Unassociated Document
Filed
Pursuant to Rule 424(b)(3)
Registration Nos. 333-136187,
333-117178,
333-119017,
333-108645, 333-111135,
333-113796
and 333-130008
HEMISPHERX
BIOPHARMA, INC.
1,738,864
Shares of Common Stock
The
Offering:
This
prospectus relates to the sale of up to 1,738,864 shares of our common
stock that may be offered and sold from time to time by selling stockholders and
the persons to whom such selling stockholders may transfer their shares,
consisting of: (1) 1,038,527 shares of common stock issuable upon exercise of
outstanding warrants; and (2) 135% of 518,768 shares of common stock
issuable upon the exercise of outstanding warrants related to our former Senior
Convertible Debentures (“Debenture Warrants”). We will not receive
any of the proceeds from the sale of these shares by the selling stockholders,
but we will receive proceeds from the cash exercise of warrants, if
any.
Our
common stock is traded on the NYSE Amex under the symbol “HEB.” On June 30,
2009, the last reported sale price for our common stock on the NYSE Amex was
$2.54 per share.
The
selling stockholders may sell their shares from time to time on the NYSE Amex or
otherwise, in one or more transactions at fixed prices, at prevailing market
prices at the time of sale or at prices negotiated with purchasers. The selling
stockholders will be responsible for any commissions or discounts due to brokers
or dealers. We will pay substantially all expenses of registration of the shares
covered by this prospectus.
Please
see the risk factors beginning on page 5 to read about certain factors you
should consider before buying shares of common stock.
Selling
Stockholders may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined that this prospectus
is truthful or complete. Any representation to the contrary is a
criminal offense.
The
date of this prospectus is July 1, 2009
TABLE
OF CONTENTS
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Page
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Prospectus
Summary
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3
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Risk
Factors
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5
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Special
Note Regarding Forward-Looking Statements
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19
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Business
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20
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Selling
Stockholders
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20
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Plan
of Distribution
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24
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Use
of Proceeds
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26
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SEC
Position On Indemnification For Securities Act
Liabilities
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27
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Legal
Matters
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27
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Experts
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27
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27
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Information
Incorporated By Reference
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28
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PROSPECTUS
SUMMARY
The
following is a brief summary of certain information contained elsewhere in this
prospectus or incorporated in this prospectus by reference. This summary is not
intended to be a complete description of the matters covered in this prospectus
and is qualified in its entirety by reference to the more detailed information
contained or incorporated by reference in this prospectus. You are urged to read
this prospectus in its entirety, including all materials incorporated in this
prospectus by reference.
The
registration statement that contains this prospectus, including the exhibits to
the registration statement, contains additional information about us and the
securities being offered under this prospectus. You should read the registration
statement and the accompanying exhibits for further information. The
registration statement and exhibits can be read and are available to the public
over the Internet at the SEC's website at http://www.sec.gov as described under
the heading "Where You Can Find More Information."
About
Hemispherx
We are a
specialty pharmaceutical company engaged in the clinical development,
manufacture, marketing and distribution of new drug therapies based on natural
immune system enhancing technologies for the treatment of viral and immune based
chronic disorders. We were founded in the early 1970s doing contract
research for the National Institutes of Health. Since that time, we have
established a strong foundation of laboratory, pre-clinical, and clinical data
with respect to the development of nucleic acids to enhance the natural
antiviral defense system of the human body and to aid the development of
therapeutic products for the treatment of certain chronic diseases.
Our
current strategic focus is derived from four applications of our two core
pharmaceutical technology platforms Ampligen® and Alferon N
Injection®. The commercial focus for Ampligen includes application as
a treatment for Chronic Fatigue Syndrome (“CFS”) and as a vaccine enhancer
(adjuvant) for both therapeutic and preventative vaccine
development. Alferon N Injection® is an FDA approved product with an
indication for refractory or recurring genital warts. Alferon LDO (Low Dose
Oral) is an application currently under early stage development targeting
influenza and viral diseases both as an adjuvant as well as a single entity
anti-viral.
Ampligen®
is an experimental drug currently undergoing clinical development for the
treatment of CFS. In August 2004, we completed a Phase III
clinical trial (“AMP 515”) treating CFS patients with Ampligen® and we are
presently in the registration process for a new drug application (“NDA”) with
the Food and Drug Administration (“FDA”). In July 2008, the FDA
accepted for review our NDA for Ampligen® to treat CFS. On February
18, 2009, we were notified by the FDA that the originally scheduled Prescription
Drug User Fee Act (“PDUFA”) date of February 25, 2009 has been extended to May
25, 2009. On May 22, 2009, we were notified by the FDA that it may
require up to one to two additional weeks to take action beyond the scheduled
PDUFA action date of May 25, 2009. We have not heard from the FDA
since then.
We own
and operate a 43,000 sq. ft. FDA approved facility in New Brunswick, New Jersey
primarily designed to produce Alferon N Injection®. In 2006, we
completed the installation of a polymer production line to produce Ampligen® raw
materials on a more reliable and consistent basis.
Our
principal executive offices are located at One Penn Center, 1617 JFK Boulevard,
Philadelphia, Pennsylvania 19103, and our telephone number is
215-988-0080. We maintain a website at
“http://www.hemispherx.net.” Information contained on our website is
not considered to be a part of, nor incorporated by reference in, this
prospectus.
Securities
Offered
Common
stock to be offered
by
the selling stockholders
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1,738,864
Shares consisting of:
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1,038,527
shares of common stock issuable upon exercise of other outstanding
warrants; and
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·
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135%
of 518,768 shares of common stock issuable upon the exercise of
outstanding warrants related to our former Senior Convertible
Debentures.
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Common
stock outstanding
prior
to this offering
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118,921 ,900 Shares
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Use
of Proceeds
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We
will not receive any of the proceeds from the sale of the shares of common
stock because they are being offered by the selling stockholders and we
are not offering any shares for sale under this prospectus, but we may
receive proceeds from the exercise of warrants held by certain of the
selling stockholders. We will apply such proceeds, if any, to fund
commercialization of Alferon® and Ampligen® along with general corporate
purposes, which may include working capital, capital expenditures,
research and development expenditures, regulatory affairs expenditures,
clinical trial expenditures, acquisitions of new technologies and
investments, and the repayment, refinancing, redemption or repurchase of
future indebtedness or capital stock. See "Use of
Proceeds."
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RISK
FACTORS
The
following cautionary statements identify important factors that could cause our
actual results to differ materially from those projected in the forward-looking
statements made in this prospectus. Among the key factors that have a
direct bearing on our results of operations are:
Risks
Associated With Our Business
No
assurance of successful product development.
Ampligen®
and related products. The development of Ampligen® and
our other related products is subject to a number of significant
risks. Ampligen® may
be found to be ineffective or to have adverse side effects, fail to receive
necessary regulatory clearances, be difficult to manufacture on a commercial
scale, be uneconomical to market or be precluded from commercialization by
proprietary right of third parties. Our products are in various
stages of clinical and pre-clinical development and require further clinical
studies and appropriate regulatory approval processes before any such products
can be marketed. We do not know when, if ever, Ampligen® or
our other products will be generally available for commercial sale for any
indication. Generally, only a small percentage of potential
therapeutic products are eventually approved by the FDA for commercial
sale. Please see the next risk factor.
Alferon N
Injection®. Although Alferon N Injection® is approved for marketing
in the United States for the intra-lesional treatment of refractory or recurring
external genital warts in patients 18 years of age or older, to date it has not
been approved for other indications. We face many of the risks
discussed above, with regard to developing this product for use to treat other
ailments.
Our
drugs and related technologies are investigational and subject to regulatory
approval. If we are unable to obtain regulatory approval, our
operations will be significantly adversely affected.
All of
our drugs and associated technologies, other than Alferon N Injection®, are
investigational and must receive prior regulatory approval by appropriate
regulatory authorities for general use and are currently legally available only
through clinical trials with specified disorders. At present, Alferon
N Injection® is only approved for the intra-lesional treatment of refractory or
recurring external genital warts in patients 18 years of age or
older. Use of Alferon N Injection® for other indications will require
regulatory approval.
Our
products, including Ampligen®, are subject to extensive regulation by numerous
governmental authorities in the U.S. and other countries, including, but not
limited to, the FDA in the U.S., the Health Protection Branch (“HPB”) of Canada,
and the Agency for the Evaluation of Medicinal Products (“EMEA”) in
Europe. Obtaining regulatory approvals is a rigorous and lengthy
process and requires the expenditure of substantial resources. In
order to obtain final regulatory approval of a new drug, we must demonstrate to
the satisfaction of the regulatory agency that the product is safe and effective
for its intended uses and that we are capable of manufacturing the product to
the applicable regulatory standards. We require regulatory approval
in order to market Ampligen® or any other proposed product and receive product
revenues or royalties. We cannot assure you that Ampligen® will
ultimately be demonstrated to be safe or efficacious. In addition,
while Ampligen® is authorized for use in clinical trials including a cost
recovery program in the United States and Europe, we cannot assure you that
additional clinical trial approvals will be authorized in the United States or
in other countries, in a timely fashion or at all, or that we will complete
these clinical trials.
We filed
an NDA with the FDA for treatment of CFS on October 10, 2007. On
December 5, 2007 we received a Refusal to File letter from the FDA as our NDA
filing was deemed “not substantially complete”. We responded to the
FDA’s concerns by filing amendments to our NDA on April 25,
2008. These amendments should allow the FDA reviewers to better
evaluate independently the statistical efficacy/safety conclusions of our NDA
for the use of Ampligen® in treating CFS. On July 7, 2008, the FDA
accepted our NDA filing for review. However, there are no assurances
that upon review of the NDA that it will be approved by the FDA. On
February 18, 2009, we were notified by the FDA that the originally scheduled
PDUFA date of February 25, 2009 has been extended to May 25, 2009. On
May 22, 2009, we were notified by the FDA that it may require up to one to two
additional weeks to take action beyond the scheduled PDUFA action date of May
25, 2009. We have not heard from the FDA since then.
If
Ampligen® or one of our other products does not receive regulatory approval in
the U.S. or elsewhere, our operations most likely will be materially adversely
affected.
Alferon®
LDO is undergoing pre-clinical testing for possible prophylaxis against avian
flu. Additional studies are anticipated for swine
H1N1. While the studies to date have been
encouraging. Preliminary testing in the laboratory and animals is not
necessarily predictive of successful results in clinical testing or human
treatment. No assurance can be given that similar results will be
observed in clinical trials. Use of Alferon® as a possible treatment
of avian flu requires prior regulatory approval. Only the FDA can
determine whether a drug is safe, effective or promising for treating a specific
application. As discussed in the prior risk factor, obtaining
regulatory approvals is a rigorous and lengthy process.
We
may continue to incur substantial losses and our future profitability is
uncertain.
We began
operations in 1966 and last reported net profit from 1985 through
1987. Since 1987, we have incurred substantial operating losses, as
we pursued our clinical trial effort to get our experimental drug, Ampligen®,
approved. As of March 31, 2009, our accumulated deficit was
approximately $200,496,000. We have not yet generated significant
revenues from our products and may incur substantial and increased losses in the
future. We cannot assure that we will ever achieve significant
revenues from product sales or become profitable. We require, and will continue
to require, the commitment of substantial resources to develop our
products. We cannot assure that our product development efforts will
be successfully completed or that required regulatory approvals will be obtained
or that any products will be manufactured and marketed successfully, or be
profitable.
We may require additional financing
which may not be available.
The
development of our products will require the commitment of substantial resources
to conduct the time-consuming research, preclinical development, and clinical
trials that are necessary to bring pharmaceutical products to
market. As of March 31, 2009, we had approximately $5,541,000 in cash
and cash equivalents and short-term investments. Since then, while we
have continued to spend cash on operations, we received approximately $1,440,000
of equity funding from Fusion Capital Fund II, LLC during April and May 2009 and
approximately $28,250,000 from recent placements of shares and warrants and
$660,000 from the exercise of warrants issued in one of those
placements. Given the harsh economic conditions, we have reviewed
every aspect of our operations for cost and spending reductions to assure our
long term survival while maintaining the resources necessary to achieve our
primary objectives of commercializing Alferon N, obtaining NDA approval of
Ampligen® and securing a strategic partner. Based on these actions
and our recent financings, we do not anticipate that we will need additional
financing in order to continue operations for the near future.
We have
in place one potential sources of financing - the Common Stock Purchase
Agreement (the "Fusion Purchase Agreement") with Fusion Capital Fund II, LLC
(“Fusion Capital”) pursuant to which we have the right to sell shares of our
Common Stock to Fusion Capital.
If we are
unable to commercialize and sell Ampligen®, Alferon N Injection® or other
products, we eventually will need to secure other sources of funding through
additional equity or debt financing or from other sources in order to satisfy
our working capital needs and to complete the necessary clinical trials and the
regulatory approval processes including the commercializing of Ampligen®
products. We anticipate, but cannot assure, that, should we need to raise
additional funds, we will be able to do so from the sale of shares under the
Fusion Purchase Agreement. Pursuant to the Purchase Agreement, we
only have the right to receive $120,000 every two business days unless our stock
price equals or exceeds $0.80, in which case we can sell greater amounts to
Fusion Capital as the price of our common stock increases. Fusion
Capital does not have the right nor the obligation to purchase any shares of our
common stock on any business day that the market price of our common stock is
less than $0.40.
In
addition, as of June 15, 2009, we had approximately 44,000,000 shares authorized
but unissued and unreserved. At our annual stockholders’ meeting held
on June 24, 2009, we sought approval of an amendment to our Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
200,000,000 to 350,000,000. At the meeting, there were an
insufficient number of votes in favor of the proposal and voting on this
proposal was left open until July 28, 2009. If that approval is not obtained,
the amount of proceeds we may receive from the sale of our Common Stock will be
limited.
We
are unable to estimate the amount, timing or nature of future sales of
outstanding common stock or instruments convertible into or exercisable for our
common stock. Should we require additional financing and such
financing is unavailable or prohibitively expensive, our ability to develop our
products or continue our operations could be materially adversely
affected.
Our Alferon N Injection® Commercial
Sales have halted due to lack of finished goods inventory.
Our
finished goods inventory of Alferon N Injection® reached it’s expiration date in
March 2008. As a result, we have no product to sell at this
time. The FDA declined to respond to our requests for an extension of
the expiration date, therefore we consider the request to be
denied. Since our testing of the product indicates that it is not
impaired and could be safely utilized, the finished goods inventory of 2,745
Alferon N Injection® 5ml vials may be used to produce approximately 11,000,000
sachets of Low Dose Oral Alferon (LDO) for future clinical trials.
Production
of Alferon N Injection® from our work-in-progress inventory, which has an
approximate expiration date of 2012, has been put on hold at this time due to
the resources needed to prepare our New Brunswick facility for the FDA
preapproval inspection with respect to our Ampligen® NDA. Work on the
Alferon N Injection® is expected to resume in mid-2009, which means that we may
not have any Alferon N Injection® product commercially available until
2010. However, if there is a significant absence of the product from
the market place, no assurance can be given that sales will return to prior
levels.
Although preliminary in vitro
testing indicates that Ampligen® enhances the effectiveness of different drug
combinations on avian influenza, preliminary testing in the laboratory is not
necessarily predictive of successful results in clinical testing or human
treatment.
Ampligen®
is currently being tested as a vaccine adjuvant for H5N1, a pathogenic avian
influenza virus (“HPAIV”) in Japan, where the preclinical data has shown
activity in preventing lethal challenge with the original virus used for
vaccination as well as the other related, but not identical, isolates of H5N1
virus (i.e., cross-reactivity). The clinical testing phase of
Ampligen® in Japan is expected to begin in late 2009 or early
2010. The results of laboratory testing with seasonal influenza virus
vaccine in Australia for the effect of Ampligen® as an adjuvant is
pending. No assurance can be given that similar results will be
observed in clinical trials. Use of Ampligen® in the treatment of flu
requires prior regulatory approval. Only the FDA can determine
whether a drug is safe, effective or promising for treating a specific
application. As discussed above, obtaining regulatory approvals is a
rigorous and lengthy process (see “Our drugs and related technologies
are investigational and subject to regulatory approval. If we are
unable to obtain regulatory approval, our operations will be significantly
adversely affected” above).
We
may not be profitable unless we can protect our patents and/or receive approval
for additional pending patents.
We need
to preserve and acquire enforceable patents covering the use of Ampligen® for a
particular disease in order to obtain exclusive rights for the commercial sale
of Ampligen® for such disease. We obtained all rights to Alferon N
Injection®, and we plan to preserve and acquire enforceable patents covering its
use for existing and potentially new diseases. Our success depends,
in large part, on our ability to preserve and obtain patent protection for our
products and to obtain and preserve our trade secrets and
expertise. Certain of our know-how and technology is not patentable,
particularly the procedures for the manufacture of our experimental drug,
Ampligen®, which is carried out according to standard operating procedure
manuals. We also have been issued patents on the use of Ampligen® in
combination with certain other drugs for the treatment of chronic Hepatitis B
virus, chronic Hepatitis C virus, and a patent which affords protection on the
use of Ampligen® in patients with Chronic Fatigue Syndrome. We have
not yet been issued any patents in the United States for the use of
AmpligenÒ as a sole
treatment for any of the cancers, which we have sought to
target. With regard to Alferon N Injection®, we have acquired from
ISI its patents for natural alpha interferon produced from human peripheral
blood leukocytes and its production process and we have filed a patent
application for the use of Alferon® LDO in treating viral diseases including
avian influenza. We cannot assure that our competitors will not seek and obtain
patents regarding the use of similar products in combination with various other
agents, for a particular target indication prior to our doing
such. If we cannot protect our patents covering the use of our
products for a particular disease, or obtain additional patents, we may not be
able to successfully market our products.
The
patent position of biotechnology and pharmaceutical firms is highly uncertain
and involves complex legal and factual questions.
To date,
no consistent policy has emerged regarding the breadth of protection afforded by
pharmaceutical and biotechnology patents. There can be no assurance
that new patent applications relating to our products or technology will result
in patents being issued or that, if issued, such patents will afford meaningful
protection against competitors with similar technology. It is
generally anticipated that there may be significant litigation in the industry
regarding patent and intellectual property rights. Such litigation
could require substantial resources from us and we may not have the financial
resources necessary to enforce the patent rights that we hold. No
assurance can be made that our patents will provide competitive advantages for
our products or will not be successfully challenged by
competitors. No assurance can be given that patents do not exist or
could not be filed which would have a materially adverse effect on our ability
to develop or market our products or to obtain or maintain any competitive
position that we may achieve with respect to our products. Our
patents also may not prevent others from developing competitive products using
related technology.
There
can be no assurance that we will be able to obtain necessary licenses if we
cannot enforce patent rights we may hold. In addition, the failure of
third parties from whom we currently license certain proprietary information or
from whom we may be required to obtain such licenses in the future, to
adequately enforce their rights to such proprietary information, could adversely
affect the value of such licenses to us.
If we
cannot enforce the patent rights we currently hold we may be required to obtain
licenses from others to develop, manufacture or market our
products. There can be no assurance that we would be able to obtain
any such licenses on commercially reasonable terms, if at all. We
currently license certain proprietary information from third parties, some of
which may have been developed with government grants under circumstances where
the government maintained certain rights with respect to the proprietary
information developed. No assurances can be given that such third
parties will adequately enforce any rights they may have or that the rights, if
any, retained by the government will not adversely affect the value of our
license.
There
is no guarantee that our trade secrets will not be disclosed or known by our
competitors.
To
protect our rights, we require certain employees and consultants to enter into
confidentiality agreements with us. There can be no assurance that
these agreements will not be breached, that we would have adequate and
enforceable remedies for any breach, or that any trade secrets of ours will not
otherwise become known or be independently developed by
competitors.
We
have limited marketing and sales capability. If we are unable to
obtain additional distributors and our current and future distributors do not
market our products successfully, we may not generate significant revenues or
become profitable.
We have
limited marketing and sales capability. We are dependent upon
existing and, possibly future, marketing agreements and third party distribution
agreements for our products in order to generate significant revenues and become
profitable. As a result, any revenues received by us will be
dependent in large part on the efforts of third parties, and there is no
assurance that these efforts will be successful.
Our
commercialization strategy for Ampligen®-CFS may include licensing/co-marketing
agreements utilizing the resources and capacities of a strategic
partner(s). We are currently seeking worldwide marketing partner(s),
with the goal of having a relationship in place before approval is
obtained. In parallel to partnering discussions, appropriate
pre-marketing activities will be undertaken. We intend to control
manufacturing of Ampligen on a world-wide basis.
We cannot
assure that our U.S. or foreign marketing strategy will be successful or that we
will be able to establish future marketing or third party distribution
agreements on terms acceptable to us, or that the cost of establishing these
arrangements will not exceed any product revenues. Our inability to
establish viable marketing and sales capabilities would most likely have a
materially adverse effect on us.
There
are no long-term agreements with suppliers of required materials. If
we are unable to obtain the required raw materials, we may be required to scale
back our operations or stop manufacturing Alferon N Injection® and/or
Ampligen®.
A number
of essential materials are used in the production of Alferon N Injection®,
including human white blood cells. We do not have long-term
agreements for the supply of any of such materials. There can be no
assurance we can enter into long-term supply agreements covering essential
materials on commercially reasonable terms, if at all.
There are
a limited number of manufacturers in the United States available to provide the
polymers for use in manufacturing Ampligen®. At present, we do not
have any agreements with third parties for the supply of any of these
polymers. We have established relevant manufacturing operations
within our New Brunswick, New Jersey facility for the production of Ampligen®
polymers from raw materials in order to obtain polymers on a more consistent
manufacturing basis.
If we are
unable to obtain or manufacture the required polymers, we may be required to
scale back our operations or stop manufacturing. The costs and availability of
products and materials we need for the production of Ampligen® and the
commercial production of Alferon N Injection® and other products which we may
commercially produce are subject to fluctuation depending on a variety of
factors beyond our control, including competitive factors, changes in
technology, and FDA and other governmental regulations and there can be no
assurance that we will be able to obtain such products and materials on terms
acceptable to us or at all.
There
is no assurance that successful manufacture of a drug on a limited scale basis
for investigational use will lead to a successful transition to commercial,
large-scale production.
Small
changes in methods of manufacturing, including commercial scale-up, may affect
the chemical structure of Ampligen® and other RNA drugs, as well as their safety
and efficacy, and can, among other things, require new clinical studies and
affect orphan drug status, particularly, market exclusivity rights, if any,
under the Orphan Drug Act. The transition from limited production of
pre-clinical and clinical research quantities to production of commercial
quantities of our products will involve distinct management and technical
challenges and will require additional management and technical personnel and
capital to the extent such manufacturing is not handled by third
parties. There can be no assurance that our manufacturing will be
successful or that any given product will be determined to be safe and
effective, capable of being manufactured economically in commercial quantities
or successfully marketed.
We
have limited manufacturing experience.
Ampligen®
has been produced to date only in limited quantities for use in our clinical
trials and we are dependent upon a third party supplier for the manufacturing
and bottling process. The failure to continue these arrangements or
to achieve other such arrangements on satisfactory terms could have a material
adverse affect on us. Also to be successful, our products must be
manufactured in commercial quantities in compliance with regulatory requirements
and at acceptable costs. To the extent we are involved in the
production process, our current facilities are not adequate for the production
of our proposed products for large-scale commercialization, and we currently do
not have adequate personnel to conduct large-scale manufacturing. We
intend to utilize third-party facilities if and when the need arises or, if we
are unable to do so, to build or acquire commercial-scale manufacturing
facilities. We will need to comply with regulatory requirements for
such facilities, including those of the FDA pertaining to current Good
Manufacturing Practices (“cGMP”) regulations. There can be no
assurance that such facilities can be used, built, or acquired on commercially
acceptable terms, or that such facilities, if used, built, or acquired, will be
adequate for our long-term needs.
We
may not be profitable unless we can produce Ampligen® or other products in
commercial quantities at costs acceptable to us.
We have
never produced Ampligen® or any other products in large commercial
quantities. We must manufacture our products in compliance with
regulatory requirements in large commercial quantities and at acceptable costs
in order for us to be profitable. We intend to utilize third-party
manufacturers and/or facilities if and when the need arises or, if we are unable
to do so, to build or acquire commercial-scale manufacturing
facilities. If we cannot manufacture commercial quantities of
Ampligen® or enter into third party agreements for its manufacture at costs
acceptable to us, our operations will be significantly
affected. Also, each production lot of Alferon N Injection® is
subject to FDA review and approval prior to releasing the lots to be
sold. This review and approval process could take considerable time,
which would delay our having product in inventory to sell.
Rapid
technological change may render our products obsolete or
non-competitive.
The
pharmaceutical and biotechnology industries are subject to rapid and substantial
technological change. Technological competition from pharmaceutical
and biotechnology companies, universities, governmental entities and others
diversifying into the field is intense and is expected to
increase. Most of these entities have significantly greater research
and development capabilities than us, as well as substantial marketing,
financial and managerial resources, and represent significant competition for
us. There can be no assurance that developments by others will not
render our products or technologies obsolete or noncompetitive or that we will
be able to keep pace with technological developments.
Our
products may be subject to substantial competition.
Ampligen®. Competitors
may be developing technologies that are, or in the future may be, the basis for
competitive products. Some of these potential products may have an
entirely different approach or means of accomplishing similar therapeutic
effects to products being developed by us. These competing products
may be more effective and less costly than our products. In addition,
conventional drug therapy, surgery and other more familiar treatments may offer
competition to our products. Furthermore, many of our competitors
have significantly greater experience than us in pre-clinical testing and human
clinical trials of pharmaceutical products and in obtaining FDA, HPB and other
regulatory approvals of products. Accordingly, our competitors may
succeed in obtaining FDA, HPB or other regulatory product approvals more rapidly
than us. There are no drugs approved for commercial sale with respect
to treating ME/CFS in the United States. The dominant competitors
with drugs to treat disease indications in which we plan to address include
Gilead Pharmaceutical, Pfizer, Bristol-Myers, Abbott Labs, GlaxoSmithKline,
Merck and Schering-Plough Corp. These potential competitors are among
the largest pharmaceutical companies in the world, are well known to the public
and the medical community, and have substantially greater financial resources,
product development, and manufacturing and marketing capabilities than we
have. Although we believe our principal advantage is the unique
mechanism of action of Ampligen® on the immune system, we cannot assure that we
will be able to compete.
ALFERON N
Injection®. Our competitors are among the largest pharmaceutical
companies in the world, are well known to the public and the medical community,
and have substantially greater financial resources, product development, and
manufacturing and marketing capabilities than we have. Alferon N
Injection® currently competes with Schering’s injectable recombinant alpha
interferon product (INTRON® A) for the treatment of genital warts. 3M
Pharmaceuticals also offer competition from its immune-response modifier,
Aldara®, a self-administered topical cream, for the treatment of external
genital and perianal warts. In addition, Medigene has FDA approval
for a self-administered ointment, VeregenTM, which is indicated for the topical
treatment of external genital and perianal warts. Alferon N
Injection® also competes with surgical, chemical, and other methods of treating
genital warts. We cannot assess the impact products developed by our
competitors, or advances in other methods of the treatment of genital warts,
will have on the commercial viability of Alferon N Injection®. If and
when we obtain additional approvals of uses of this product, we expect to
compete primarily on the basis of product performance. Our
competitors have developed or may develop products (containing either alpha or
beta interferon or other therapeutic compounds) or other treatment modalities
for those uses. There can be no assurance that, if we are able to
obtain regulatory approval of Alferon N Injection® for the treatment of new
indications, we will be able to achieve any significant penetration into those
markets. In addition, because certain competitive products are not
dependent on a source of human blood cells, such products may be able to be
produced in greater volume and at a lower cost than Alferon N
Injection®. Currently, our wholesale price on a per unit basis of
Alferon N Injection® is higher than that of the competitive recombinant alpha
and beta interferon products.
General. Other
companies may succeed in developing products earlier than we do, obtaining
approvals for such products from the FDA more rapidly than we do, or developing
products that are more effective than those we may develop. While we
will attempt to expand our technological capabilities in order to remain
competitive, there can be no assurance that research and development by others
or other medical advances will not render our technology or products obsolete or
non-competitive or result in treatments or cures superior to any therapy we
develop.
Possible
side effects from the use of Ampligen® or Alferon N Injection® could adversely
affect potential revenues and physician/patient acceptability of our
product.
Ampligen®. We
believe that Ampligen® has been generally well tolerated with a low incidence of
clinical toxicity, particularly given the severely debilitating or life
threatening diseases that have been treated. A mild flushing reaction
has been observed in approximately 15-20% of patients treated in our various
studies. This reaction is occasionally accompanied by a rapid heart
beat, a tightness of the chest, urticaria (swelling of the skin), anxiety,
shortness of breath, subjective reports of ''feeling hot'', sweating and
nausea. The reaction is usually infusion-rate related and can
generally be controlled by reducing the rate of infusion. Other
adverse side effects include liver enzyme level elevations, diarrhea, itching,
asthma, low blood pressure, photophobia, rash, transient visual disturbances,
slow or irregular heart rate, decreases in platelets and white blood cell
counts, anemia, dizziness, confusion, elevation of kidney function tests,
occasional temporary hair loss and various flu-like symptoms, including fever,
chills, fatigue, muscular aches, joint pains, headaches, nausea and
vomiting. These flu-like side effects typically subside within
several months. One or more of the potential side effects might deter
usage of Ampligen® in certain clinical situations and therefore, could adversely
affect potential revenues and physician/patient acceptability of our
product.
Alferon N
Injection®. At present, Alferon N Injection® is only approved for the
intra-lesional (within the lesion) treatment of refractory or recurring external
genital warts in adults. In clinical trials conducted for the
treatment of genital warts with Alferon N Injection®, patients did not
experience serious side effects; however, there can be no assurance that
unexpected or unacceptable side effects will not be found in the future for this
use or other potential uses of Alferon N Injection® which could threaten or
limit such product’s usefulness.
We
may be subject to product liability claims from the use of Ampligen®, Alferon N
Injection®, or other of our products which could negatively affect our future
operations. We have temporarily discontinued product liability
insurance.
We face
an inherent business risk of exposure to product liability claims in the event
that the use of Ampligen® or other of our products results in adverse
effects. This liability might result from claims made directly by
patients, hospitals, clinics or other consumers, or by pharmaceutical companies
or others manufacturing these products on our behalf. Our future
operations may be negatively affected from the litigation costs, settlement
expenses and lost product sales inherent to these claims. While we
will continue to attempt to take appropriate precautions, we cannot assure that
we will avoid significant product liability exposure.
On
November 28, 2008, we suspended product liability insurance for Alferon® N and
Ampligen® until we receive regulatory clearance for Ampligen®. We now
require third parties to indemnify us in conjunction with all overseas emergency
sales of Ampligen® and Alferon® LDO. We concluded that years of
successfully addressing the limited number of product liability claims filed
against Ampligen® and Alferon® LDO, combined with the mandatory patient waivers
completed as an element of clinical trials and lack of any commercial sales
since April 2008, that temporarily discontinuing the liability insurance was an
acceptable risk given our financial condition and need to conserve
cash.
Currently,
without product liability coverage for Ampligen® and Alferon® LDO, a claim
against the products could have a materially adverse effect on our business and
financial condition.
The
loss of services of key personnel including Dr. William A. Carter could hurt our
chances for success.
Our
success is dependent on the continued efforts of our staff, especially certain
doctors and researchers along with the continued efforts of Dr. William A.
Carter because of his position as a pioneer in the field of nucleic acid drugs,
his being the co-inventor of Ampligen®, and his knowledge of our overall
activities, including patents and clinical trials. The loss of the
services of personnel key to our operations or Dr. Carter could have a material
adverse effect on our operations and chances for success. As a cash
conservation measure, we have elected to discontinue the Key Man life insurance
in the amount of $2,000,000 on the life of Dr. Carter until we receive
regulatory clearance for Ampligen®. An employment agreement continues
to exist with Dr. Carter that, as amended, runs until December 31,
2010. However, Dr. Carter has the right to terminate his employment
upon not less than 30 days prior written notice. The loss of Dr.
Carter or other personnel or the failure to recruit additional personnel as
needed could have a materially adverse effect on our ability to achieve our
objectives.
Uncertainty
of health care reimbursement for our products.
Our
ability to successfully commercialize our products will depend, in part, on the
extent to which reimbursement for the cost of such products and related
treatment will be available from government health administration authorities,
private health coverage insurers and other organizations. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and from time to time legislation is proposed, which, if adopted,
could further restrict the prices charged by and/or amounts reimbursable to
manufacturers of pharmaceutical products. We cannot predict what, if
any, legislation will ultimately be adopted or the impact of such legislation on
us. There can be no assurance that third party insurance companies
will allow us to charge and receive payments for products sufficient to realize
an appropriate return on our investment in product development.
There
are risks of liabilities associated with handling and disposing of hazardous
materials.
Our
business involves the controlled use of hazardous materials, carcinogenic
chemicals, flammable solvents and various radioactive
compounds. Although we believe that our safety procedures for
handling and disposing of such materials comply in all material respects with
the standards prescribed by applicable regulations, the risk of accidental
contamination or injury from these materials cannot be completely
eliminated. In the event of such an accident or the failure to comply
with applicable regulations, we could be held liable for any damages that
result, and any such liability could be significant. We do not
maintain insurance coverage against such liabilities.
Risks
Associated With an Investment in Our Common Stock
The
market price of our stock may be adversely affected by market
volatility.
The
market price of our common stock has been and is likely to be
volatile. This is especially true given the current significant
instability in the financial markets. In addition to general
economic, political and market conditions, the price and trading volume of our
stock could fluctuate widely in response to many factors,
including:
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|
·
|
announcements
of the results of clinical trials by us or our
competitors;
|
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|
·
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adverse
reactions to products;
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|
·
|
governmental
approvals, delays in expected governmental approvals or withdrawals
of any prior governmental approvals or public or regulatory
agency concerns regarding the safety or effectiveness of our
products;
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·
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changes
in U.S. or foreign regulatory policy during the period of product
development;
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·
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developments
in patent or other proprietary rights, including any third party
challenges of our intellectual property
rights;
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·
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announcements
of technological innovations by us or our
competitors;
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·
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announcements
of new products or new contracts by us or our
competitors;
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·
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actual
or anticipated variations in our operating results due to the level of
development expenses and other
factors;
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·
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changes
in financial estimates by securities analysts and whether our earnings
meet or exceed the
estimates;
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·
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conditions
and trends in the pharmaceutical and other
industries;
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·
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new
accounting standards;
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·
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overall
investment market fluctuation; and
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·
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occurrence
of any of the risks described in these "Risk
Factors."
|
Our
common stock is listed for quotation on the NYSE Amex. For the
12-month period ended May 31, 2009, the closing price of our common stock has
ranged from $0.25 to $2.03 per share. As of June 30, 2009, the last
reported sale price for our common stock on the NYSE Amex was $2.54 per
share. We expect the price of our common stock to remain
volatile. The average daily trading volume of our common stock varies
significantly.
In the
past, following periods of volatility in the market price of the securities of
companies in our industry, securities class action litigation has often been
instituted against companies in our industry. If we face securities
litigation in the future, even if without merit or unsuccessful, it would result
in substantial costs and a diversion of management attention and resources,
which would negatively impact our business.
Our
stock price may be adversely affected if a significant amount of shares are sold
in the public market.
In May
2009 we issued an aggregate of 25,543,339 shares and warrants to purchase an
additional 14,708,687 shares under a universal shelf registration
statement. In connection with entering into the Purchase Agreement
with Fusion Capital, we registered 21,300,000 shares in the aggregate,
consisting of 20,000,000 shares which we may sell to Fusion Capital and
1,300,000 shares we have issued or may issue to Fusion Capital as a commitment
fee. As of June 15, 2009, we have sold an aggregate of 6,642,632
shares to Fusion Capital under the Purchase Agreement, leaving 14,657,368
shares. The sale of a substantial number of shares of our common
stock by Fusion Capital, or anticipation of such sales, could make it more
difficult for us to sell equity or equity-related securities in the future at a
time and at a price that we might otherwise wish to effect
sales. However, we have the right to control the timing and amount of
any sales of our shares to Fusion Capital and the agreement may be terminated by
us at any time at our discretion without any cost to us.
This
prospectus relates to the public sale of an aggregate of 1,738,864 shares
issuable upon exercise of certain outstanding warrants. To the extent
the exercise price of our outstanding warrants is less than the market price of
the common stock, the holders of the warrants are likely to exercise them and
sell the underlying shares of common stock and to the extent that the exercise
price of certain of these warrants are adjusted pursuant to anti-dilution
protection, the warrants could be exercisable or convertible for even more
shares of common stock. We also may issue shares to be used to meet
our capital requirements or use shares to compensate employees, consultants
and/or directors. We are unable to estimate the amount, timing or
nature of future sales of outstanding common stock or instruments convertible
into or exercisable for our common stock.
Sales of
substantial amounts of our common stock in the public market could cause the
market price for our common stock to decrease. Furthermore, a decline
in the price of our common stock would likely impede our ability to raise
capital through the issuance of additional shares of common stock or other
equity securities.
Provisions
of our Certificate of Incorporation and Delaware law could defer a change of our
management which could discourage or delay offers to acquire us.
Provisions
of our Certificate of Incorporation and Delaware law may make it more difficult
for someone to acquire control of us or for our stockholders to remove existing
management, and might discourage a third party from offering to acquire us, even
if a change in control or in management would be beneficial to our
stockholders. For example, our Certificate of Incorporation allows us
to issue shares of preferred stock without any vote or further action by our
stockholders. Our Board of Directors has the authority to fix and
determine the relative rights and preferences of preferred stock. Our
Board of Directors also has the authority to issue preferred stock without
further stockholder approval. As a result, our Board of Directors
could authorize the issuance of a series of preferred stock that would grant to
holders the preferred right to our assets upon liquidation, the right to receive
dividend payments before dividends are distributed to the holders of common
stock and the right to the redemption of the shares, together with a premium,
prior to the redemption of our common stock. In this regard, in
November 2002, we adopted a stockholder rights plan and, under the Plan, our
Board of Directors declared a dividend distribution of one Right for each
outstanding share of Common Stock to stockholders of record at the close of
business on November 29, 2002. Each Right initially entitles holders
to buy one unit of preferred stock for $30.00. The Rights generally
are not transferable apart from the common stock and will not be exercisable
unless and until a person or group acquires or commences a tender or exchange
offer to acquire, beneficial ownership of 15% or more of our common
stock. However, for Dr. Carter, our Chief Executive Officer, who
already beneficially owns 6.05% of our common stock, the Plan’s threshold will
be 20%, instead of 15%. The Rights will expire on November 19, 2012,
and may be redeemed prior thereto at $.01 per Right under certain
circumstances.
Because
the risk factors referred to above could cause actual results or outcomes to
differ materially from those expressed in any forward-looking statements made by
us, you should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of
the date on which it is made and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is
not possible for us to predict which will arise. In addition, we
cannot assess the impact of each factor on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statements. Our research in clinical efforts may continue for the
next several years and we may continue to incur losses due to clinical costs
incurred in the development of Ampligen® for commercial
application. Possible losses may fluctuate from quarter to quarter as
a result of differences in the timing of significant expenses incurred and
receipt of licensing fees and/or cost recovery treatment revenue.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements in this prospectus constitute “forwarding-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1995 (collectively, the
“Reform Act”). Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology such as “believes,” “expects,” “may,” “will,” “should,” or
“anticipates” or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and
uncertainties. All statements other than statements of historical
fact, included in this prospectus regarding our financial position, business
strategy and plans or objectives for future operations are forward-looking
statements. Without limiting the broader description of
forward-looking statements above, we specifically note that statements regarding
potential drugs, their potential therapeutic effect, the possibility of
obtaining regulatory approval, our ability to manufacture and sell any products,
market acceptance or our ability to earn a profit from sales or licenses of any
drugs or our ability to discover new drugs in the future are all forward-looking
in nature.
Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, including but not limited to, the risk factors discussed above,
which may cause the actual results, performance or achievements of Hemispherx
and its subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements and other factors referenced in this prospectus. We do not
undertake and specifically decline any obligation to publicly release the
results of any revisions which may be made to any forward-looking statement to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
BUSINESS
Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2008,
incorporated by reference into this Prospectus, contains information about us,
including audited financial statements for our fiscal year ended December 31,
2008. Please refer to this report and all of our subsequent reports
filed with the SEC for additional information.
SELLING
STOCKHOLDERS
The
following table provides information regarding the selling stockholders and the
number of shares of common stock they are offering.
Unless
otherwise indicated in the footnotes below, we believe that the persons and
entities named in the table have sole voting and investment power with respect
to all shares beneficially owned. The information regarding shares beneficially
owned after the offering assumes the sale of all shares offered by each of the
selling stockholders.
None of
the selling stockholders has had any position, office or other material
relationship with us or any of our affiliates within the past three years, other
than as a stockholder, unless otherwise disclosed in the footnotes.
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Selling Stockholder
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Common
Stock Owned
Prior
To Offering
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|
No. of Shares
Being Offered
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Common Stock
Owned After
The Offering
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Portside
Growth & Opportunity Fund (1)
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700,337 |
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700,337 |
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- |
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Christopher
Chipman (2)
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5,000 |
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5,000 |
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- |
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Mid
South Capital, LLC (3)
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25,000 |
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25,000 |
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- |
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HefCap
Holdings, LLC (4)
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50,000 |
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25,000 |
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25,000 |
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William
Mason (5)
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41,667 |
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41,667 |
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W.
Barry McDonald (5)
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41,667 |
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|
41,667 |
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Wayne
Pambianchi (5)
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41,667 |
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|
41,667 |
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Gordon
Ramseier (5)
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|
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41,667 |
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|
41,667 |
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|
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|
Daniel
Tripodi (5)
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41,667 |
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|
41,667 |
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|
|
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Michael
Burrows (6)
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|
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500,000 |
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|
150,000 |
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|
350,000 |
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|
UBS
O’Connor LLC (7)
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|
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30,000 |
|
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|
30,000 |
|
|
|
- |
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Fenmore
Holdings (8)
|
|
|
36,058 |
|
|
|
36,058 |
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|
|
- |
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Gemini
Master Fund, Ltd. (9)
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43,269 |
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|
43,269 |
|
|
|
- |
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Vision
Opportunity Master Fund (10)
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188,461 |
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|
188,461 |
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|
|
- |
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JMG
Capital Partners, LP (11)
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37,116 |
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37,116 |
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|
- |
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JMG
Triton Off shore Fund, Ltd. (12)
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72,116 |
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72,116 |
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- |
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Iroquois
Capital, LP (13)
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2,141,412 |
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57,692 |
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2,083,720 |
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Jefferies
& Company, Inc. (14)
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631,618 |
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150,480 |
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481,138 |
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Sage
Healthcare Advisors LLC (15)
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75,000 |
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10,000 |
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65,000 |
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(1)
|
Includes
135% of 518,768 shares of common stock issuable upon exercise of
Warrants that expire in July 2009. Ramius Capital Group, LLC
("Ramius Capital") is the investment adviser of Portside Growth &
Opportunity Fund ("Portside") and consequently has voting control and
investment discretion over securities held by Portside. Ramius Capital
disclaims beneficial ownership of the shares held by Portside. Peter A.
Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon are the
sole managing members of C4S& Co., LLC, the sole managing member of
Ramius Capital. As a result, Messrs. Cohen, Stark, Strauss and
Solomon may be considered beneficial owners of any shares deemed to be
beneficially owned by Ramius Capital. Messrs. Cohen, Stark, Strauss and
Solomon disclaim beneficial ownership of these
shares.
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(2)
|
Consists
of 5,000 shares issuable upon the exercise of warrants at $3.60 expiring
April 1, 2011. Mr. Chipman provided us with financial and
accounting consulting
services.
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|
(3)
|
Includes
up to 25,000 shares of common stock issuable upon exercise of warrants
owned by Mid South Capital which are exercisable at a price of $3.00 per
share. Mark Hill and Jack Magerson are the principals of Mid South Capital
and are therefore considered the beneficial owner of these
securities.
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|
(4)
|
Includes
up to 25,000 shares of common stock issuable upon exercise of warrants
owned by Hefcap Holdings, LLC which are exercisable at a price of $2.50
per share and expiring March 31, 2010. Robert Rosenstein is the
sole member of Hefcap Holdings, LLC. Accordingly, the shares
beneficially owned by Hefcap Holdings are deemed to be beneficially owned
by this selling stockholder.
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|
(5)
|
Includes
share issuable upon the exercise of outstanding options exercisable at
$1.55 per share expiring February 14, 2015. The principals of
The Sage Group Inc. are Wayne Pambianchi, Daniel Tripodi, W. Barry
McDonald, Gordon Ramseier, William Mason and R. Douglas
Hulse. The foregoing securities were issued to The Sage Group
Inc. and its principals for services provided to us. The Sage
Group Inc. is affiliated by common ownership with Sage Healthcare Advisors
LLC.
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|
(6)
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Consists
of shares issuable upon exercise of 150,000 options issued in 2005 to
purchase common stock at $2.00 per share expiring September 23,
2015. Mr. Burrows is a former member of the Board of
Directors.
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|
(7)
|
Shares
offered and owned include 30,000 shares issuable upon exercise of warrants
issued in the Private Placement. The shares are beneficially
owned by O’Connor PIPES Corporate Strategies Master Ltd. UBS O'Connor LLC
is the investment manager for O’Connor PIPES Corporate Strategies Master
Ltd. UBS O'Connor LLC is a wholly owned subsidiary of UBS AG, which is
traded on the NYSE.
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|
(8)
|
Shares
offered and owned includes 36,058 shares issuable upon exercise of
warrants issued in the Private Placement. The selling
stockholder has identified Mark Nordlicht, as a natural person
with voting and investment control over shares of our common stock
beneficially owned by the selling stockholder. Mr. Nordlicht
disclaims beneficial ownership of the securities held by
Fennmore.
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|
(9)
|
Shares
offered and owned includes 43,269 shares issuable upon exercise of
warrants issued in the Private Placement, of which 36,058 warrants were
acquired from Provident Premier Master Fund, Ltd and 7,211 warrants were
acquired from Gemini Master Fund, Ltd.. The Managing Members of
Gemini Investment Strategies, LLC is Mr. Steven W. Winters. Mr.
Winters disclaims beneficial ownership of such
shares.
|
|
(10)
|
Shares
offered and owned includes 188,461 shares issuable upon exercise of
warrants issued in the Private Placement. The selling
stockholder has identified Adam Benowitz, as a natural person with voting
and investment control over shares of our common stock beneficially owned
by the selling stockholder. Mr. Benowitz disclaims beneficial
ownership of the securities held by Vision Opportunity Master
Fund.
|
|
(11)
|
Shares
offered and owned includes 37,116 shares issuable upon exercise of
warrants issued in the Private Placement. Shares listed as owned and
offered excludes shares beneficially owned by JMG Triton Offshore Fund,
Ltd. JMG Capital Partners, L.P. (“JMG Partners”) is a
California limited partnership. Its general partner is JMG
Capital Management, LLC (the “Manager”), a Delaware limited liability
company and an investment adviser registered with the Securities and
Exchange Commission. The Manager has voting and dispositive
power over JMG Partners’ investments, including the Registrable
Securities. The equity interests of the Manager are owned by
JMG Capital Management, Inc., (“JMG Capital”) a Delaware
corporation. Jonathan M. Glaser is the Executive Officer and
Director of JMG Capital and has sole investment discretion over JMG
Partners’ portfolio holdings.
|
|
(12)
|
Shares
offered and owned includes 72,116 shares issuable upon exercise of
warrants issued in the Private Placement. Shares listed as
owned and offered excludes shares beneficially owned by JMG Capital
Partners, L.P. JMG Triton Offshore Fund, Ltd. (The “Fund”) is
an international business company under the laws of the British Virgin
Islands. The Fund’s investment manager is Pacific Assets
Management LLC, a Delaware limited liability company (the
“Manager”). The Manager is an investment adviser registered
with the Securities and Exchange Commission and has voting and dispositive
power over the Fund’s investments, including the Registrable
Securities. The equity interests of the Manager are owned by
Pacific Capital Management, Inc., a Delaware company (“the
Pacific. The equity interests of Pacific are owned by
Messrs. Roger Richter, Jonathan M. Glaser and Daniel A. David
and Messrs. Glaser and Richter have sole investment discretion over the
fund’s portfolio holdings.
|
|
(13)
|
Shares
offered and owned include 57,692 shares issuable upon exercise of warrants
issued in the Private Placement. The selling stockholder has
identified Joshua Silverman, as a natural person with voting and
investment control over shares of our common stock beneficially owned by
the selling stockholder. Shares owned also includes 2,083,720
shares issuable upon exercise of warrants issued in the May 18, 2009
Private placement to Iroquois Master Fund, Ltd. Iroquois Master
Fund Ltd. is affiliated with Iroquois Capital, L.P. Mr.
Silverman manages both funds. Mr. Silverman disclaims
beneficial ownership of the shares held by Iroquois Capital,
LP.
|
|
(14)
|
Includes
150,480 shares issuable upon exercise of warrants. Jefferies acted as the
sole placement agent in the financing and is a registered
broker-dealer. Based upon representations made to us by
Jefferies, the warrant to purchase common stock were acquired in the
ordinary course of its business for its own account for investment
purposes only and not with a view to, or for, distributing the warrant or
the shares of common stock issuable upon exercise
thereof. Jefferies does not have any agreements, plans or
understandings, directly or indirectly, with any person or entity to
distribute the warrant to purchase common stock or the shares of common
stock issuable upon exercise of the
warrant.
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(15)
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Reflects
10,000 options to purchase common stock at $2.46 per share expiring
December 8, 2010 The principals of Sage Healthcare Advisors LLC
are Wayne Pambianchi, Daniel Tripodi, W. Barry McDonald, Gordon Ramseier,
William Mason and R. Douglas Hulse. The foregoing securities
were issued to Sage Healthcare Advisors LLC and its principals for
services provided to us. Sage Healthcare Advisors LLC is
affiliated by common ownership with The Sage Group
Inc.
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PLAN
OF DISTRIBUTION
The
common stock offered by this prospectus is being offered by the selling
stockholders. The selling stockholders may sell their shares of common stock
from time to time in various ways and at various prices. The shares may be sold
in one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be affected in transactions that may involve
crosses or block transactions. Some of the methods by which the selling
stockholders may sell the shares include:
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on
any national securities exchange or quotation service on which the shares
may be listed or quoted at the time of
sale;
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in
the over-the-counter market;
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in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
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through
the writing of options, whether such options are listed on an options
exchange or otherwise;
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
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privately
negotiated transactions;
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block
trades in which the broker or dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
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purchases
by a broker or dealer as principal and resale by that broker or dealer for
the selling stockholder's account under this
prospectus;
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sales
under Rule 144 rather than by using this
prospectus;
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through
the settlement of short sales;
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a
combination of any of these methods of sale;
or
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any
other legally permitted method.
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In
connection with sales of the shares or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the shares in the course of hedging in positions they assume. The
selling stockholders may also sell shares short and deliver shares to close out
short positions, provided that the selling stockholders may not close out short
positions entered into prior to the effective date of the registration statement
of which this prospectus is a part with any shares included in this prospectus.
The selling stockholders may also pledge their shares as collateral for a margin
loan under their customer agreements with their brokers. If there is a default
by the selling stockholders, the brokers may offer and sell the pledged shares
from time to time under this prospectus or an amendment to this prospectus under
Rule 424(b)(3) or other applicable provisions of the Securities Act amending the
list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus.
Brokers
or dealers may receive commissions or discounts from the selling stockholders
(or, if the broker-dealer acts as agent for the purchaser of the shares, from
that purchaser) in amounts to be negotiated. These commissions may exceed those
customary in the types of transactions involved.
We cannot
estimate at the present time the amount of commissions or discounts, if any,
that will be paid by the selling stockholders in connection with sales of the
shares.
The
selling stockholders and any broker-dealers or agents that participate with the
selling stockholders in sales of the shares may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales. In that
event, any commissions received by the broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling
stockholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of the shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of shares by the selling
stockholders. In addition, each of the selling stockholders who is a registered
broker-dealer or is affiliated with a registered broker-dealer has advised us
that:
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it
purchased the shares in the ordinary course of business;
and
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at
the time of the purchase of the shares to be resold, it had no agreements
or understandings, directly or indirectly, with any person to distribute
the shares.
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Under the
securities laws of certain states, the shares may be sold in those states only
through registered or licensed broker-dealers. In addition, the shares may not
be sold unless they have been registered or qualified for sale in the relevant
state or unless they qualify for an exemption from registration or
qualification.
We do not
know whether any selling stockholder will sell any or all of the shares
registered by the registration statement of which this prospectus forms a
part.
We have
agreed to pay all fees and expenses incident to the registration of the shares,
including certain fees and disbursements of counsel to certain of the selling
stockholders. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
Certain
of the selling stockholders have also agreed to indemnify us, our directors,
officers, agents and representatives against certain liabilities, including
certain liabilities under the Securities Act.
The
selling stockholders and other persons participating in the distribution of the
shares offered under this prospectus are subject to the applicable requirements
of Regulation M promulgated under the Exchange Act in connection with sales of
the shares. With certain exceptions, Regulation M precludes the
selling stockholders, any affiliated purchasers, and any broker-dealer or other
person who participates in the distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of the shares offered hereby this
Prospectus.
We have
agreed with the selling stockholders to keep the registration statement of which
this prospectus is a part effective until all the shares registered under the
registration statement have been resold.
This
offering will terminate on the date that all shares offered by this Prospectus
have been sold by the selling stockholders.
We will
not receive any proceeds from the sale of the shares of common stock offered by
the selling stockholders. We will receive proceeds from the exercising of the
Warrants, if any. We will apply such proceeds, if any, to fund commercialization
of Alferon® and Ampligen® along with general corporate purposes, which may
include working capital, capital expenditures, research and development
expenditures, regulatory affairs expenditures, clinical trial expenditures,
acquisitions of new technologies and investments, and the repayment,
refinancing, redemption or repurchase of future indebtedness or capital
stock.
SEC
POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the company pursuant to
the foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
LEGAL
MATTERS
The
validity of the common stock offered in this prospectus has been passed upon for
us by Silverman Sclar Shin & Byrne PLLC, 381 Park Avenue South, Suite 1601,
New York, New York 10016.
EXPERTS
The
financial statements, the related financial statement schedule, and the
effectiveness of internal control over financial reporting incorporated by
reference in this Prospectus and Registration Statement have been audited by
McGladrey & Pullen, LLP, an independent registered public accounting firm,
as stated in their report incorporated herein by reference, and are incorporated
in reliance upon such report and upon the authority of such firm as experts in
accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a registration statement on Form S-3 that we filed with
the SEC. This prospectus does not contain all of the information
included in the registration statement. For further information about us and our
securities, you should refer to the registration statement and the exhibits
filed with the registration statement.
We are
subject to the information requirements of the Securities Exchange Act of 1934
and file annual, quarterly and current reports, proxy statements and other
information with the SEC. You can read our SEC filings, including the
registration statement, over the Internet at the SEC’s website at www.sec.gov or through our
website at www.hemispherx.net. Information
contained on our website is not considered to be a part of, nor incorporated by
reference in, this prospectus. You may also read and copy any
document we file with the SEC at its Public Reference Room at 100 F Street, NE,
Washington, D.C. 20549.
You may
also obtain copies of the documents at prescribed rates by writing to the Public
Reference Room of the SEC at 100 F Street, NE, Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information
on the operation of the Public Reference Room.
INFORMATION
INCORPORATED BY REFERENCE
The SEC
allows us to “incorporate by reference” the information that we file with them,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is
considered to be an important part of this prospectus, and later information
that we file with the SEC will automatically update and supersede this
information. We incorporate by reference the following documents and
any future filing made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the
offering:
(a) Our
annual report on Form 10-K for our fiscal year ended December 31, 2008, SEC File
No. 1-13441.
(b) Our
quarterly report on Form 10-Q for the period ended March 31, 2009, SEC File No.
1-13441.
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(c)
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Our
current reports on Form 8-K, SEC File No. 1-13441 filed with the SEC on
June 24, 2009, June 17, 2009, May 27,
2009, May 26, 2009, May 19, 2009 and February 19, 2009.
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(d)
Our proxy
statement on schedule 14A for our 2009 annual meeting, SEC File No.
1-13441.
You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address: Hemispherx Biopharma, Inc., 1617 JFK Boulevard, Philadelphia,
Pennsylvania 19103, telephone number 215-988-0080.
You
should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else
to provide you with different information. We will not make offers to
sell these shares in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement is
accurate as of any date other that the date on the front of those
documents.
No
dealer, salesman or any other person is authorized to give any information or to
represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an
offer to sell these securities and it is not a solicitation of an offer to buy
these securities in any state where the offer or sale is not
permitted. The information contained in this Prospectus is current
only as of this date.
HEMISPHERX
BIOPHARMA, INC.
1,738,864
Shares of Common Stock
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