upon conversion of our
Series A, Series B, Series C and Series D preferred stock (excluding
any accrued but unpaid dividends).
To the extent that these options, warrants and the convertible securities
are exercised or converted, there will be further dilution to new investors.
S-11
UNDERWRITING
Jefferies & Company, Inc. is the underwriter and the sole book-running
manager for this offering. Subject to the terms and conditions of the
underwriting agreement dated as of the date of this prospectus supplement,
Jefferies & Company, Inc. has agreed to purchase 782,608 shares of our common
stock on the offering. If the underwriter sells more shares than the total
number set forth above, the underwriter has a 30-day over-allotment option to
buy up to an additional 117,391 shares from us at the public offering price less
the underwriting discounts and commissions to cover these sales.
The following table provides information regarding the amount of the
discount to be paid to the underwriter by us. These amounts are shown assuming
both no exercise and full exercise of the underwriter's option to purchase up to
an additional 117,391 shares.
NO EXERCISE FULL EXERCISE
----------- -------------
Per share................ $ 0.615 $ 0.615
Total.................... $481,304 $553,499
In addition, we will reimburse the underwriter for all fees, disbursements
and out-of-pocket expenses incurred by the underwriter in connection with this
offering. We estimate that the total expenses of this offering payable by us,
excluding underwriting discounts and commissions, will be approximately
$420,000.
Shares sold by the underwriter to the public will initially be offered at
the public offering price set forth on the cover of this prospectus supplement.
Any shares sold by the underwriter to securities dealers may be sold at a
discount of up to $0.31 per share from the public offering price. Any of these
securities dealers may resell any shares purchased from the underwriter to other
brokers or dealers at a discount of up to $0.10 per share from the public
offering price and the other selling terms.
Other than issuances of options pursuant to our stock option plans or
issuances of shares pursuant to exercises of presently outstanding options and
warrants, we have agreed with the underwriter not to offer, sell, contract to
sell, hedge or otherwise dispose of, directly or indirectly, any of our common
stock or securities convertible into or exchangeable for shares of common stock
during the period from the date of this prospectus supplement continuing through
the date 90 days after the date of this prospectus supplement, subject to
certain permitted exceptions, without the prior written consent of Jefferies &
Company, Inc.
In connection with this offering, the underwriter may purchase and sell
shares of our common stock in the open market. These transactions may include
stabilizing transactions, short sales and purchases to cover positions created
by short sales. Stabilizing transactions consist of bids or purchases made for
the purpose of preventing or retarding a decline in the market price of our
common stock while this offering is in progress. Short sales involve the sale by
the underwriter of a greater number of shares than they are required to purchase
in this offering. Short sales may be either "covered short sales" or "naked
short sales". Covered short sales are sales made in an amount not greater than
the underwriter's over-allotment option to purchase additional shares in this
offering. The underwriter may close out any covered short position by either
exercising its over-allotment option or purchasing shares in the open market. In
determining the source of shares to close out the covered short position, the
underwriter will consider, among other things, the price of shares available for
purchase in the open market as compared to the price at which they may purchase
shares through the over-allotment option. Naked short sales are sales in excess
of the over-allotment option. The underwriter must close out any naked short
position by purchasing shares in the open market. A naked short position is more
likely to be created if the underwriter is concerned there may be downward
pressure on the price of shares in the open market after pricing that could
adversely affect investors who purchase in this offering.
S-12
These activities by the underwriter may stabilize, maintain or otherwise
affect the market price of our common stock. As a result, the price of our
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriter at any time. These transactions may be effected on the AMEX or
otherwise.
In addition, in connection with this offering the underwriter may engage
in passive market making transactions in our common stock on the AMEX prior to
the pricing and completion of the offering. Passive market making consists of
bids on the AMEX no higher than independent bids and effected in response to
order flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in our common stock during a specified period and must be discontinued when such
limit is reached. Passive market making may cause the price of our common stock
to be higher than the price that otherwise would exist in the open market in the
absence of such transactions. If passive market making is commenced, it may be
discontinued at any time.
We have agreed to indemnify the underwriter and its controlling persons
against some liabilities, including liabilities under the Securities Act of
1933, and to contribute to payments that the underwriter may be required to make
in respect thereof.
In connection with this offering, the underwriter or certain securities
dealers may distribute prospectuses electronically.
In addition, in connection with this offering, we will issue to the
Underwriter a warrant to purchase up to 200,000 shares of our common stock,
exercisable for five years at a price per share equal to the per share public
offering price of the Shares offered herein. This warrant may not be sold,
transferred, assigned or hypothecated for a period of 180 days following the
commencement of sales of this offering except in accordance with National
Association of Securities Dealers rules.
From time to time in the ordinary course of business, the underwriter or
its affiliates may provide investment banking and other financial advisory
services to us, for which we expect to pay customary fees and expenses.
LEGAL MATTERS
The validity of the issuance of the common stock offered by this
prospectus supplement will be passed upon for us by Cadwalader, Wickersham &
Taft LLP, New York, New York. Latham & Watkins LLP, Menlo Park, California is
counsel to the underwriter in connection with the offering.
S-13
EXPERTS
The financial statements as of March 31, 2004 and 2003, and for each of
the three years in the period ended March 31, 2004, incorporated by reference in
this prospectus supplement have been audited by Deloitte & Touche, LLP, an
independent registered public accounting firm, as stated in their report
incorporated by reference in the registration statement, and have been so
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION OF DOCUMENTS BY REFERENCE
We file annual, quarterly and current reports, proxy statements and other
documents with the SEC, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). You may read and copy any materials that we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800 -SEC-0330. Our reports, proxy statements and
other documents filed electronically with the SEC are available at the website
maintained by the SEC at http://www.sec.gov. We also make available free of
charge on or through our Internet website, http://www.immtech-international.com,
our annual, quarterly and current reports, and, if applicable, amendments to
those reports, filed or furnished pursuant to Section 13(a) of the Exchange Act,
as soon as reasonably practicable after we electronically file such reports with
the SEC. Information on our website is not a part of this prospectus supplement
or accompanying prospectus.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the shares. This prospectus supplement, which
constitutes a part of that registration statement, does not contain all the
information contained in that registration statement and its exhibits. For
further information with respect to us and our shares, you should consult the
registration statement and its exhibits. The registration statement and any of
its amendments, including exhibits filed as a part of the registration statement
or an amendment to the registration statement, are available for inspection and
copying through the SEC's public reference rooms listed above.
The SEC allows us to "incorporate by reference" in this prospectus the
information that we file with them, which means we can disclose important
information to you by referring you to other documents that contain that
information. The information we incorporate by reference is considered to be
part of this prospectus supplement and information we later file with the SEC
will automatically update and supersede the information in this prospectus
supplement. The following documents filed by us with the SEC pursuant to Section
13 of the Exchange Act (File No. 000-25669) and any future filings under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act made before the
termination of the offering are incorporated by reference herein:
(i) our Annual Report on Form 10-K/A for the year ended March 31, 2004
filed with the SEC on July 20, 2004, and the exhibits incorporated therein;
(ii) our definitive proxy statement pursuant to Section 14(A) of the
Exchange Act for our 2003 Annual Meeting of the Shareholders filed with the SEC
on December 12, 2003;
(iii) the description of our common stock contained in our registration
statement on Form 8-A pursuant to Section 12(b) of the Exchange Act filed with
the SEC on August 6, 2003, including any amendment or report filed for the
purpose of updating such description; and
S-14
(iv) all other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual Report
referenced in (i) above.
All documents filed by the company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this registration
statement and prior to the filing of a post-effective amendment indicating that
all securities offered hereby have been sold or deregistering all securities
then remaining unsold are expressly incorporated by reference into this
prospectus and to be a part of this prospectus from the date of filing of such
documents.
Statements made in this prospectus, or in any documents incorporated by
reference in this prospectus as to the contents of any contract or other
document are materially complete. For additional information we refer you to the
copy of the contract or other document filed as an exhibit to the registration
statement of which this prospectus is a part or as an exhibit to the documents
incorporated by reference.
We will provide to you a copy of any document incorporated by reference in
this prospectus and any exhibits specifically incorporated by reference in those
documents at no cost. You may request copies by contacting us at the following
address or telephone numbers: Corporate Secretary, Immtech International, Inc.,
150 Fairway Drive, Suite 150, Vernon Hills, Illinois, 60061, Telephone No.:
(847) 573-0033 or toll free (877) 898-8038.
Any statement incorporated or deemed incorporated herein by reference will
be deemed to be modified or superseded for the purpose of the registration
statement and this prospectus to the extent that a statement contained in this
prospectus or in any subsequently filed document modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of the registration
statement or this prospectus.
S-15
PROSPECTUS
IMMTECH INTERNATIONAL, INC.
2,081,598 Shares
Common Stock
This is a public offering of 2,081,598 shares of our common stock. We may
from time to time offer and sell, subject to American Stock Exchange LLC
("AMEX") rules, up to 750,000 shares of common stock for our own account and the
stockholders named under the caption "Selling Stockholders" may from time to
time offer and sell up to an additional 1,331,598 shares of common stock. By
this post-effective Amendment No. 4, the Company is registering for Selling
Stockholders an additional 550,000 shares of common stock, of which 100,000 are
outstanding and 450,000 are underlying warrants. Of the 450,000 shares
underlying warrants, 100,000 are exercisable at $6.00 per share, 100,000 are
exercisable at $6.08 per share, 125,000 are exercisable at $10.00 per share and
125,000 are exercisable at $15.00 per share. The shares may be sold in
transactions occurring either on or off the AMEX at prevailing market prices or
at negotiated prices. Sales may be made through brokers or through dealers, who
are expected to receive customary commissions or discounts. We will receive no
proceeds from the sale of shares sold by selling stockholders under this
prospectus.
Our common stock is traded on the AMEX under the symbol "IMM". The last
reported sale of our common stock on the AMEX on April 22, 2004 was $18.60.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 1 OF THIS PROSPECTUS
BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is April 23, 2004
TABLE OF CONTENTS
RISK FACTORS.................................................................................................... 1
About this prospectus........................................................................................... 14
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION OF DOCUMENTS BY REFERENCE................................... 15
FORWARD-LOOKING STATEMENTS...................................................................................... 16
THE COMPANY..................................................................................................... 17
USE OF PROCEEDS................................................................................................. 18
SELLING STOCKHOLDERS............................................................................................ 18
DESCRIPTION OF CAPITAL STOCK.................................................................................... 22
PLAN OF DISTRIBUTION............................................................................................ 22
LEGAL MATTERS................................................................................................... 24
EXPERTS......................................................................................................... 24
interests of named experts and counsel.......................................................................... 24
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES............................. 24
GLOSSARY........................................................................................................ 26
RISK FACTORS
An investment in the shares offered by this prospectus involves a high
degree of risk. In addition to the other information contained in this
prospectus, the following risk factors should be considered carefully in
evaluating our business before purchasing the shares.
THERE IS NO ASSURANCE THAT WE WILL SUCCESSFULLY DEVELOP A COMMERCIALLY VIABLE
PRODUCT; OUR MOST ADVANCED PRODUCT CANDIDATE IS IN PHASE II HUMAN CLINICAL
TRIALS.
We are at an early stage of human clinical, and in some cases
pre-clinical, development activities required for drug approval and
commercialization. Since our formation in October 1984, we have engaged in
research and development programs, expanding our network of scientists and
scientific advisors, licensing technology agreements and advancing the
..0commercialization of the dication technology platform. We have generated no
revenue from product sales and do not have any products currently available for
sale, and none are expected to be commercially available for sale until after
March 31, 2005, if at all. There can be no assurance that the research we fund
and manage will lead to commercially viable products. Our most advanced programs
are in the Phase II human clinical testing stage using our lead compound DB289
for several indications including trypanosomiasis and malaria and must undergo
substantial additional regulatory review prior to commercialization.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT; OUR FUTURE PROFITABILITY
IS UNCERTAIN.
We have experienced significant operating losses since our inception and
we expect to incur additional operating losses as we continue research and
development, clinical trial and commercialization efforts. As of December 31,
2003, we had an accumulated deficit of approximately $54,286,000. Losses from
operations were $4,693,000 and $10,712,000, respectively, for the fiscal year
ended March 31, 2003 and the nine-month period ended December 31, 2003.
WE WILL NEED SUBSTANTIAL ADDITIONAL FUNDS IN FUTURE YEARS TO CONTINUE OUR
RESEARCH AND DEVELOPMENT; IF FINANCING IS NOT AVAILABLE, WE MAY BE REQUIRED TO
REDUCE SPENDING FOR OUR RESEARCH PROGRAMS, CEASE OPERATIONS OR PURSUE OTHER
FINANCING ALTERNATIVES.
Our operations to date have consumed substantial amounts of cash. Negative
cash flow from operations is expected to continue in the foreseeable future.
Without substantial additional financing, we may be required to reduce some or
all of our research programs or cease operations. Our cash requirements may vary
materially from those now planned because of results of research and
development, results of pre-clinical and clinical testing, responses to our
grant requests, relationships with strategic partners, changes in the focus and
direction of our research and development programs, competitive and
technological advances, the Food and Drug Administration ("FDA") and foreign
regulatory process and other factors. In any of these circumstances, we may
require substantially more funds than we currently have available or currently
intend to raise to continue our business. We may seek to satisfy future funding
requirements through public or private offerings of securities, by collaborative
or other arrangements with pharmaceutical or biotechnology companies, issuance
of debt or from other
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sources. Additional financing may not be available when needed or may not be
available on acceptable terms. If adequate financing is not available, we may
not be able to continue as a going concern or may be required to delay, scale
back or eliminate certain research and development programs, relinquish rights
to certain technologies or product candidates, forego desired opportunities or
license third parties to commercialize our products or technologies that we
would otherwise seek to develop internally. To the extent we raise additional
capital by issuing equity securities, ownership dilution to existing
stockholders will result.
We receive funding primarily from charitable grants, research and
development programs and from sales of our equity securities. To date we have
directed most of such funds not used for general and administrative overhead
toward our research and development and commercialization programs (including
preparation of test results for submission to regulatory agencies for product
approval). Until one or more of our product candidates is approved for sale, our
funding is limited to funds received from testing and research agreements,
licensing of our technology and potential fees associated with interim leasing
of our properties while we develop them for product manufacture.
WE DO NOT HAVE EMPLOYMENT CONTRACTS WITH ANY EMPLOYEES OTHER THAN OUR CEO, T.
STEPHEN THOMPSON; SOME OF OUR PROPRIETARY INTELLECTUAL PROPERTY IS DEVELOPED BY
SCIENTISTS THAT ARE NOT EMPLOYED BY US.
We have an employment agreement with our CEO, T. Stephen Thompson that
renews annually in April of each year unless 30 day prior notice is given by
either party to the other. Mr. Thompson renewed his employment with the company
this year and has not expressed any indication that he desires to leave the
company or retire. All other company employees are "at will" and may leave at
any time, however, none have as of this date, expressed any intention to do so.
We do not have "key-man" life insurance policies on any of our executives,
including Mr. Thompson.
Most of the financial aspects of the company, including investor
relations, intellectual property control and corporate governance, are under the
direct supervision of Cecilia Chan and Gary Parks. Together with Mr. Thompson,
Ms. Chan and Mr. Parks hold institutional knowledge and business savvy that they
utilize to assist the company to forge new relationships and exploit new
business opportunities without diminishing or undermining existing programs and
obligations. Neither Ms. Chan nor Mr. Parks have employment contracts with the
company, however, neither has indicated any intention to retire or leave the
company.
Our business depends to a significant degree on the continuing
contributions of our key management, scientific and technical personnel, as well
as on the continued discoveries of scientists, researchers and specialists at
The University of North Carolina at Chapel Hill ("UNC"), Georgia State
University, Duke University and Auburn University (collectively, the "Scientific
Consortium") and other research groups that assist in the development of our
product candidates. Substantial amounts of our proprietary intellectual property
is developed by scientists who are employed by the universities that comprise
the Scientific Consortium and other research groups. We do not have control
over, knowledge of, or access to those employment arrangements. We have not been
advised by any of the key members of our company, the scientific research groups
or of the Scientific Consortium of their intention to leave their employ or the
program.
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There can be no assurance that the loss of certain members of management
or the scientists, researchers and technicians from the Scientific Consortium
universities would not materially adversely affect our business.
ADDITIONAL RESEARCH GRANTS NEEDED TO FUND OUR OPERATIONS MAY NOT BE AVAILABLE
OR, IF AVAILABLE, NOT ON TERMS ACCEPTABLE TO THE COMPANY.
We have funded our product development and operations as of December 31,
2003 through a combination of sales of equity and revenue generated from
research agreements funded by grants. As of December 31, 2003, our accumulated
deficit is approximately $54,286,000 of which approximately $10,641,000 was
funded either directly or indirectly with grant funds and payments from research
and testing agreements.
In March 2001 we entered into a clinical research subcontract with UNC,
funded by a $15.1 million grant from The Bill & Melinda Gates Foundation ("The
Gates Foundation") to UNC for the study of African sleeping sickness and
Leishmaniasis, under which UNC is to pay to us $9.8 million in installments over
a period not to exceed five years based on our achieving certain milestones. We
entered into a second subcontract with UNC under which we are to receive over
$2.4 million based on a separate $2.7 million grant from the Gates Foundation to
UNC to accelerate the African sleeping sickness study. We will continue to apply
for new grants to support continuing research and development of our dication
platform technology and other product candidates. The process of obtaining
grants is extremely competitive and there can be no assurance that any of our
grant applications will be acted upon favorably. Some charitable organizations
may request licenses to our proprietary information or may impose price
restrictions on the products we develop with grant funds. We may not be able to
negotiate terms that are acceptable to us with such organizations. In the event
we are unable to raise sufficient funds to advance our product developments with
grant funds we may seek to raise additional capital with the issuance of debt or
equity securities. There can be no assurance that we will be able to place or
sell debt or equity securities on terms acceptable to the company and, if we
sell equity, existing stockholders may suffer dilution (see Risk Factors, this
section, entitled "Shares eligible for future sale may adversely affect our
ability to sell equity securities," and "Our outstanding options and warrants
may adversely affect our ability to consummate future equity financings due to
the dilution potential to future investors").
NONE OF OUR PRODUCT CANDIDATES HAVE BEEN APPROVED FOR SALE BY ANY REGULATORY
AGENCY; APPROVAL IS REQUIRED BEFORE WE CAN SELL DRUG PRODUCTS COMMERCIALLY.
All of our product candidates, including DB289 and DB075, require
additional clinical testing, regulatory approval and development of marketing
and distribution channels, all of which are expected to require substantial
additional investment prior to commercialization. There can be no assurance that
any of our product candidates will be successfully developed, prove to be safe
and effective in human clinical trials, meet applicable regulatory standards, be
capable of being produced in commercial quantities at acceptable costs, be
eligible for third party reimbursement from governmental or private insurers, be
successfully marketed or achieve market acceptance. If we are unable to
commercialize our product candidates in a timely manner we may be required to
seek additional funding, reduce or cancel some or all of our development
programs, sell or license some of our proprietary information or cease
operations.
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THERE ARE SUBSTANTIAL UNCERTAINTIES RELATED TO CLINICAL TRIALS THAT MAY RESULT
IN THE EXTENSION, MODIFICATION OR TERMINATION OF ONE OR MORE OF OUR PROGRAMS.
In order to obtain required regulatory approvals for the commercial sale
of our product candidates, we must demonstrate through human clinical trials
that our product candidates are safe and effective for their intended uses.
Prior to conducting human clinical trials we must obtain governmental approvals
from the host nation, approval from the U.S. to export our product candidate to
the test site and qualify a sufficient number of volunteer patients that meet
our trial criteria. If we do not obtain required governmental consents or if we
do not enroll a sufficient number of patients in a timely manner or at all, our
trial expenses could increase, results may be delayed or the trial may be
cancelled.
We may find, at any stage of our research and development, that product
candidates that appeared promising in earlier clinical trials do not demonstrate
safety or effectiveness in later clinical trials and therefore do not receive
regulatory approvals. Despite the positive results of our pre-clinical testing
and human clinical trials those results may not be predictive of the results of
later clinical trials and large-scale testing. Companies in the pharmaceutical
and biotechnology industries have suffered significant setbacks in various
stages of clinical trials, even after promising results had been obtained in
early-stage human clinical trials.
Completion of the clinical trials may be delayed by many factors,
including slower than anticipated patient enrollment, difficulty in securing
sufficient supplies of clinical trial materials or adverse events occurring
during clinical trials. For instance, once we obtain permission to run a test,
there are strict criteria regulating who we can test. In the case of our malaria
product candidate, we may encounter difficulties in finding potential patients
because our initial regimen requires patients to first fail other treatment
programs in order to be eligible for our treatment. In a second case, we were
forced to cancel a human clinical trial and relocate due to political
insurrection in our host nation.
Completion of testing, studies and trials may take several years, and the
length of time varies substantially with the type, complexity, novelty and
intended use of the product. Delays or rejections may be based upon many
factors, including changes in regulatory policy during the period of product
development. No assurance can be given that any of our development programs will
be successfully completed, that any Investigational New Drug ("IND") application
filed with the FDA (or any foreign equivalent filed with the appropriate foreign
authorities) will become effective, that additional clinical trials will be
allowed by the FDA or other regulatory authorities, or that clinical trials will
commence as planned. There have been delays in our testing and development
schedules due to funding and patient enrollment difficulties and there can be no
assurance that our future testing and development schedules will be met.
WE DO NOT HAVE PHARMACEUTICAL MANUFACTURING CAPABILITY, WHICH COULD IMPAIR OUR
ABILITY TO DEVELOP COMMERCIALLY VIABLE PRODUCTS AT REASONABLE COSTS.
Our ability to commercialize product candidates will depend in part upon
our ability to have manufactured the product candidates, either directly or
through third parties, at a competitive cost and in accordance with FDA and
other regulatory requirements. We currently lack facilities and personnel to
manufacture our product candidates. There can be no assurance that we will be
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able to acquire such resources, either directly or through third parties, at
reasonable costs, if we develop commercially viable products.
We intend to commence construction of a pharmaceutical manufacturing
facility in the People's Republic of China ("PRC") with our subsidiary Immtech
Hong Kong Limited. We have recently acquired a building in which to construct
the facility, however, operation of such a facility is subject to various
governmental approvals, which may be difficult or impossible to obtain. There
can be no guarantee that products manufactured at this facility will be accepted
in the countries where we desire to sell our future products.
WE ARE DEPENDENT ON THIRD-PARTY RELATIONSHIPS FOR CRITICAL ASPECTS OF OUR
BUSINESS; PROBLEMS THAT DEVELOP IN THESE RELATIONSHIPS MAY INCREASE COSTS AND/OR
DIMINISH OUR ABILITY TO DEVELOP OUR PRODUCT CANDIDATES.
We use the expertise and resources of strategic partners and third parties
in a number of key areas, including (i) research and development, (ii)
pre-clinical and human clinical trials and (iii) manufacture of pharmaceutical
drugs. We have licensing and exclusive commercialization rights to a dicationic
pharmaceutical platform and are developing drugs intended for commercial use
based on that platform. This strategy creates risks by placing critical aspects
of our business in the hands of third parties, whom we may not be able to
control. If these third parties do not perform in a timely and satisfactory
manner, we may incur costs and delays as we seek alternate sources of such
products and services, if available. Such costs and delays may have a material
adverse effect on our business if the delays jeopardize our licensing
arrangements by causing us to become non-compliant with certain license
agreements.
We may seek additional third-party relationships in certain areas,
particularly in clinical testing, marketing, manufacturing and other areas where
pharmaceutical and biotechnology company collaborators will enable us to develop
particular products or geographic markets that are otherwise beyond our current
resources and/or capabilities. There is no assurance that we will be able to
obtain any such collaboration or any other research and development,
manufacturing or clinical trial arrangements. Our inability to obtain and
maintain satisfactory relationships with third parties may have a material
adverse effect on our business by slowing our ability to develop new products,
requiring us to expand our internal capabilities, increasing our overhead and
expenses, hampering future growth opportunities or causing us to delay or
terminate effected programs.
WE ARE UNCERTAIN ABOUT THE ABILITY TO PROTECT OR OBTAIN NECESSARY PATENTS AND
PROTECT OUR PROPRIETARY INFORMATION; OUR ABILITY TO DEVELOP OUR PRODUCT
CANDIDATES WOULD BE COMPROMISED WITHOUT ADEQUATE INTELLECTUAL PROPERTY
PROTECTION.
We have spent and continue to spend considerable funds to develop our
product candidates and we are relying on the potential to exploit commercially
without competition the results of our product development. Much of our
intellectual property is licensed to us under various agreements including the
Consortium Agreement. It is the primary responsibility of the discoverer to
develop his, her or its invention confidentially, insure that the invention is
unique, and to obtain patent protection. In most cases, our role is to reimburse
patent related costs after we decide to develop any such invention. We therefore
rely on the inventors to insure that technology licensed to us is adequately
protected. Without adequate protection for our
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intellectual property we believe our ability to realize profits on our future
commercialized product would be diminished. Without protection, competitors
might be able to copy our work and compete with our products without having
invested in the development.
There can be no assurance that any particular patent will be granted or
that issued patents will provide us, directly or through licenses, with the
intellectual property protection contemplated. Patents and licenses of patents
can be challenged, invalidated or circumvented. It is also possible that
competitors will develop similar products simultaneously. Our breach of any
license agreement or the failure to obtain a license to any technology or
process which may be required to develop or commercialize one or more of our
product candidates may have a material adverse effect on our business including
the need for additional capital to develop alternate technology, the potential
that competitors may gain unfair advantage and lessen our expectation of
potential future revenues.
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings, and a substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Third parties may
have filed applications for, or may have been issued, certain patents and may
obtain additional patents and proprietary rights related to products or
processes competitive with or similar to those that we are attempting to develop
and commercialize. We may not be aware of all of the patents potentially adverse
to our interests that may have been issued to others. No assurance can be given
that patents do not exist, have not been filed or could not be filed or issued,
which contain claims relating to or competitive with our technology, product
candidates or processes. If patents have been or are issued to others containing
preclusive or conflicting claims, then we may be required to obtain licenses to
one or more of such patents or to develop or obtain alternative technology.
There can be no assurance that the licenses or alternative technology that might
be required for such alternative processes or products would be available on
commercially acceptable terms, or at all.
Because of the substantial length of time and expense associated with
bringing new drug products to market through the development and regulatory
approval process, the pharmaceutical and biotechnology industries place
considerable importance on patent and trade secret protection for new
technologies, products and processes. Since patent applications in the United
States are confidential until patents are issued and since publication of
discoveries in the scientific or patent literature often lag behind actual
discoveries, we cannot be certain that we (or our licensors) were the first to
make the inventions covered by pending patent applications or that we (or our
licensors) were the first to file patent applications for such inventions. The
patent positions of pharmaceutical and biotechnology companies can be highly
uncertain and involve complex legal and factual questions and, therefore, the
breadth of claims allowed in pharmaceutical and biotechnology patents, or their
enforceability, cannot be predicted. There can be no assurance that any patents
under pending patent applications or any further patent applications will be
issued. Furthermore, there can be no assurance that the scope of any patent
protection will exclude competitors or provide us competitive advantages, that
any of our (or our licensors') patents that have been issued or may be issued
will be held valid if subsequently challenged, or that others, including
competitors or current or former employers of our employees, advisors and
consultants, will not claim rights in, or ownership to, our (or our licensors')
patents and other proprietary rights. There can be no assurance that others will
not independently develop substantially equivalent proprietary information or
otherwise obtain access to our proprietary
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information, or that others may not be issued patents that may require us to
obtain a license for, and pay significant fees or royalties for, such
proprietary information.
WE RELY ON TECHNOLOGY DEVELOPED BY OTHERS AND SHARED WITH COLLABORATORS TO
DEVELOP OUR PRODUCT CANDIDATES.
We rely on trade secrets, know-how and technological advancement to
maintain our competitive position. Although we use confidentiality agreements
and employee proprietary information and invention assignment agreements to
protect our trade secrets and other unpatented know-how, these agreements may be
breached by the other party thereto or may otherwise be of limited effectiveness
or enforceability.
We are licensed to commercialize technology from a dication platform
developed by a Scientific Consortium, comprised primarily of scientists employed
by universities in an academic setting. The academic world is improved by the
sharing of information. As a business, however, the sharing of information
whether through publication of research, academic lectures or general
intellectual discourse among contemporaries is not conducive to protection of
proprietary information. Our proprietary information may fall into the
possession of unintended parties without our knowledge through customary
academic information sharing.
At times we may enter into confidentiality agreements with other
companies, allowing them to test our compounds for potential future licensing,
in return for milestone and royalty payments should any discoveries result from
the use of our proprietary information. We cannot be assured that such parties
will honor these confidentiality agreements subjecting our intellectual property
to unintended disclosure.
The pharmaceutical and biotechnology industries have experienced extensive
litigation regarding patent and other intellectual property rights. We could
incur substantial costs in defending suits that may be brought against us (or
our licensors) claiming infringement of the rights of others or in asserting our
(or our licensors') patent rights in a suit against another party. We may also
be required to participate in interference proceedings declared by the U.S.
Patent and Trademark Office or similar foreign agency for the purpose of
determining the priority of inventions in connection with our (or our
licensors') patent applications.
Adverse determinations in litigation or interference proceedings could
require us to seek licenses (which may not be available on commercially
reasonable terms) or subject us to significant liabilities to third parties, and
could therefore have a material adverse effect on our business by increasing our
expenses and having an adverse effect on our business. Even if we prevail in an
interference proceeding or a lawsuit, substantial resources, including the time
and attention of our officers, would be required.
CONFIDENTIALITY AGREEMENTS MAY NOT ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.
We require our employees, consultants and third-parties with whom we share
proprietary information to execute confidentiality agreements upon the
commencement of their relationship with us. The agreements generally provide
that trade secrets and all inventions conceived by the individual and all
confidential information developed or made known to the individual during the
term of the relationship will be our exclusive property and will be kept
confidential and not
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disclosed to third parties except in specified circumstances. There can be no
assurance, however, that these agreements will provide meaningful protection for
our proprietary information in the event of unauthorized use or disclosure of
such information. If our unpatented proprietary information is publicly
disclosed before we have been granted patent protection, our competitors could
be unjustly enrichened and we could lose the ability to profitably develop
products from such information.
OUR INDUSTRY HAS SIGNIFICANT COMPETITION; OUR PRODUCT CANDIDATES MAY BECOME
OBSOLETE PRIOR TO COMMERCIALIZATION DUE TO ALTERNATIVE TECHNOLOGIES.
The pharmaceutical and biotechnology fields are characterized by extensive
research efforts and rapid technological progress. Competition from other
pharmaceutical and biotechnology companies and research and academic
institutions is intense and other companies are engaged in research and product
development for treatment of the same diseases that we target. New developments
in pharmaceutical and biotechnology fields are expected to continue at a rapid
pace in both industry and academia. There can be no assurance that research and
discoveries by others will not render some or all of our programs or products
non-competitive or obsolete.
We are aware of other companies and institutions dedicated to the
development of therapeutics similar to those we are developing, including
Aventis Pharmaceuticals, Inc., Hoffman-LaRoche Ltd., Sanofi-Synthelabo Inc.,
Pfizer Inc., and Bayer Corporation. Many of our existing or potential
competitors have substantially greater financial and technical resources than we
do and therefore may be in a better position to develop, manufacture and market
pharmaceutical products. Many of these competitors are also more experienced
performing pre-clinical testing and human clinical trials and obtaining
regulatory approvals. The current or future existence of competitive products
may also adversely affect the marketability of our product candidates.
In the event some or all of our programs are rendered non-competitive or
obsolete, we do not currently have alternative strategies to develop new product
lines or financial resources to pursue such a course of action.
THERE IS NO ASSURANCE THAT WE WILL RECEIVE FDA OR COROLLARY FOREIGN APPROVAL FOR
ANY OF OUR PRODUCT CANDIDATES FOR ANY INDICATION; WE ARE SUBJECT TO GOVERNMENT
REGULATION FOR THE COMMERCIALIZATION OF OUR PRODUCT CANDIDATES.
We have not made application to the U.S. FDA or any other regulatory
agency to sell commercially or label any of our product candidates. We or our
test collaborators have received licenses from the FDA to export DB289 for
testing purposes and have been approved to conduct human clinical trials for
various indications in each of the Democratic Republic of Congo, Angola,
Thailand and Peru.
All new pharmaceutical drugs and biologics, including our product
candidates, are subject to extensive and rigorous regulation by the federal
government, principally the FDA under the Federal Food, Drug and Cosmetic Act
("FDCA") and other laws including, in the case of biologics, the Public Health
Services Act, and by state, local and foreign governments. Such regulations
govern, among other things, the development, testing, manufacture, labeling,
storage, pre-market clearance or approval, advertising, promotion, sale and
distribution of pharmaceutical
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drugs and biologics. If drug products or biologics are marketed abroad, they are
subject to extensive regulation by foreign governments. Failure to comply with
applicable regulatory requirements may subject us to administrative or
judicially imposed sanctions such as civil penalties, criminal prosecution,
injunctions, product seizure or detention, product recalls, total or partial
suspension of production and FDA refusal to approve pending applications.
Each of our product candidates must be approved for each indication for
which we believe it to be viable. We have not yet determined from which
regulatory bodies we will seek approval for our product candidates or for which
indications. Once determined, the approval process is subject to those agencies'
policies and acceptance of those agencies' approvals, if obtained, in the
countries where we intend to market our product candidates.
WE HAVE NOT RECEIVED REGULATORY APPROVAL IN THE UNITED STATES OR ANY FOREIGN
JURISDICTION FOR THE COMMERCIAL SALE OF ANY OF OUR PRODUCT CANDIDATES.
The process of obtaining FDA and other required regulatory approvals,
including foreign approvals, often takes many years and varies substantially
based upon the type, complexity and novelty of the products involved and the
indications being studied. Furthermore, the approval process is extremely
expensive and uncertain. There can be no assurance that our product candidates
will be approved for commercial sale in the United States by the FDA or
regulatory agencies in foreign countries. The regulatory review process can take
many years and we will need to raise additional funds to complete the regulatory
review process for our current product candidates. Therefore, the failure to
receive FDA approval would have a material adverse effect on our business by
precluding us from marketing and selling such products in the United States and
preventing us from representing to other nations that the U.S. FDA has approved
our products to facilitate accelerated review procedures in those nations and
therefore negatively impacting our ability to generate future revenues. Even if
regulatory approval of a product is granted, there can be no assurance that we
will be able to obtain the labeling claims (a labeling claim is a product's
description and its FDA permitted uses) necessary or desirable for the promotion
of such product. FDA regulations prohibit the marketing or promotion of a drug
for unapproved indications. Furthermore, regulatory marketing approval may
entail ongoing requirements for post-marketing studies if regulatory approval is
obtained; we will then be subject to ongoing FDA obligations and continued
regulatory review. In particular, we, or our third party manufacturers, will be
required to adhere to Good Manufacturing Practices ("GMP"), which require us (or
our third party manufacturers) to manufacture products and maintain records in a
prescribed manner with respect to manufacturing, testing and quality control.
Further, we (or our third party manufacturers) must pass a manufacturing
facilities pre-approval inspection by the FDA or corollary agency before
obtaining marketing approval. Failure to comply with applicable regulatory
requirements may result in penalties, such as restrictions on a product's
marketing or withdrawal of the product from the market. In addition,
identification of certain side effects after a drug is on the market or the
occurrence of manufacturing problems could cause subsequent withdrawal of
approval, reformulation of the drug, additional pre-clinical testing or clinical
trials and changes in labeling of the product.
Prior to the submission of an application for FDA approval, our
pharmaceutical drugs and biologics undergo rigorous pre-clinical and clinical
testing, which may take several years and the expenditure of substantial
financial and other resources. Before commencing clinical trials in
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humans in the United States, we must submit to the FDA and receive clearance of
an IND. There can be no assurance that submission of an IND for future clinical
testing of any of our product candidates under development or other future
product candidates would result in FDA permission to commence clinical trials or
that we will be able to obtain the necessary approvals for future clinical
testing in any foreign jurisdiction. Further, there can be no assurance that if
such testing of product candidates under development is completed, any such drug
compounds will be accepted for formal review by the FDA or any foreign
regulatory body or approved by the FDA for marketing in the United States or by
any such foreign regulatory bodies for marketing in foreign jurisdictions.
If a product is regulated as a biologic, the FDA will require the
submission and approval of both a Product License Application ("PLA") and an
Establishment License Application ("ELA") before commercial marketing can
commence. The PLA must include detailed information about the biologic, its
manufacture and the results of product development, pre-clinical studies and
clinical trials. The FDA's time to review PLAs and ELAs averages two to five
years. The FDA may ultimately decide that the PLA and ELA do not satisfy the
regulatory criteria for approval and deny approval or require additional
clinical studies. Future federal, state, local or foreign legislation or
administrative acts could also prevent or delay regulatory approval of our
pharmaceutical drug and biologic candidates. We anticipate filing a NDA with the
FDA for compassionate use of DB289 as a treatment for trypanosomiasis in
sub-Sahara Africa in calendar year 2005.
OUR MOST ADVANCED PROGRAMS ARE DEVELOPING PRODUCTS INTENDED FOR SALE IN
COUNTRIES THAT MAY NOT HAVE ESTABLISHED PHARMACEUTICAL REGULATORY AGENCIES.
Some of the intended markets for our treatment of African sleeping
sickness and malaria are in countries without developed pharmaceutical
regulatory agencies. We plan in such cases to try first to obtain regulatory
approval from a recognized pharmaceutical regulatory agency such as the U.S. FDA
or one or more European agencies and then to apply to the targeted country for
recognition of the foreign approval. Because the countries where we intend
market to market treatments for African sleeping sickness and malaria are not
obligated to accept foreign regulatory approvals and because those countries do
not have standards of their own for us to rely upon, we may be required to
provide additional documentation or complete additional testing prior to
distributing our products in those countries.
THERE IS UNCERTAINTY REGARDING THE AVAILABILITY OF HEALTH CARE REIMBURSEMENT FOR
PURCHASERS OF OUR ANTICIPATED PRODUCTS; HEALTH CARE REFORM MAY NEGATIVELY IMPACT
THE ABILITY OF PROSPECTIVE PURCHASERS OF OUR ANTICIPATED PRODUCTS TO PAY FOR
SUCH PRODUCTS.
Our ability to commercialize any of our product candidates will depend in
part on the extent to which reimbursement for the costs of the resulting drug or
biologic will be available from government health administration authorities,
private health insurers, charities and others. Many of our product candidates,
including treatments for trypanosomiasis, malaria and tuberculosis, would be in
the greatest demand in developing nations, many of which do not maintain
comprehensive health care systems with the financial resources to pay for such
drugs. We do not know to what extent governments, private charities,
international organizations and others would contribute toward bringing newly
developed drugs to developing nations. Even among drugs sold in developed
countries, significant uncertainty exists as to the reimbursement status of
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newly approved health care products. There can be no assurance of the
availability of third-party insurance reimbursement coverage enabling us to
establish and maintain price levels sufficient for realization of a profit on
our investment in developing pharmaceutical drugs and biologics. Government and
other third-party payers are increasingly attempting to contain health care
costs by limiting both coverage and the level of reimbursement for new drug or
biologic products approved for marketing by the FDA and by refusing, in some
cases, to provide any coverage for uses of approved products for disease
indications for which the FDA has not granted marketing approval. If adequate
coverage and reimbursement levels are not provided by government and third-party
payers for uses of our anticipated products, the market acceptance of these
products would be adversely affected.
Health care reform proposals are continually introduced in Congress and in
various state legislatures and there is no guarantee that such proposals will
not be introduced in the future. We cannot predict when any proposed reforms
will be implemented, if ever, or the effect of any implemented reforms on our
business. Implemented reforms may have a material adverse effect on our business
by reducing or eliminating the availability of third-party reimbursement for our
anticipated products or by limiting price levels at which we are able to sell
such products. If reimbursement is not available for our products, health care
providers may prescribe alternative remedies if available. Patients, if they
cannot afford our products, may do without. In addition, if we are able to
commercialize products in overseas markets, then our ability to achieve success
in such markets may depend, in part, on the health care financing and
reimbursement policies of such countries. We cannot predict changes in health
care systems in foreign countries, and therefore, do not know the effects on our
business of possible changes.
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT OUR ABILITY TO SELL EQUITY
SECURITIES.
Sales of our common stock (including the issuance of shares upon
conversion of preferred stock) in the public market could materially and
adversely affect the market price of shares because prior sales have been
executed at or below our current market price. We have outstanding four series
of preferred stock that convert to common stock at prices equivalent to $4.42,
$4.00, $4.42 and $9.00, respectively, for our series A, series B, series C and
series D convertible preferred stock. Our obligation to convert the preferred
stock upon demand by the holders may depress the price of our common stock and
also make it more difficult for us to sell equity securities or equity-related
securities in the future at a time and price that we deem appropriate.
As of March 19, 2004, we had 9,834,986 shares of common stock outstanding,
plus (1) 80,800 shares of series A convertible preferred stock, convertible into
approximately 457,013 shares of common stock at the conversion rate of 1:5.656,
(2) 19,925 shares of series B Convertible Preferred stock convertible into
approximately 124,531 shares of common stock at the conversion rate of 1:6.25,
(3) 72,304 shares of series C convertible preferred stock convertible into
approximately 408,954 shares of common stock at the conversion rate of 1:5.656,
(4) 200,000 shares of series D convertible preferred stock convertible into
approximately 555,540 shares of common stock at the conversion rate of 1:2.778,
(5) 955,374 options to purchase shares of common stock with a weighted-average
exercise price of $8.58 per share and (6) 2,787,712 warrants to purchase shares
of common stock with a weighted-average exercise price of $7.10. Of the shares
outstanding, 6,888,199 shares of common stock are freely
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tradable without restriction. All of the remaining 2,946,787 shares are
restricted from resale, except pursuant to certain exceptions under the
Securities Act of 1933, as amended (the "Securities Act").
OUR OUTSTANDING OPTIONS AND WARRANTS MAY ADVERSELY AFFECT OUR ABILITY TO
CONSUMMATE FUTURE EQUITY FINANCINGS DUE TO THE DILUTION POTENTIAL TO FUTURE
INVESTORS.
We have outstanding options and warrants for the purchase of shares of our
common stock with exercise prices currently below market which may adversely
affect our ability to consummate future equity financings. The holders of such
warrants and options may exercise them at a time when we would otherwise be able
to obtain additional equity capital on more favorable terms. To the extent any
such options and warrants are exercised, the outstanding shares of our common
stock will be diluted.
As of March 19, 2004, we have outstanding vested options to purchase
616,615 shares of common stock at a weighted-average exercise price of $6.47 and
vested warrants to purchase 2,787,712 shares of common stock with a
weighted-average price of $7.12.
Due to the number of shares of common stock we are obligated to sell
pursuant to outstanding options and warrants described above, potential
investors may not purchase our future equity offerings at market price because
of the potential dilution such investors may suffer as a result of the exercise
of the outstanding options and warrants.
THE MARKET PRICE OF OUR COMMON STOCK HAS EXPERIENCED SIGNIFICANT VOLATILITY.
The securities markets from time to time experience significant price and
volume fluctuations unrelated to the operating performance of particular
companies. In addition, the market prices of the common stock of many publicly
traded pharmaceutical and biotechnology companies have been and can be expected
to be especially volatile. Our common stock price in the 52-week period ended
March 19, 2004 had a low of $4.15 and high of $32.51. Announcements of
technological innovations or new products by us or our competitors, developments
or disputes concerning patents or proprietary rights, publicity regarding actual
or potential clinical trial results relating to products under development by us
or our competitors, regulatory developments in both the United States and
foreign countries, delays in our testing and development schedules, public
concern as to the safety of pharmaceutical drugs or biologics and economic and
other external factors, as well as period-to-period fluctuations in our
financial results, may have a significant impact on the market price of our
common stock. The realization of any of the risks described in these "Risk
Factors" may have a significant adverse impact on such market prices.
WE ROUTINELY PAY VENDORS IN STOCK AS CONSIDERATION FOR THEIR SERVICES; THIS MAY
RESULT IN SHAREHOLDER DILUTION, ADDITIONAL COSTS AND DIFFICULTY RETAINING
CERTAIN VENDORS.
In order for us to preserve our cash resources, we often pay vendors in
shares or options to purchase shares of our common stock rather than cash.
Payments for services in stock may materially adversely affect our shareholders
by diluting the value of outstanding shares of our common stock. In addition, in
situations where we have agreed to register the shares issued to a vendor, this
will generally cause us to incur additional expenses associated with such
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registration. Paying vendors in shares or options to purchase shares of common
stock may also limit our ability to contract with the vendor of our choice
should that vendor decline payment in stock.
WE DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK. UNTIL SUCH TIME AS WE PAY
CASH DIVIDENDS OUR STOCKHOLDERS MUST RELY ON INCREASES IN OUR STOCK PRICE FOR
APPRECIATION.
We have never declared or paid dividends on our common stock. We intend to
retain future earnings to develop and commercialize our products and therefor we
do not intend to pay cash dividends in the foreseeable future. Until such time
as we determine to pay cash dividends on our common stock, our stockholders must
rely on increases in our common stock's market price for appreciation.
THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS, AND WE MAY HAVE TO
INDEMNIFY OUR OFFICERS AND DIRECTORS IN CERTAIN INSTANCES.
Our certificate of incorporation limits, to the maximum extent permitted
under Delaware law, the personal liability of our directors for monetary damages
for breach of their fiduciary duties as directors. Our bylaws provide that we
will indemnify our officers and directors and may indemnify our employees and
other agents to the fullest extent permitted by law. We have entered into
indemnification agreements with our officers and directors containing provisions
that are in some respects broader than the specific indemnification provisions
under Delaware law. The indemnification agreements may require us, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers
(other than liabilities arising from willful misconduct of a culpable nature),
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified and to obtain directors' and officers'
insurance. Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made or
threatened to be made a party to an action by reason of the fact that he or she
was a director, officer, employee or agent of the corporation or was serving at
the request of the corporation, against expenses actually and reasonably
incurred in connection with such action if he or she acted in good faith and in
a manner he or she 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 or her conduct was unlawful.
Delaware law does not permit a corporation to eliminate a director's duty of
care and the provisions of our certificate of incorporation have no effect on
the availability of equitable remedies, such as injunction or rescission, for a
director's breach of the duty of care.
We believe that our limitation of director liability assists us to attract
and retain qualified directors. However, in the event a director or the board
commits an act that may legally be indemnified under Delaware law, the company
will be responsible to pay for such director(s) legal defense and potentially
any damages resulting therefrom. Furthermore, the limitation on director
liability may reduce the likelihood of derivative litigation against directors,
and may discourage or deter stockholders from instituting litigation against
directors for breach of their fiduciary duties, even though such an action, if
successful, might benefit the company and its stockholders. Given the difficult
environment and potential for incurring liabilities currently facing directors
of publicly-held corporations, we believe that director indemnification is in
the
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best interests of the company and its stockholders, because it enhances our
ability to retain highly qualified directors and reduce a possible deterrent to
entrepreneurial decision-making.
Nevertheless, limitations of director liability may be viewed as limiting
the rights of stockholders, and the broad scope of the indemnification
provisions contained in our certificate of incorporation and bylaws could result
in increased expense to the company. The board of directors believes, however,
that these provisions will provide a better balancing of the legal obligations
of, and protections for, directors and will contribute positively to the quality
and stability of our corporate governance. The board of directors has concluded
that the benefit to stockholders of improved corporate governance outweighs any
possible adverse effects on stockholders of reducing the exposure of directors
to liability and broadened indemnification rights.
PRODUCT LIABILITY EXPOSURE MAY EXPOSE US TO SIGNIFICANT LIABILITY.
We do not have pharmaceutical products for sale and we therefor do not
carry product liability insurance. However, if we do commercialize drug products
we will face risk of exposure to product liability and other claims and lawsuits
in the event that the development or use of our technology or prospective
products is alleged to have resulted in adverse effects. We may not be able to
avoid significant liability exposure. We may not have sufficient insurance
coverage and we may not be able to obtain sufficient coverage at a reasonable
cost. An inability to obtain product liability insurance at acceptable cost or
to otherwise protect against potential product liability claims could prevent or
inhibit the commercialization of our products. A product liability claim could
hurt our financial performance. Even if we avoid liability exposure, significant
costs could be incurred, potentially damaging our financial performance. We do
carry commercial general liability insurance and clinical trials insurance which
covers our human clinical trial activities.
ABOUT THIS PROSPECTUS
This document is called a prospectus and is part of a registration
statement on Form S-3 that we filed with the SEC. Under this prospectus, we may
from time to time sell any combination of the securities described in this
prospectus in one or more offerings. The company's offerings may total up to
750,000 shares. In addition, the selling stockholders also may from time to time
collectively offer up to 1,331,598 shares of our common stock plus any
additional shares paid to selling stockholders as dividends on the preferred
shares that are convertible into the common stock registered hereunder.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not making, nor will
we make, an offer to sell the common stock in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in
this prospectus is current only as of the date on its cover. Our business,
financial condition, results of operations and prospects may have changed since
that date. You should read this prospectus together with the additional
information described under the heading "Where You Can Find More Information"
below.
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WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION OF DOCUMENTS BY REFERENCE
We file annual, quarterly and current reports, proxy statements and other
documents with the Securities and Exchange Commission (the "SEC"), under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). You may read
and copy any materials that we file with the SEC at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549, at 233 Broadway, 16th
Floor, New York, New York 10279 and at Northwest Atrium Center, 5000 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Our reports, proxy statements and other documents filed
electronically with the SEC are available at the website maintained by the SEC
at http://www.sec.gov. We also make available free of charge on or through our
Internet website, http://www.immtech-international.com, our annual, quarterly
and current reports, and, if applicable, amendments to those reports, filed or
furnished pursuant to Section 13(a) of the Exchange Act, as soon as reasonably
practicable after we electronically file such reports with the SEC. Information
on our website is not a part of this report.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the shares. This prospectus, which constitutes a
part of that registration statement, does not contain all the information
contained in that registration statement and its exhibits. For further
information with respect to the company and the shares, you should consult the
registration statement and its exhibits. The registration statement and any of
its amendments, including exhibits filed as a part of the registration statement
or an amendment to the registration statement, are available for inspection and
copying through the SEC's public reference rooms listed above.
The SEC allows us to "incorporate by reference" in this prospectus the
information that we file with them, which means we can disclose important
information to you by referring you to other documents that contain that
information. The information we incorporate by reference is considered to be
part of this prospectus and information we later file with the SEC will
automatically update and supersede the information in this prospectus. The
following documents filed by us with the SEC pursuant to Section 13 of the
Exchange Act (File No. 000-25669) and any future filings under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act made before the termination of the
offering are incorporated by reference herein:
(i) our Amended Annual Report on Form 10-K/A for the fiscal year ended
March 31, 2003, filed with the SEC on October 15, 2003;
(ii) our Quarterly Reports on Form 10-Q for the fiscal quarters ended
June 30, 2003, September 30, 2003, and December 31, 2003, filed with
the SEC on August 14, 2003, November 14, 2003 and February 17, 2004,
respectively;
(iii) the description of our common stock contained in our registration
statement filed with the SEC via Edgar under Section 12 of the
Exchange Act on April 29, 1999, including any amendments or reports
filed for the purpose of updating such description;
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(iv) our definitive proxy statement pursuant to Section 14(A) of the
Exchange Act for our 2003 Annual Meeting of the Shareholders filed
with the SEC on December 12, 2003;
(v) all other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual
Report referenced in (i) above;
(vi) our Form 8-A pursuant to Section 12(b) of the Exchange Act filed
with the SEC on August 6, 2003;
(vii)our registration statement on Form SB-2/A filed with the SEC on
February 11, 1999; and
(viii) our certificate of incorporation, as amended, filed as Exhibit 3.1
to the above referenced registration statement on Form SB-2/A.
All documents filed by the company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this registration
statement and prior to the filing of a post-effective amendment indicating that
all securities offered hereby have been sold or deregistering all securities
then remaining unsold are expressly incorporated by reference into this
prospectus and to be a part of this prospectus from the date of filing of such
documents.
Statements made in this prospectus, or in any documents incorporated by
reference in this prospectus as to the contents of any contract or other
document are materially complete. For additional information we refer you to the
copy of the contract or other document filed as an exhibit to the registration
statement of which this prospectus is a part or as an exhibit to the documents
incorporated by reference.
We will provide to you a copy of any document incorporated by reference in
this prospectus and any exhibits specifically incorporated by reference in those
documents at no cost. You may request copies by contacting us at the following
address or telephone numbers: Corporate Secretary, Immtech International, Inc.,
150 Fairway Drive, Suite 150, Vernon Hills, Illinois, 60061, Telephone No.:
(847) 573-0033 or toll free (877) 898-8038.
Any statement incorporated or deemed incorporated herein by reference will
be deemed to be modified or superseded for the purpose of the registration
statement and this prospectus to the extent that a statement contained in this
prospectus or in any subsequently filed document modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of the registration
statement or this prospectus.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and in the documents
incorporated by reference in this prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact may be deemed
to be forward-looking statements. Forward-looking statements frequently, but not
always, use the words "intends," "plans," "believes," "anticipates" or
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"expects" or similar words and may include statements concerning our strategies,
goals and plans. Forward-looking statements involve a number of significant
risks and uncertainties that could cause our actual results or achievements or
other events to differ materially from those reflected in such forward-looking
statements. Such factors include, among others described in the prospectus, the
following: (i) we are in an early stage of product development, (ii) our
technology is in the research and development stage and therefore its potential
benefits for human therapy are unproven, (iii) the possibility that favorable
relationships with collaborators cannot be established or, if established, will
be abandoned by the collaborators before completion of product development, (iv)
the possibility that we or our collaborators will not successfully develop any
marketable products, (v) the possibility that advances by competitors will cause
our product candidates not to be viable, (vi) uncertainties as to the
requirement that a drug product may not be found to be safe and effective after
extensive clinical trials and the possibility that the results of such trials,
if completed, will not establish the safety or efficacy of our drug product
candidates, (vii) risks relating to requirements for approvals by governmental
agencies, such as the Food and Drug Administration, before products can be
marketed and the possibility that such approvals will not be obtained in a
timely manner or at all or will be conditioned in a manner that would impair our
ability to market our product candidates successfully, (viii) the risk that our
patents could be invalidated or narrowed in scope by judicial actions or that
our technology could infringe upon the patent or other intellectual property
rights of third parties, (ix) the possibility that we will not be able to raise
adequate capital to fund our operations through the process of commercializing a
successful product or that future financing will be completed on unfavorable
terms, (x) the possibility that any products successfully developed by us will
not achieve market acceptance and (xi) other risks and uncertainties that may
not be described herein. We undertake no obligation except as required by
securities law to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise in this prospectus.
THE COMPANY
AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION
PROVIDED UNDER "RISK FACTORS" BEGINNING ON PAGE S-1. A GLOSSARY WHICH DEFINES
VARIOUS TERMS USED IN THIS PROSPECTUS BEGINS ON PAGE S-26.
We are a pharmaceutical company focused on the development and
commercialization of oral drugs to treat infectious diseases. The company has
development programs that include fungal infections, malaria, tuberculosis,
hepatitis C, Pneumocystis carinii pneumonia ("PCP") and tropical medicine
diseases, including African sleeping sickness (a parasitic disease also known as
trypanosomiasis) and leishmaniasis (a parasitic disease that destroys the
liver). We hold worldwide patents, patent applications, licenses and rights to
license worldwide patents, patent applications and technologies from a
scientific consortium and exclusive rights to commercialize products from those
patents and licenses that are integral to our business.
Since our formation in October 1984, we have engaged in research and
development programs, expanding our network of scientists and scientific
advisors, licensing technology agreements and advancing the commercialization of
the dication technology platform. We use
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the expertise and resources of strategic partners and third parties in a number
of areas, including (i) research and development, (ii) pre-clinical and human
clinical trials and (iii) manufacture of pharmaceutical drugs. We have licensing
and exclusive commercialization rights to a dicationic pharmaceutical platform
and are developing drugs intended for commercial use based on that platform.
Dication pharmaceutical drugs work by blocking life-sustaining enzymes from
binding to key sites in the "minor groove" of an organism's deoxyribonucleic
acid ("DNA"), killing the infectious organisms that cause fungal, parasitic,
bacterial and viral diseases. The key site on an organism's DNA is an area where
enzymes interact with the infectious organism's DNA as part of their normal life
cycle. Structurally, dications are chemical molecules that have two positively
charged ends held together by a chemical linker. The composition of the
dications, with positive charges on both ends (shaped like molecular barbells),
allows dications to bind (similar to a band-aid) to the negatively charged key
sites of an infectious organism's DNA. The bound dications block life sustaining
enzymes from attaching to the DNA's key sites, thereby killing the infectious
organism.
The dication technology is the result of a research program developed by
scientists at UNC, Georgia State University, Duke University and Auburn
University (collectively, the "Scientific Consortium"). We entered into an
agreement with the Scientific Consortium, dated January 15, 1997, as amended,
and a License Agreement, dated as of January 28, 2002 (collectively, the
"Consortium Agreement"), to commercialize product candidates resulting from the
Scientific Consortium's research, including the dication technology.
USE OF PROCEEDS
We intend to use the proceeds of the sale of shares under this prospectus
by the company for general corporate purposes, including research and
development and commercialization efforts. We will not receive any of the
proceeds from the sale of the shares offered by the selling stockholders under
this prospectus.
SELLING STOCKHOLDERS
The selling stockholders other than Gabriele Group LLC ("Gabriele"), Mr.
John Vaccaro ("Mr. Vaccaro"), Fulcrum Holdings of Australia, Inc. ("Fulcrum")
and China Harvest International Ltd. ("China Harvest"), listed below acquired
our series C stock in private placements between June 6-9, 2003. Such selling
stockholders have the right to acquire shares (i) upon conversion of the series
C stock or (ii) upon issuance of common stock as stock dividends to holders of
series C stock, granted to them in connection with their participation in the
private placements. No period of time has been fixed within which the shares
registered under this prospectus may be offered or sold. Our obligation to keep
the registration statement of which this prospectus is a part effective expires
as to 667,144 shares on June 6, 2004, 41,854 shares on June 9, 2004, 70,000 on
July 31, 2004, and 2,600 shares on November 12, 2004 or sooner if all selling
stockholders' shares are sold.
Between June 6-9, 2003, the selling stockholders purchased in the
aggregate 125,352 shares of our series C stock for gross proceeds to us of
$3,133,800. We completed our offering of series C stock as of June 9, 2003.
Subject to adjustment for dilution protection, each share of series C stock is
convertible into 5.6561 shares of common stock, 708,998 shares in the
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aggregate. The series C stock earns an 8% per annum dividend payable
semi-annually each April 15th and October 15th, in cash or common stock at the
company's option for so long as any series C stock remains outstanding. If
common stock is to be used to pay the series C stock dividend, such common stock
is to be valued at the 10-day volume-weighted average closing-bid price
immediately prior to the date of payment. We agreed to use reasonable efforts to
register the resale by the selling stockholders of the shares of common stock
issuable upon conversion of the series C stock within 180 days after the date of
purchase of the series C stock, and to keep such registration effective for the
lesser of one year or until all of such shares are sold.
On July 31, 2002, we entered into a one-year agreement with Gabriele to
provide to us management consulting services, strategic planning, public
relations and promotions. We issued to Gabriele 40,000 shares of our common
stock and three warrants, each to purchase 10,000 shares of our common stock
exercisable at $6.00 per share; the warrants vest when the market price of our
common stock meets or exceeds $10, $15 and $20 for a period of 20 consecutive
trading days, respectively, or if the valuation of our common stock in a merger
or acquisition meets or exceeds $10, $15 and $20 per share, respectively.
On April 26, 1999, we entered into a consulting arrangement with Mr.
Vaccaro for services to be provided to assist the company to list its common
stock on to the NASDAQ SmallCap Market. For his services, Mr. Vaccaro was
granted a warrant to purchase 2,600 shares of common stock exercisable at $16.00
per share of common stock upon such listing.
On March 21, 2003, we entered into an investor relations agreement with
Fulcrum for financial consulting services and public relations management to be
provided over a 12-month period. Pursuant to this agreement we issued, among
other things, warrants to purchase 350,000 shares of common stock from the
Company. Warrants to purchase 100,000 shares are exercisable at $6.00 per share;
warrants to purchase 125,000 shares are exercisable at $10.00 per share; and
warrants to purchase an additional 125,000 shares are exercisable at $15.00 per
share. The warrants are fully vested and may be exercised until the earliest of
March 21, 2005, the effective date of a sale, merger or other combination of the
Company.
On July 25, 2003, we entered into a consulting agreement with Fulcrum to
identify and negotiate with stock exchanges to list our common stock and to
assist us to prepare applications to list our common stock on stock exchanges.
Pursuant to this agreement and upon the listing of our common stock on the
American Stock Exchange on August 11, 2003, we issued to Fulcrum 100,000 shares
of our common stock.
On July 16, 2003, we entered into an agreement with China Harvest for
services to assist the Company in obtaining regulatory approval to conduct
clinical trials in China. Pursuant to this agreement, we granted China Harvest a
warrant to purchase 600,000 shares of our common stock at $6.08 per share. These
warrants are fully vested and have an exercise period of five years. We are
registering hereunder 100,000 of the 600,000 shares of common stock underlying
the abovementioned warrants.
The following table sets forth for each selling stockholder (i) the number
of shares being registered by this prospectus, (ii) the number of shares and
percent of class beneficially owned at the date of filing, and (iii) the number
of shares and percent of class that the selling stockholder
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would beneficially own if all shares registered hereunder were sold, assuming no
other shares were purchased. No selling stockholder has been an officer,
director or employee of Immtech for the past three years. Because the selling
stockholders may offer all, some or none of their shares, we cannot provide a
definitive estimate of the number of shares each will hold after such
registration. This prospectus is filed at our expense.
PERCENT OF
SHARES CLASS
PERCENT OF REMAINING REMAINING
CLASS OF IF ALL IF ALL
SHARES SHARES SHARES SHARES
SERIES C SHARES OF BENEFICIALLY SHARES BENEFICIALLY REGISTERED REGISTERED
NAME STOCK COMMON OWNED REGISTERED OWNED(1) ARE SOLD ARE SOLD
------------------------ -------- ---------- ------------ ---------- ----------- ---------- ----------
Fulcrum Holdings of
Australia, Inc. 0 550,000 551,000 450,000 4.6% 101,000 1.02%
China Harvest
International Ltd. 0 600,000 600,000 100,000 6.15% 500,000 5.08%
Gabriele Group LLC 0 70,000 70,000 70,000 * % 0 * %
Vivienne Lee 9,200 52,036 202,602 52,036 2.0% 150,566 * %
Ma Fa On 0 36,199 64,751 36,199 * % 28,552 * %
Tao Wai Ling 0 32,805 33,072 32,805 * % 267 * %
Cheung Ming Tak 0 32,805 66,311 32,805 * % 33,506 * %
Cheung Shuk Kwan 4,800 27,149 120,847 27,149 1.2% 93,698 * %
Monet Capital Fund I, LP 4,800 27,149 120,847 27,149 1.2% 93,698 * %
Tsang Wai Ping Alfred 0 24,887 79,598 24,887 * % 54,711 * %
Sanford Goldfarb 0 22,624 24,949 22,624 * % 2,325 * %
Lau Chu 4,000 22,624 102,528 22,624 1.0% 79,904 * %
Cheung Yuk Chor Dickie 0 22,624 137,886 22,624 1.4% 90,262 * %
Donald H. Wong 3,400 19,231 53,885 19,231 * % 34,654 * %
Chan Chee Wing 3,200 18,100 115,684 18,100 1.2% 97,589 * %
Tefa Capital, Inc. 3,200 18,100 18,225 18,100 * % 125 * %
Liu Yuk Tong and Wong
Gum Wing Caroline 3,000 16,968 103,672 16,968 1.0% 86,704 * %
Val Busler 0 15,837 15,837 15,837 * % 0 * %
Li Lo Kwong 2,600 14,706 25,694 14,706 * % 0 * %
Jerry Sorkin 2,600 14,706 17,808 14,706 * % 3,102 * %
Lau Kin Yip 2,400 13,575 13,669 13,575 * % 94 * %
Ho Siu Man 0 11,991 12,087 11,991 * % 96 * %
Lau Mei Yin Amy 0 11,765 23,214 11,765 * % 11,449 * %
Shum Kit Ching 0 11,765 11,859 11,765 * % 94 * %
Fukoku Asset Management
Ltd. 2,000 11,312 64,552 11,312 * % 53,246 * %
John R. Harrington and
John R. Harrington,
Jr. Trust 3,800 21,493 134,630 21,493 1.4% 113,137 * %
Hui Chin Ki 0 11,312 26,584 11,312 * % 15,272 * %
Mao Frank Tsao Yu 0 11,312 11,471 11,312 * % 159 * %
Richard M. Schaeffer 2,000 11,312 11,390 11,312 * % 78 * %
Wingpearl Investments
Ltd. 2,000 11,312 11,390 11,312 * % 78 * %
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Mak Wah 0 10,860 10,974 10,860 * % 87 * %
John J. Orlando 1,800 10,181 25,902 10,181 * % 15,721 * %
Target Profits
Securities Limited 1,768 10,000 30,069 10,000 * % 20,069 * %
Chan Yu Ching 1,768 10,000 10,069 10,000 * % 69 * %
Wong Hon Fai Jones 1,768 10,000 16,220 10,000 * % 6,220 * %
John Neal 0 10,000 10,164 10,000 * % 164 * %
Lee Hon Kit Raymond 1,600 9,050 24,647 9,050 * % 15,597 * %
Ho Cho Chuen 1,600 9,050 9,112 9,050 * % 62 * %
Li Wai Yin 0 9,050 9,176 9,050 * % 126 * %
Thomas J. Krupp II 0 6,787 6,852 6,787 * % 65 * %
Raymond Carbone 0 5,656 6,750 5,656 * % 1,094 * %
Richard H. Harrington 1,000 5,656 15,695 5,656 * % 10,039 * %
Scott Hess 1,000 5,656 12,491 5,656 * % 6,835 * %
John Ketcham 1,000 5,656 9,695 5,656 * % 4,039 * %
Michael Strada 1,000 5,656 5,695 5,656 * % 39 * %
Chan Pui Ling Juliana 0 4,525 6,588 4,525 * % 2,063 * %
Dwight B. Crane 800 4,525 31,844 4,525 * % 27,319 * %
James M. Florsheim Trust
Account #1 800 4,525 11,402 4,525 * % 6,877 * %
Sum Lan Hing 0 2,715 2,735 2,715 * % 20 * %
John A. Vaccaro 0 2,600 2,600 2,600 * % 0 * %
John J. Coonan 400 2,262 4,631 2,262 * % 2,369 * %
Yeung Lai 0 2,262 5,317 2,262 * % 3,055 * %
Stephen Carter 400 2,262 3,788 2,262 * % 1,526 * %
Ho Mei Yee 400 2,262 2,277 2,262 * % 15 * %
Lam Yuk Ying 0 2,262 2,293 2,262 * % 31 * %
Michael Dundas 400 2,262 2,277 2,262 * % 15 * %
Lau Wai Wah Richard 400 2,262 2,277 2,262 * % 15 * %
Lo Mo On 400 2,262 8,321 2,262 * % 6,059 * %
Salvatore Picciallo 400 2,262 2,277 2,262 * % 15 * %
Michael Volpe 400 2,262 7,235 2,262 * % 4,973 * %
Martin Boyle 200 1,131 8,057 1,131 * % 6,926 * %
------ --------- --------- ---------
Totals 72,304 1,931,598 3,153,472 1,331,598
(1) The corresponding percentages are the quotient of (x) the number of
shares beneficially owned and (y) the sum of the 9,834,986 shares of
common stock outstanding, the number shares of common stock issuable
upon conversion of series A stock, series B stock, series C stock
and series D stock and such holder's options and warrants
exercisable within 60 days of the date of March 19, 2004.
* Less than 1.00%.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The following are the material terms of our common stock. You should refer
to the applicable provisions of Delaware law, our certificate of incorporation
as amended and our bylaws for additional information. See "Where You Can Find
More Information."
Under our certificate of incorporation, as amended, our authorized capital
stock consists of:
30,000,000 shares of common stock; and
5,000,000 shares of preferred stock, par value $0.01 per share.
As of March 19, 2004, we had 9,834,986 shares of common stock outstanding
(not including 457,013 shares of common stock reserved for conversion of series
A stock, 124,531 shares of common stock reserved for conversion of series B
stock, 408,954 shares of common stock reserved for conversion of series C stock,
555,540 shares of common stock reserved for the conversion of series D stock,
955,374 shares of common stock reserved for exercise of outstanding options and
2,787,712 shares of common stock reserved for exercise of outstanding warrants
held by certain investors). Of the shares of common stock outstanding, 6,888,199
shares of common stock are freely tradable without restriction. All of the
remaining 2,946,787 shares are restricted from resale except pursuant to certain
exceptions under the Securities Act. All of the common stock underlying the
outstanding series C stock is registered by this prospectus.
COMMON STOCK
Our common stock is traded on the American Stock Exchange LLC ("AMEX")
under the symbol "IMM." Each share of our common stock entitles the holder to
one vote on all matters on which holders are permitted to vote. There is no
cumulative voting for election of directors. Accordingly, the holders of a
majority of the shares voted can elect all of the nominees for director.
Subject to preferences that may be applicable to any outstanding series of
preferred stock, the holders of our common stock are entitled to dividends when,
and if, declared by the board of directors out of funds legally available for
that purpose. Upon liquidation, dissolution or winding up, subject to
preferences that may be applicable to any outstanding series of preferred stock,
the holders of our common stock are entitled to a pro rata share in any
distribution to stockholders. Our common stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to our common stock. All outstanding shares of our common
stock are fully paid and non-assessable.
PLAN OF DISTRIBUTION
The distribution of the shares described in this prospectus may be
effected from time to time in one or more transactions either (a) at a fixed
price or prices, which may be changed, (b) at market prices prevailing at the
time of sale, (c) at prices relating to the prevailing market prices or (d) at
negotiated prices. We (subject to AMEX rules), and any selling stockholders, may
offer
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and sell the shares described in this prospectus (i) through agents, (ii)
through one or more underwriters or dealers, (iii) through a block trade in
which the broker or dealer engaged to handle the block trade will attempt to
sell the securities as agent, but may position and resell a portion of the block
as principal to facilitate the transaction, (iv) directly to one or more
purchasers (through a specific bidding or auction process or otherwise), (v) in
"at the market offerings," within the meaning of Rule 415(a)(4) of the
Securities Act, (vi) through a combination of any of these methods of sale, or
(vii) at a fixed exchange ratio in return for other of our securities.
To our knowledge, the selling stockholders have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares, nor is there an underwriter or
coordinating broker acting in connection with the proposed sales of shares by
the selling stockholders. Any shares covered by this prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus. We will pay all costs and expenses
incurred in connection with the registration of the shares offered by this
prospectus. Any brokerage commissions and similar selling expenses attributable
to the sale of shares by the selling stockholders will be borne by the selling
stockholders.
We have agreed to indemnify the selling stockholders and the selling
stockholders' respective officers, directors, employees and agents, and each
person who controls such selling stockholders, in certain circumstances against
certain liabilities, including liabilities arising under the Securities Act, and
the selling stockholders have agreed to indemnify us and our directors and
officers in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act, in each case in connection with
this offering.
We or the selling stockholders may solicit offers to purchase the shares
directly and we or the selling stockholders may sell the shares directly to
institutional or other investors. We or the selling stockholders may enter into
agreements with agents, underwriters and dealers under which we or the selling
stockholders may agree to indemnify the agents, underwriters and dealers against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments they may be required to make with respect to these
liabilities. Some of the agents, underwriters or dealers, or their affiliates
may be customers of, engage in transactions with or perform services for us or
the selling stockholders in the ordinary course of business.
If we or any selling stockholders offer and sell shares through an
underwriter or underwriters, then we or the selling stockholders will execute an
underwriting agreement with the underwriter or underwriters. The names of the
specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transactions, including compensation of the
underwriters and dealers, which may be in the form of discounts, concessions or
commissions, if any, will be described in a prospectus supplement, if
applicable, which will be used by the underwriters to make resales of the
shares. If the selling stockholders offer and sell the shares through a dealer,
then the selling stockholders or an underwriter will sell the shares to the
dealer, as principal. The dealer may then resell the shares to the public at
varying prices to be determined by the dealer at the time of resale.
We may engage in at the market offerings of our common stock. An at the
market offering is an offering of our common stock at other than a fixed price
to or through a market maker. Under
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Rule 415(a)(4) of the Securities Act, the total value of at the market offerings
made under this prospectus may not exceed 10% of the aggregate market value of
our common stock held by non-affiliates. Any underwriter that we engage for an
at the market offering would be named in a post-effective amendment to the
registration statement containing this prospectus. Additional details of our
arrangement with the underwriter, including commissions or fees paid by us and
whether the underwriter is acting as principal or agent, would be described in
the related prospectus supplement.
We may grant underwriters who participate in the distribution of the
shares an option to purchase additional shares to cover over-allotments, if any,
in connection with the distribution.
The selling stockholders, dealers acting in connection with the offering
and brokers executing sell orders on behalf of one or more selling stockholders
may be deemed to be "underwriters" within the meaning of the Securities Act. In
addition, any such broker or dealer may be required to deliver a copy of this
prospectus to any person who purchases any of the shares from or through such
broker or dealer.
LEGAL MATTERS
Legal matters in connection with the validity of the shares offered by
this prospectus will be passed upon for the company by Cadwalader, Wickersham &
Taft LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference from
the company's Annual Report on Form 10-K/A have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions, the company has been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
You should rely only on the information contained in this prospectus,
incorporated by reference herein or provided by supplement. We have not
authorized anyone else to provide you with
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different information. The information contained in this prospectus is correct
only as of the date of this prospectus, regardless of the time of the delivery
of this prospectus or any sale of these securities.
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GLOSSARY
As used in this prospectus, the following terms have the meanings set
forth below.
AIDS Acquired immune deficiency syndrome, a disease caused by a
virus.
DB289 The designation given to our lead dication.
Dication A chemical molecule with two positively charged ends that are
held together by a chemical linker. Dications bind to the DNA
of infectious organisms.
DNA A type of molecule made up of polymerized deoxyribonucleotides
linked together by phosphate bonds.
ELA Establishment License Application.
FDA U.S. Food and Drug Administration. Federal Food, Drug, and
Cosmetic Act as Amended. FDCA
HCV Hepatitis C virus, or HCV, is one of the viruses that causes
acute and chronic hepatitis. Persons who are chronically
infected with hepatitis C are at an increased risk for the
development of cirrhosis and liver cancer.
HIV HIV is the human immunodeficiency virus most researchers
believe causes AIDS.
IND Investigational New Drug Application, or IND, is a document
required to be filed with the FDA prior to performing clinical
studies on human subjects in the United States.
Leishmaniasis An infection caused by a protozoal parasite that affects the
skin and abdominal organs, causing ulcers or skin disorders
that resemble leprosy.
PCP Pneumocystis carinii pneumonia ("PCP") is a protozoal
infection of the lungs, and most common of the AIDS-associated
diseases.
Phase I Clinical testing in which the safety and pharmacological
profile of a new drug is established in humans.
Phase II Clinical testing in which the effectiveness of a new drug
is established in humans. This includes establishing the dose
amount and frequency required to achieve a therapeutic effect,
the metabolic rate of the administered drug and the toxicity
profile in specific patient populations.
PLA Product License Application.
TB A disease caused by bacteria, Mycobacterium tuberculosis, that
is transmitted by breathing in or eating infected droplets,
usually affecting the lungs, although infection of other organ
systems can occur.
Trypanosomiasis An infection caused by a protozoal parasite and transmitted
usually by insect bites. Also known as African sleeping
sickness.
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