As
filed with the Securities and Exchange Commission on March 11,
2005.
Registration
No. 333-_____
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________________________________________________
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
______________________________________________________
DOR
BioPharma, Inc.
(Exact
name of Registrant as specified in its charter)
______________________________________________________
Delaware 41-1505029
(State or
other jurisdiction of (I.R.S.
Employer
incorporation
or organization) Identification
No.)
DOR
BioPharma, Inc.
Lincoln
Building, 1691 Michigan Ave
Miami,
Florida 33139
(305)
534-3383
(Address,
including zip code, and telephone number, including area code, of Registrant’s
principal executive offices)
Michael
T. Sember
President
and Chief Executive Officer
DOR
BioPharma, Inc.
Lincoln
Building, 1691 Michigan Ave
Miami,
Florida 33139
(305)
534-3383
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
______________________________________________________
with
copies to:
Leslie
J. Croland, Esq.
Edwards
& Angell, LLP
350
East Las Olas Blvd., Suite 1150
Fort
Lauderdale, Florida 33334-3607
(954)
727-2600
______________________________________________________
Approximate
date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the
only securities being registered on this form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
¨
If any of
the securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. x
If this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If
delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ¨
______________________________________________________
CALCULATION
OF REGISTRATION FEE
|
Title
of Each Class
of
Securities to be Registered |
Amount
to be registered (1) |
Proposed
maximum offering price per unit (2) |
Proposed
maximum aggregate offering price (2) |
Amount
of registration fee |
|
Common
Stock,
$.001
par value per share. . . . . |
15,922,883 |
$0.42 |
$6,687,610 |
$787.13 |
(1) Includes
up to 6,926,783 shares of the Registrant's common stock issuable upon exercise
of warrants issued to the placement agent and the Selling Stockholders, as
defined in the accompanying prospectus, on February 9, 2005; and 600,000 shares
of the Registrant’s common stock issuable upon exercise of warrants issued to
George B. McDonald, M.D. Pursuant to Rule 416 under the Securities Act of 1933,
as amended (the “Securities Act”), to the extent additional shares of
Registrant’s common stock may be issued or issuable as a result of a stock
split, stock dividend or other distribution declared at any time by the
Registrant while this registration statement is in effect, this registration
statement is hereby deemed to cover all such additional shares of common
stock.
(2) These
figures are estimates made solely for the purpose of calculating the
registration fee pursuant to Rule 457 under the Securities Act. The registration
fee has been calculated in accordance with Rule 457(h)(1) based upon the average
of the high and low prices of the Registrant's common stock reported on the
American Stock Exchange on March 7, 2005.
______________________________________________________
The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to Section 8(a), may
determine.
The
information in this prospectus is not complete and may be changed. The Selling
Stockholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
SUBJECT
TO COMPLETION, DATED MARCH 11, 2005
PROSPECTUS
DOR
BioPharma, Inc.
15,922,883
Shares of
Common
Stock
_______________________________________
This
prospectus relates to the resale, from time to time, of up to 15,922,883 shares
of our common stock, by the selling stockholders named in this prospectus in the
section “Selling Stockholders,” including their pledges, assignees and
successors-in-interest, whom we collectively refer to in this document as the
“Selling Stockholders.” On February 9, 2005, we consummated a financing pursuant
to which we issued to the Selling Stockholders (i) 8,396,100 shares of common
stock and (ii) warrants to purchase up to an aggregate of 7,526,783 shares of
common stock (the “Warrants”). The common stock being offered in this prospectus
may include shares issued pursuant to the exercise of the Warrants. The common
stock offered by this prospectus shall be adjusted to cover any additional
securities as may become issuable to prevent dilution resulting from stock
splits, stock dividends or similar transactions. We will not receive any of the
proceeds from the sale of any of the shares covered by this prospectus.
References in this prospectus to “the Company,” “we,” “our,” and “us” refer to
DOR BioPharma, Inc.
Our
common stock is traded on the American Stock Exchange under the symbol "DOR." On
March 7, 2005, the last reported sale price for our common stock was
$0.42
per
share.
An
investment in shares of our common stock involves a high degree of risk. You
should carefully consider the "Risk Factors" beginning on page 3 before you
decide whether to invest in shares of our common stock.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is , 2005
TABLE
OF CONTENTS
|
|
Page
Number |
|
FORWARD-LOOKING
STATEMENTS |
1 |
|
PROSPECTUS
SUMMARY |
2 |
|
RISK
FACTORS |
3 |
|
USE
OF PROCEEDS |
9 |
|
SELLING
STOCKHOLDERS |
9 |
|
PLAN
OF DISTRIBUTION |
12 |
|
LEGAL
MATTERS |
14 |
|
EXPERTS |
14 |
|
WHERE
YOU CAN FIND MORE INFORMATION |
14 |
| |
|
You
should rely only on the information contained or incorporated by reference in
this prospectus and in any accompanying prospectus supplement. We have not
authorized anyone to provide you with different information.
We
have not authorized the Selling Stockholders to make an offer of these shares of
common stock in any jurisdiction where the offer is not permitted.
You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of the
documents.
FORWARD-LOOKING
STATEMENTS
The
information contained in this prospectus, including the information incorporated
by reference into this prospectus, includes forward-looking statements as
defined in the Private Securities Reform Act of 1995. These forward looking
statements are often identified by words such as “may,” “will,” “expect,”
“intend,” “anticipate,” “believe,” “estimate,” “continue,” “plan” and similar
expressions. These statements involve estimates, assumptions and uncertainties
that could cause actual results to differ materially from those expressed for
the reasons described in this prospectus. You should not place undue reliance on
these forward-looking statements.
You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including:
| · |
significant
uncertainty inherent in developing vaccines against bioterror threats, and
manufacturing and conducting preclinical and clinical trials of
vaccines; |
| · |
our
ability to obtain regulatory approvals; |
| · |
our
ability to obtain future financing or funds when
needed; |
| · |
difficulties
or delays in clinical trials or a lack of progress or positive results
from research and development efforts; |
| · |
our
ability to successfully obtain further grants and awards from the U.S.
Government and other countries, and maintenance of our existing
grants; |
| · |
our
ability to patent, register and protect our technology from challenge and
our products from competition; |
| · |
maintenance
or expansion of our license agreements with our current licensors;
|
| · |
our
ability to maintain our listing on the American Stock Exchange; and
|
| · |
maintenance
of a successful business strategy. |
You
should also consider carefully the statements under "Risk Factors" and other
sections of this prospectus, which address additional factors that could cause
our actual results to differ from those set forth in the forward-looking
statements and could materially and adversely affect our business, operating
results and financial condition. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the applicable cautionary statements.
The
forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. 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.
PROSPECTUS
SUMMARY
The
Company
We are a
biopharmaceutical company focused on the research and development of biodefense
vaccines and oral therapeutic products intended for areas of unmet medical need.
We were incorporated in 1987. We maintain two active segments: BioDefense and
BioTherapeutics.
Through
our BioDefense Division, we are developing bioengineered countermeasure vaccines
for ricin toxin and botulinum toxin, both of which are considered bioterrorism
threats by the U.S. Department of Homeland Security (DHS), National Institute of
Allergic and Infectious Diseases (NIAID), Department of Defense (DOD) and
Centers for Disease Control and Prevention (CDC). We are developing our
biodefense countermeasures for potential U.S. government procurement pursuant to
the Project Bioshield Act of 2004, which provides incentives to industry to
expeditiously supply biodefense countermeasures to the Strategic National
Stockpile. As a step towards this goal, on September 13, 2004, we were awarded a
$5.2 million grant from the National Institute of Allergy and Infectious
Diseases (NIAID) for RiVaxTM, our
genetically engineered vaccine against ricin toxin, one of the most lethal plant
toxins known to man. The grants project period is September 15, 2004 to August
31, 2007 and covers the process development for manufacturing of
RiVaxTM our
recombinant vaccine for ricin toxin. The grant is based on milestones and
certain budget amounts are earned as we meet certain milestones in the
development of RiVaxTM. In
addition, on February 7, 2005, we announced that our academic partner, The
University of Texas Southwestern Medical Center at Dallas, began a Phase I
clinical trial of RiVaxTM in
normal volunteers. This is the first time a ricin toxin vaccine will be studied
in humans. Also, on January 7, 2005, we announced an agreement with Cambrex
corporation (NYSE: CBM) on the
consummation of an agreement for the process development and potential large
scale production of RiVax™ covered by the aforementioned grant.
Our
vaccine against botulinum neurotoxin, one of the most lethal substances known to
man, BT-VACC™, is an orally administered vaccine that protects against exposure
to botulinum neurotoxins. As opposed to injectable vaccines that require
multiple injections, BT-VACC™ is being developed as a multivalent, solid oral
dosage form. BT-VACC™ is covered by issued and pending U.S. patents that broadly
claim orally deliverable botulinum neurotoxin vaccines. The oral formulation is
designed to be sufficiently stable for stockpiling and storage, which is ideal
for rapid distribution and vaccination for military use or civilian vaccination
in response to bioterrorism. Oral administration of BT-VACC™ for serotype A
produces protective antibodies that afford protection or prolonged survival of
treated animals exposed to 30,000 times the lethal dose of botulinum toxin
serotype A. Pre-clinical studies of BT-VACC™ for serotype B are also ongoing. On
February 16, 2005, we expanded our biodefense product line from prophylactic
(pre-exposure) vaccines into post-exposure therapeutics when we initiated a
rational drug design program intended to identify small molecules capable of
blocking the deadly effects of botulinum toxin on a post-exposure
basis.
Through
our BioTherapeutics Division, we are in the process of developing oral
therapeutic products to treat unmet medical needs. Our therapeutic product,
orBec® (oral
beclomethasone dipropionate), has recently completed a pivotal Phase III
clinical trial for the treatment of acute intestinal graft-vs-host disease
(iGVHD), a form of serious and life-threatening gastrointestinal inflammation.
On December 30, 2004, we announced top line results of our pivotal Phase III
trial of orBec® in
iGVHD, in which orBec®
demonstrated a highly statistically significant reduction in mortality during
the prospectively defined Day 200 post-transplant period and positive trends on
it’s primary endpoint. While orBec® did not
achieve statistical significance in its primary endpoint of time to treatment
failure at Day 50 (p-value 0.1177), orBec® did
achieve a 70% reduction in mortality compared to placebo (p-value 0.007).
orBec® is a
highly potent, topically-active glucocorticoid. orBec® has
previously been granted Fast Track Designation and received Orphan Drug
Designation by the Food and Drug Administration (FDA) for the treatment of
iGVHD. We are currently in discussions with the FDA to determine the next steps
for orBec® and
pending the outcome of these discussions, expect to be in a position to offer
guidance in second quarter 2005.
The
Offering
This
prospectus relates to the offer and sale from to time to time of up to
15,922,883 shares of
our common stock by the Selling Stockholders. Of the shares registered for
resale through this prospectus, 15,322,883 shares were issued or are issuable in
connection with our February 2005 private placement as follows: (1) 8,396,100
shares were sold to investors in the private placement, (2) 6,297,075 shares are
issuable upon exercise of warrants, exercisable for a period of five years
commencing on August 8, 2005 at a price of $0.505 per share, sold to investors
in the private placement, and (3) 629,708 shares are issuable upon exercise of a
warrant, exercisable for a period of five years commencing on August 8, 2005 at
a price of $0.625 per share, issued to the placement agent of the private
placement, Growth
Capital Partners, LLC through its NASD affiliate, MidSouth Capital, Inc.
Of the
remaining 600,000 shares registered for resale through this prospectus, warrants
to purchase 600,000 shares were issued in connection with an amendment to a
consulting agreement and a stock purchase agreement.
The
Selling Stockholders may sell these shares in the over-the-counter market or
otherwise, at market prices prevailing at the time of sale, at prices related to
the prevailing market price, or at negotiated prices. We will not receive any
proceeds from the sale of shares by the Selling Stockholders.
RISK
FACTORS
You
should carefully consider the risks described below before making an investment
decision. The risks described below are not the only ones facing our company.
Additional risks not presently known to us or that we currently believe are
immaterial may also impair our business operations. Our business could be harmed
by any of these risks. The trading price of our common stock could decline due
to any of these risks and you may lose all or part of your investment. In
assessing these risks, you should also refer to the other information contained
or incorporated by reference in this prospectus, including our consolidated
financial statements and related notes.
Risks
Related To Our Industry
We
have had significant losses and anticipate future losses; if additional funding
cannot be obtained, we may reduce or discontinue our product development and
commercialization efforts and we may be unable to continue our
operations.
We are a
company that has experienced significant losses since inception and have a
significant accumulated deficit. We expect to incur additional operating losses
in the future and expect our cumulative losses to increase. As of December 31,
2004, we had $2.3 million in cash available. As a result of our private
placement in February 2005, which brought in gross proceeds of approximately
$3.77 million, we expect to have enough funds to meet our anticipated cash needs
for the next 12 months. In addition, through the NIH grant a portion of our
personnel and overhead expenditures will be supported. All of our products are
currently in development, preclinical studies or clinical trials, and we have
not generated any revenues from sales or licensing of these products. Through
December 31, 2004, we had expended approximately $6.3 million developing our
current product candidates for preclinical research and development and clinical
trials, and we currently have commitments to spend at least $7.1 million over
the next two years in connection with development of our vaccines and
therapeutic products, licenses, employee agreements, and consulting agreements.
Unless and until we are able to generate sales or licensing revenue from orBec®,
our leading product candidate, or another one of our product candidates, we will
require additional funding to meet these commitments, sustain our research and
development efforts, provide for future clinical trials, and continue our
operations. We may not be able to obtain additional required funding on terms
satisfactory to our requirements, if at all. If we are unable to raise
additional funds when necessary, we may have to reduce or discontinue
development, commercialization or clinical testing of some or all of our product
candidates or take other cost-cutting steps that could adversely affect our
ability to achieve our business objectives. If additional funds are raised
through the issuance of equity securities, stockholders may experience dilution
of their ownership interests, and the newly issued securities may have rights
superior to those of the common stock. If additional funds are raised by the
issuance of debt, we may be subject to limitations on our operations.
If
we are unsuccessful in developing our products, our ability to generate revenues
will be significantly impaired.
To be
profitable, our organization must, along with corporate partners and
collaborators, successfully research, develop and commercialize our technologies
or product candidates. Our current product candidates are in various stages of
clinical and preclinical development and will require significant further
funding, research, development, preclinical and/or clinical testing, regulatory
approval and commercialization, and are subject to the risks of failure inherent
in the development of products based on innovative or novel technologies.
Specifically, each of the following is possible with respect to any of our other
product candidates:
| · |
that
we will not be able to maintain our current research and development
|
schedules;
| · |
we
may be unsuccessful in our efforts to secure profitable procurement
contracts from the U.S. government or others for our biodefense products;
|
| · |
that
we will encounter problems in clinical trials; or
|
| · |
that
the technology or product will be found to be ineffective or unsafe.
|
If any of
the risks set forth above occurs, or if we are unable to obtain the necessary
regulatory approvals as discussed below, we may not be able to successfully
develop our technologies and product candidates and our business will be
seriously harmed. Furthermore, for reasons including those set forth below, we
may be unable to commercialize or receive royalties from the sale of any other
technology we develop, even if it is shown to be effective, if:
| · |
it
is uneconomical or the market for the product does not develop or
diminishes; |
| · |
we
are not able to enter into arrangements or collaborations to manufacture
and/or market the product; |
| · |
the
product is not eligible for third-party reimbursement from government or
private insurers; |
| · |
others
hold proprietary rights that preclude us from commercializing the product;
|
| · |
others
have brought to market similar or superior products; or
|
| · |
the
product has undesirable or unintended side effects that prevent or limit
its commercial use. |
Our
business is subject to extensive governmental regulation, which can be costly,
time consuming and subjects us to unanticipated
delays.
All of
our product offerings, as well as the processes and facilities by which they are
manufactured, are subject to very stringent United States, federal, foreign,
state and local government laws and regulations, including the Federal Food,
Drug and Cosmetic Act, the Environmental Protection Act, the Occupational Safety
and Health Act, and state and local counterparts to these acts. These laws and
regulations may be amended, additional laws and regulations may be enacted, and
the policies of the FDA and other regulatory agencies may change.
The
regulatory process applicable to our products requires pre-clinical and clinical
testing of any product to establish its safety and efficacy. This testing can
take many years and require the expenditure of substantial capital and other
resources. We may be unable to obtain, or we may experience difficulties and
delays in obtaining, necessary domestic and foreign governmental clearances and
approvals to market a product. Also, even if regulatory approval of a product is
granted, that approval may entail limitations on the indicated uses for which
the product may be marketed. The pivotal clinical trial of our product candidate
orBec® began in
2001. In December of 2004, we announced top line results for our pivotal Phase
III trial of orBec®
in iGVHD,
in which orBec®
demonstrated
a highly statistically significant reduction in mortality during the
prospectively defined Day 200 post-transplant period and positive trends on its
primary endpoint. While orBec® did not
achieve statistical significance in its primary endpoint of time to treatment
failure at Day 50 (p-value 0.1177), orBec®
did
achieve a 70% reduction in mortality compared to placebo. We plan to continue
discussions with the FDA to determine the next steps in the development of
orBec®.
Additional clinical trials may be necessary prior to either submission of a
marketing application or approval by the FDA of a marketing application.
Following
any regulatory approval, a marketed product and its manufacturer are subject to
continual regulatory review. Later discovery of problems with a product or
manufacturer may result in restrictions on such product or manufacturer. These
restrictions may include withdrawal of the marketing approval for the product.
Furthermore, the advertising, promotion and export, among other things, of a
product are subject to extensive regulation by governmental authorities in the
United States and other countries. If we fail to comply with applicable
regulatory requirements, we may be subject to fines, suspension or withdrawal of
regulatory approvals, product recalls, seizure of products, operating
restrictions and/or criminal prosecution.
There
may be unforeseen challenges in developing biodefense
products.
For
development of biodefense vaccines and therapeutics, the FDA has instituted
policies that are expected to result in accelerated approval. This includes
approval for commercial use using the results of animal efficacy trials, rather
than efficacy trials in humans. However, we will still have to establish that
the vaccine and countermeasures it is developing are safe in humans at doses
that are correlated with the beneficial effect in animals. Such clinical trials
will also have to be completed in distinct populations that are subject to the
countermeasures; for instance, the very young and the very old, and in pregnant
women, if the countermeasure is to be licensed for civilian use. Other agencies
will have an influence over the risk benefit scenarios for deploying the
countermeasures and in establishing the number of doses utilized in the
Strategic National Stockpile. We may not be able to sufficiently demonstrate the
animal correlation to the satisfaction of the FDA, as these correlates are
difficult to establish and are often unclear. Invocation of the two animal rule
may raise issues of confidence in the model systems even if the models have been
validated. For many of the biological threats, the animal models are not
available and we may have to develop the animal models, a time-consuming
research effort. There are few historical precedents, or recent precedents, for
the development of new countermeasure for bioterrorism agents. Despite the two
animal rule, the FDA may require large clinical trials to establish safety and
immunogenicity before licensure and it may require safety and immunogenicity
trials in additional populations. Approval of biodefense products may be subject
to post-marketing studies, and could be restricted in use in only certain
populations.
We
will be dependent on government funding, which is inherently uncertain, for the
success of our biodefense operations.
We are
subject to risks specifically associated with operating in the biodefense
industry, which is a new and unproven business area. We do not anticipate that a
significant commercial market will develop for our biodefense products. Because
we anticipate that the principal potential purchasers of these products, as well
as potential sources of research and development funds, will be the U.S.
government and governmental agencies, the success of our biodefense division
will be dependent in large part upon government spending decisions. The funding
of government programs is dependent on budgetary limitations, congressional
appropriations and administrative allotment of funds, all of which are
inherently uncertain and may be affected by changes in U.S. government policies
resulting from various political and military developments.
Our
products, if approved, may not be commercially viable due to health care changes
and third party reimbursement limitations.
Recent
initiatives to reduce the federal deficit and to change health care delivery are
increasing cost-containment efforts. We anticipate that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, price controls on pharmaceuticals, and other fundamental changes to
the health care delivery system. Any changes of this type could negatively
impact the commercial viability of our products, if approved. Our ability to
successfully commercialize our product candidates, if they are approved, will
depend in part on the extent to which appropriate reimbursement codes and
authorized cost reimbursement levels of these products and related treatment are
obtained from governmental authorities, private health insurers and other
organizations, such as health maintenance organizations. In the absence of
national Medicare coverage determination, local contractors that administer the
Medicare program may make their own coverage decisions. Any of our product
candidates, if approved and when commercially available, may not be included
within the then current Medicare coverage determination or the coverage
determination of state Medicaid programs, private insurance companies or other
health care providers. In addition, third-party payers are increasingly
challenging the necessity and prices charged for medical products, treatments
and services.
We
may not be able to retain rights licensed to us by third parties to
commercialize key products or to develop the third party relationships we need
to develop, manufacture and market our products.
We
currently rely on license agreements from, the University of Texas Southwestern
Medical Center, The University of Texas Medical Branch at Galveston, Thomas
Jefferson University, Southern Research Institute, the University of Alabama
Research Foundation, and George B. McDonald M.D. for the rights to commercialize
key product candidates. We may not be able to retain the rights granted under
these agreements or negotiate additional agreements on reasonable terms, or at
all.
Furthermore,
we currently have very limited product development capabilities and no
manufacturing, marketing or sales capabilities. For us to research, develop and
test our product candidates, we need to contract or partner with outside
researchers, in most cases with or through those parties that did the original
research and from whom we have licensed the technologies. If products are
successfully developed and approved for commercialization, then we will need to
enter into collaboration and other agreements with third parties to manufacture
and market our products. We may not be able to induce the third parties to enter
into these agreements, and, even if we are able to do so, the terms of these
agreements may not be favorable to us. Our inability to enter into these
agreements could delay or preclude the development, manufacture and/or marketing
of some of our product candidates or could significantly increase the costs of
doing so. In the future, we may grant to our development partners rights to
license and commercialize pharmaceutical and related products developed under
the agreements with them, and these rights may limit our flexibility in
considering alternatives for the commercialization of these products.
Furthermore, third-party manufacturers or suppliers may not be able to meet our
needs with respect to timing, quantity and quality for the products.
Additionally,
if we do not enter into relationships with third parties for the marketing of
our products, if and when they are approved and ready for commercialization, we
would have to build our own sales force. Development of an effective sales force
would require significant financial resources, time and expertise. We may not be
able to obtain the financing necessary to establish a sales force in a timely or
cost effective manner, if at all, and any sales force we are able to establish
may not be capable of generating demand for our product candidates, if they are
approved.
We
may suffer product and other liability claims; we maintain only limited product
liability insurance, which may not be sufficient.
The
clinical testing, manufacture and sale of our products involves an inherent risk
that human subjects in clinical testing or consumers of our products may suffer
serious bodily injury or death due to side effects, allergic reactions or other
unintended negative reactions to our products. As a result, product and other
liability claims may be brought against us. We currently have clinical trial and
product liability insurance with limits of liability of $5 million, which may
not be sufficient to cover our potential liabilities. Because liability
insurance is expensive and difficult to obtain, we may not be able to maintain
existing insurance or obtain additional liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Furthermore, if any
claims are brought against us, even if we are fully covered by insurance, we may
suffer harm such as adverse publicity.
We
may not be able to compete successfully with our competitors in the
biotechnology industry.
The
biotechnology industry is intensely competitive, subject to rapid change and
sensitive to new product introductions or enhancements. Most of our existing
competitors have greater financial resources, larger technical staffs, and
larger research budgets than we have, as well as greater experience in
developing products and conducting clinical trials. Our competition is
particularly intense in the gastroenterology and transplant areas and is also
intense in the therapeutic area of inflammatory bowel disease. We face intense
competition in the area of biodefense from various public and private companies
and universities as well as governmental agencies, such as the U.S. Army, which
may have their own proprietary technologies that may directly compete with our
technologies. In addition, there may be other companies that are currently
developing competitive technologies and products or that may in the future
develop technologies and products that are comparable or superior to our
technologies and products. We may not be able to compete successfully with our
existing and future competitors.
We
may be unable to commercialize our products if we are unable to protect our
proprietary rights, and we may be liable for significant costs and damages if we
face a claim of intellectual property infringement by a third
party.
Our
success depends in part on our ability to obtain and maintain patents, protect
trade secrets and operate without infringing upon the proprietary rights of
others. In the absence of patent and trade secret protection, competitors may
adversely affect our business by independently developing and marketing
substantially equivalent or superior products and technology, possibly at lower
prices. We could also incur substantial costs in litigation and suffer diversion
of attention of technical and management personnel if we are required to defend
ourselves in intellectual property infringement suits brought by third parties,
with or without merit, or if we are required to initiate litigation against
others to protect or assert our intellectual property rights. Moreover, any such
litigation may not be resolved in our favor.
Although
we and our licensors have filed various patent applications covering the uses of
our product candidates, patents may not be issued from the patent applications
already filed or from applications that we might file in the future. Moreover,
the patent position of companies in the pharmaceutical industry generally
involves complex legal and factual questions, and recently has been the subject
of much litigation. Any patents we have obtained, or may obtain in the future,
may be challenged, invalidated or circumvented. To date, no consistent policy
has been developed in the United States Patent and Trademark Office regarding
the breadth of claims allowed in biotechnology patents.
In
addition, because patent applications in the United States are maintained in
secrecy until patents issue, and because publication of discoveries in the
scientific or patent literature often lags behind actual discoveries, we cannot
be certain that we and our licensors are the first creators of inventions
covered by any licensed patent applications or patents or that we or they are
the first to file. The Patent and Trademark Office may commence interference
proceedings involving patents or patent applications, in which the question of
first inventorship is contested. Accordingly, the patents owned or licensed to
us may not be valid or may not afford us protection against competitors with
similar technology, and the patent applications licensed to us may not result in
the issuance of patents.
It is
also possible that our patented technologies may infringe on patents or other
rights owned by others, licenses to which may not be available to us. We are
aware of at least one issued U.S. patent assigned to the U.S. Government
relating to one component of one of our vaccine candidates that we may be
required to license in order to commercialize that vaccine candidate. We may not
be successful in our efforts to obtain a license under such patent on terms
favorable to us, if at all. We may have to alter our products or processes, pay
licensing fees or cease activities altogether because of patent rights of third
parties.
In
addition to the products for which we have patents or have filed patent
applications, we rely upon unpatented proprietary technology and may not be able
to meaningfully protect our rights with regard to that unpatented proprietary
technology. Furthermore, to the extent that consultants, key employees or other
third parties apply technological information developed by them or by others to
any of our proposed projects, disputes may arise as to the proprietary rights to
this information, which may not be resolved in our favor.
Our
business could be harmed if we fail to retain our current personnel or if they
are unable to effectively run our business.
We have
only nine employees and we depend upon these employees to manage the day-to-day
activities of our business. Because we have such limited personnel, the loss of
any of them or our inability to attract and retain other qualified employees in
a timely manner would likely have a negative impact on our operations.
Furthermore, these few employees on whom our business depends have limited
experience in managing and operating our business. Michael Sember, Chief
Executive Officer, was hired in December 2004; Evan Myrianthopoulos, our Chief
Financial Officer, was hired in November 2004, although he was on the Board for
two years; Dr. Gregory Davenport, the President of BioDefense Division, was
hired in December 2003; James Clavijo, our Controller, Treasurer and Corporate
Secretary was hired in October 2004; and Dr. Robert Brey, our Chief Scientific
Officer was hired in 1996. In the fourth quarter of 2004, Alexander P. Haig was
appointed Chairman of the Board replacing his father, General (Ret.) Alexander
M. Haig, Jr., who resigned from our Board and joined our BioDefense Strategic
Advisory Board. In addition, our President and Acting Chief Executive Officer,
Geoff Green and our Controller, William Milling, resigned in the fourth quarter
of 2004. Because of this inexperience in operating our business, there continues
to be significant uncertainty as to how our management team will perform. We
will not be successful if this management team cannot effectively manage and
operate our business. Several members of our board of directors are associated
with other companies in the biopharmaceutical industry. Stockholders should not
expect an obligation on the part of these board members to present product
opportunities to us of which they become aware outside of their capacity as
members of our board of directors.
Risks
Related to the Offering
Our
stock price is highly volatile.
The
market price of our common stock, like that of many other research and
development public pharmaceutical and biotechnology companies, has been highly
volatile and may continue to be so in the future due to a wide variety of
factors, including:
| · |
announcements
of technological innovations, more important bio-threats or new commercial
therapeutic products by us, our collaborative partners or our present or
potential competitors; |
| · |
our
quarterly operating results and
performance; |
| · |
announcements
by us or others of results of pre-clinical testing and clinical
trials; |
| · |
developments
or disputes concerning patents or other proprietary
rights; |
| · |
litigation
and government proceedings; |
| · |
changes
in government regulations; |
| · |
economic
and other external factors; and |
| · |
general
market conditions |
Our stock
price has fluctuated between January 1, 2001 through December 31, 2004, the per
share price of our common stock ranged between a high of $2.10 per share to a
low of $0.11 per share. As of March 2, 2005 our common stock traded at $0.43.
The fluctuation in the price of our common stock has sometimes been unrelated or
disproportionate to our operating performance.
Our
stock may not remain listed on the American Stock
Exchange
Because
we continue to incur losses from operations in fiscal 2004, the stockholders’
equity standard applicable to us of the American Stock Exchange’s (AMEX)
continued listing requirements is $6 million. As of February 7, 2005 on the
raising of approximately $3.77 million through a private equity placement we
were in compliance with the standard. However in order to continue to be in
compliance with the listing standard we must execute the compliance plan
submitted on December 30, 2004 with AMEX and approved by them on January 19,
2005. Despite our current compliance, AMEX may require that we also demonstrate
continued compliance with all listing requirements by July 12, 2005, including
minimum stockholders’ equity of at least $6 million at such time. Based upon our
forecasted cash expenditures, we may not satisfy such requirement at such time
absent one or more transactions having the effect of increasing our current
stockholders’ equity.
In June
30, 2003, our net equity of $2.3 million did not satisfy the $4 million minimum
stockholders’ equity requirement that was applicable to calendar quarters ending
during 2003, and we received notification from the AMEX that we were no longer
in compliance with their minimum listing requirements. On August 4, 2003 we
submitted a compliance plan, and the AMEX accepted our plan and allowed us 18
months to regain compliance in accordance with the terms of our plan. Our
deadline to meet the plan was December 26, 2004, to avoid delisting
from the AMEX. Although we did not meet the plan submitted, AMEX provided us
with the opportunity to submit a new plan of compliance with the listing
standard, which we submitted on December 30, 2004. On January 24, 2005 AMEX
accepted the compliance plan and provided us until July 12, 2005 to comply with
the continued listing standard of section 1003 (a) (iii) of the AMEX company
guide. However, we cannot assure you that we will continue to satisfy other
requirements necessary to remain listed on the AMEX or that the AMEX will not
take additional actions to delist our common stock. If for any reason, our stock
were to be delisted from the AMEX, we may not be able to list our common stock
on another national exchange or market. If our common stock is not listed on a
national exchange or market, the trading market for our common stock may become
illiquid. Upon any such delisting, our common stock would become subject to the
penny stock rules of the SEC, which generally are applicable to equity
securities with a price of less than $5.00 per share, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. The penny
stock rules require a broker-dealer, before a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with bid and ask quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer’s account. In addition, the penny stock rules require that, before
a transaction in a penny stock that is not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. As a result of these requirements, if our common
stock were to become subject to the penny stock rules, it is likely that the
price of our common stock would decline and that our stockholders would find it
more difficult to sell their shares.
Stockholders
may suffer substantial dilution.
We have a
number of agreements or obligations that may result in dilution to investors.
These include:
| · |
warrants
to purchase a total of approximately 22.4 million shares of our common
stock at a current weighted average exercise price of approximately $1.04;
|
| · |
anti-dilution
rights associated with a portion of the above warrants which can permit
purchase of additional shares and/or lower exercise prices under certain
circumstances; and |
| · |
options
to purchase approximately 11.8 million shares of our common stock of a
current weighted average exercise price of approximately $0.64.
|
To the
extent that anti-dilution rights are triggered, or warrants or options are
exercised, our stockholders will experience substantial dilution and our stock
price may decrease.
USE
OF PROCEEDS
Any net
proceeds from any sale of shares of our common stock covered by this prospectus
will be received by the Selling Stockholders. We will not receive any proceeds
from the sale of shares by the Selling Stockholders.
SELLING
STOCKHOLDERS
Of the
15,922,883 shares of
our common stock registered for public resale pursuant to this prospectus and
listed under the column "Shares Available for Sale Under This Prospectus" on the
table set forth below, 14,693,175 shares were issued or are issuable in
connection with our February 2005 private placement, in which we sold shares at
$0.45 per share, with investors receiving warrants to purchase shares of common
stock with an exercise price of $0.505 per share. Our placement agent,
Growth
Capital Partners, LLC through its NASD affiliate, MidSouth Capital,
Inc., received
a warrant to purchase 629,708 shares of common stock at $0.625 per share. This
placement was completed on February 9, 2005. These shares of our common stock
are included in this prospectus pursuant to registration rights we granted in
connection with the February 2005 private placement.
Of the
remaining 600,000 shares of our common stock registered for public resale
pursuant to this prospectus and listed under the column "Shares Available for
Sale Under This Prospectus" on the table set forth below, warrants to purchase
600,000 shares were issued to George B. McDonald, M.D. in connection with an
amendment to his consulting agreement and a stock purchase agreement. These
shares of our common stock are included in this prospectus pursuant to the
registration rights we granted in connection with such amendment and stock
purchase.
The
following table presents information as of March 2, 2005 and sets forth the
number of shares beneficially owned by each of the Selling Stockholders as of
the date of this prospectus. We are not able to estimate the amount of shares
that will be held by each Selling Stockholder after the completion of this
offering because: (1) the Selling Stockholders may sell less than all of the
shares registered under this prospectus; (2) the Selling Stockholders may
exercise less than all of their warrants; and (3) to our knowledge, the Selling
Stockholders currently have no agreements, arrangements or understandings with
respect to the sale of any of their shares. The following table assumes that all
of the currently outstanding warrants will be exercised into common stock and
all of the shares being registered pursuant to this prospectus will be sold. The
Selling Stockholders are not making any representation that any shares covered
by this prospectus will be offered for sale. Except as otherwise indicated,
based on information provided to us by each Selling Stockholder, the Selling
Stockholders have sole voting and investment power with respect to their shares
of common stock.
|
Name
of Selling Stockholder |
Number
of
Shares of Common Stock Owned Before the Offering
(1)(2) |
Percent
of
Common Stock Owned Before the Offering |
Shares
Available
for Sale Under This Prospectus (2) |
Number
of
Shares of Common Stock To Be Owned After Completion of the
Offering |
Percent
of
Common Stock to be Owned After Completion of the
Offering
|
| |
|
|
|
|
|
|
SF
Capital Partners Ltd.(3) |
3,581,581
|
6.73%
|
3,885,000
|
2,374,240
|
4.46%
|
|
Silverback
Master Ltd.(4) |
2,525,563
|
4.99%
|
3,108,000
|
-
|
*
|
|
Portside
Growth and Opportunity Fund(5) |
2,100,000
|
4.08%
|
2,100,000
|
-
|
*
|
|
Enable
Growth Partners LP(6) |
1,050,000
|
2.06%
|
1,050,000
|
-
|
*
|
|
Nite
Capital LP(7) |
1,050,000
|
2.06%
|
1,050,000
|
-
|
*
|
|
Castle
Creek Healthcare Partners, LLC(8) |
968,038
|
1.90%
|
525,000
|
443,038
|
*
|
|
CC
LifeScience Ltd.(9) |
968,038
|
1.90%
|
525,000
|
443,038
|
*
|
|
Omicron
Master Trust(10) |
875,000
|
1.72%
|
875,000
|
-
|
*
|
|
Silverback
Life Sciences Master Fund(4) |
777,000
|
1.53%
|
777,000
|
-
|
*
|
|
MidSouth
Capital, Inc. (11) |
629,708
|
1.23%
|
629,708
|
-
|
*
|
|
Cranshire
Capital, L.P.(12) |
525,000
|
1.03%
|
525,000
|
-
|
*
|
|
Steven
Mark IRA |
140,000
|
*
|
140,000 |
-
|
*
|
|
Vasili
and Elisabeth Myrianthopoulos, JTWROS |
58,625
|
*
|
58,625
|
-
|
*
|
|
Lloyd
Brokaw IRA |
35,000
|
*
|
35,000 |
-
|
*
|
|
Francis
A. and Nicole Bartul, JTWROS |
20,125
|
*
|
20,125 |
-
|
*
|
|
Alexander
and Suzanne Myrianthopoulos, JTWROS |
19,425
|
*
|
19,425
|
-
|
*
|
|
George
B. McDonald, M.D. |
600,000
|
1.17%
|
600,000
|
-
|
*
|
*Less
than 1%.
(1) This
column does not include certain shares of common stock issuable upon exercise of
warrants held by SF Capital Partners Ltd. and Silverback Master Ltd., because
such warrants are subject to conversion limitations that preclude SF Capital
Partners Ltd. and Silverback Master Ltd. from utilizing its exercise rights to
the extent that it would beneficially own (determined in accordance with Section
13(d) of the Exchange Act) in excess of 4.99% of the total number of our issued
and outstanding shares of common stock. Such limitations may be waived by
providing 61 days’ prior written notice to us.
(2) The
shares of common stock issuable upon the exercise of warrants as follows: SF
Capital Partners Ltd., 1,665,000 shares; Silverback Master Ltd., 1,322,000
shares; Portside Growth and Opportunity Fund, 900,000 shares; Enable Growth
Partners LP, 450,000 shares; Nite Capital, LP, 450,000 shares; Omicron Master
Trust, 375,000 shares; Silverback Life Sciences Master Fund, 333,000 shares;
Castle Creek Healthcare Partners, LLC, 225,000 shares; CC Life Science Ltd.,
225,000 shares; Cranshire Capital, L.P., 225,000 shares; MidSouth Capital, Inc.,
629,708 shares; Steven Mark IRA, 60,000 shares; Vasili and Elisabeth
Myrianthopoulos, 25,125 shares; Lloyd Brokaw IRA, 15,000 shares; Francis A. and
Nicole Bartul, JTWROS, 8,625 shares; Alexander and Suzanne Myrianthopoulos,
JTWROS, 8,325 shares; and George B. McDonald, M.D., 600,000 shares.
(3) The
number of shares listed under the caption "Number of Shares of Common Stock
Owned Before the Offering" includes 1,361,581 shares of common stock in
connection with our March 2004 private placement. Michael A. Roth and Brian J.
Stark are Managing Members of Stark Offshore Management, LLC (“Stark Offshore”),
which acts as investment manager and has sole power to direct the management of
SF Capital Partners Ltd. Through Stark Offshore, Michael A. Roth and Brian J.
Stark possess voting and dispositive power over the securities held by SF
Capital Partners Ltd. Michael A. Roth and Brian J. Stark disclaim beneficial
ownership of the securities held by SF Capital. Partners Ltd.
(4)
Silverback Asset Management, LLC ("SAM") serves as investment manager to
Silverback Master, Ltd. ("Silverback Master") and Silverback Life Sciences
Master Fund (“Silverback Life Sciences”). In that capacity, SAM may be deemed to
be the beneficial owner of securities held by Silverback Master and Silverback
Life Sciences. SAM disclaims beneficial ownership of the securities held by
Silverback Master and Silverback Life Sciences. Elliot Bossen is the sole
Managing Member of SAM and is primarily responsible for the investment decisions
of SAM. Elliot Bossen disclaims beneficial ownership of the securities held by
Silverback Master and Silverback Life Sciences.
(5) Ramius
Capital Group, LLC (“Ramius Capital”) is the investment adviser of Portside
Growth and 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.
(6) Mitch
Levine, Managing Partner of Enable Growth Partners LP, exercises sole voting and
investment power of the shares of our common stock on behalf of this Selling
Stockholder.
(7) Keith
Goodman, Manager of the General Partner of Nite Capital, LP exercises sole
voting and investment power of the shares of our common stock on behalf of this
Selling Stockholder.
(8) The
number of shares listed under the caption "Number of Shares of Common Stock
Owned Before the Offering" includes 316,456 shares of common stock and 126,582
shares of common stock issuable upon exercise of warrants issued in connection
with our March 2004 private placement, with an exercise price per shares of
$0.87. As investment manager under a management agreement, Castle Creek
Partners, LLC may exercise dispositive and voting power with respect to the
shares owned by Castle Creek Healthcare Partners LLC. Castle Creek Partners, LLC
disclaims beneficial ownership of such shares. Daniel Asher is the managing
member of Castle Creek Partners, LLC. Mr. Asher disclaims beneficial ownership
of the shares owned by Castle Creek Healthcare Partners LLC.
(9) The
number of shares listed under the caption "Number of Shares of Common Stock
Owned Before the Offering" includes 316,456 shares of common stock and 126,582
shares of common stock issuable upon exercise of warrants issued in connection
with our March 2004 private placement, with an exercise price per shares of
$0.87.
(10)
Omicron Capital, L.P., a Delaware limited partnership (“Omicron Capital”),
serves as investment manager to Omicron Master Trust, a trust formed under the
laws of Bermuda (“Omicron”), Omicron Capital, Inc., a Delaware corporation
(“OCI”), serves as general partner of Omicron Capital, and Winchester Global
Trust Company Limited (“Winchester”) serves as the trustee of Omicron. By reason
of such relationships, Omicron Capital and OCI may be deemed to share
dispositive power over the shares of our common stock owned by Omicron, and
Winchester may be deemed to share voting and dispositive power over the shares
of our common stock owned by Omicron. Omicron Capital, OCI and Winchester
disclaim beneficial ownership of such shares of our common stock. No other
person has sole or shared voting or dispositve power with respect to the shares
of our common stock being offered by Omicron, as those terms are used for the
purposes of Regulation 13D-G under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Omicron and Winchester are not “affiliates” of one
another, as that term is used for purposes of the Exchange Act, or of any other
person named in this prospectus as a Selling Stockholder. No person or “group”
(as that term is used in Section 13(d) or Regulation 13D - G of the Exchange
Act) controls Omicron and
Winchester.
(11)
Growth
Capital Partners, LLC through its NASD affiliate, MidSouth Capital, Inc. is a
broker-dealer who acted as placement agent for the private placement completed
on February 9, 2005. We issued MidSouth warrants to purchase an aggregate of
629,708 shares of common stock at $0.625 per share, and paid $189,158 in cash as
placement agent fees.
(12)
Mitchell P. Kopin, President of Downsview Capital, Inc., the General Partner of
Cranshire Capital, L.P., exercises sole voting and investment power of the
shares of our common stock on behalf of this Selling Stockholder.
PLAN
OF DISTRIBUTION
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The Selling Stockholders may use any one or more of
the following methods when selling shares:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits investors; |
| · |
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction; |
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account; |
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange; |
| · |
privately
negotiated transactions; |
| · |
to
cover short sales and other hedging transactions made after the date that
the registration statement of which this prospectus is a part is declared
effective by the Securities and Exchange Commission
(“SEC”); |
| · |
broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share; |
| · |
a
combination of any such methods of sale;
and |
| · |
any
other method permitted pursuant to applicable
law. |
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
investor of shares, from the purchaser) in amounts to be negotiated. The Selling
Stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of common stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending the list of Selling
Stockholders to include the pledgees, transferees or other successors in
interest as Selling Stockholders under this prospectus.
Upon our
being notified in writing by a Selling Stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing
(i) the name of each such Selling Stockholder and of the participating
broker-dealer(s), (ii) the number of shares involved, (iii) the price at which
such shares of common stock were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus, and (vi) other facts
material to the transaction. In addition, upon our being notified in writing by
a Selling Stockholder that a donee or pledge intends to sell more than 500
shares of common stock, a supplement to this prospectus will be filed if then
required in accordance with applicable securities law.
The
Selling Stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Discounts, concessions, commissions and
similar selling expenses, if any, that can be attributed to the sale of
securities will be paid by the Selling Stockholders and/or the purchasers of the
securities.
Each
Selling Stockholder that is affiliated with a registered broker-dealer has
confirmed to us that, at the time it acquired the securities subject to the
registration statement of which this prospectus is a part, it did not have any
agreement or understanding, directly or indirectly, with any person to
distribute any of such securities. The Company has advised each Selling
Stockholder that it may not use shares registered on the registration statement
of which this prospectus is a part to cover short sales of our common stock made
prior to the date on which such registration statement was declared effective by
the SEC.
We are
required to pay certain fees and expenses incident to the registration of the
shares. We have agreed to indemnify the Selling Stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act. We agreed to keep this prospectus effective until the earlier of
(i) the date on which the shares may be resold by the Selling Stockholders
without registration and without regard to any volume limitations by reason of
Rule 144(e) under the Securities Act or any other rule of similar effect and
(ii) such time as all of the shares have been publicly sold.
LEGAL
MATTERS
The
validity of the shares of our common stock offered by Selling Stockholders will
be passed upon by the law firm of Edwards & Angell, LLP, Fort Lauderdale,
Florida.
EXPERTS
Sweeney,
Gates & Co., independent Registered public accounting firm, have
audited our consolidated financial statements included in our Annual Report on
Form 10-KSB, as amended, for the year ended December 31, 2003, as set forth in
their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements are
incorporated by reference in reliance on Sweeney, Gates & Co.’s report,
given on their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file
annual, quarterly, and special reports, proxy statements, and other information
with the SEC. You may read and copy any document we file at the SEC’s public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
these materials may also be obtained from the SEC at prescribed rates by writing
to the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information about the operation of the SEC public
reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. Our
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at http://www.sec.gov.
This
prospectus is part of a registration statement we have filed with the SEC. The
SEC allows us to incorporate documents by reference. This means that we can
disclose important information by referring you to another document we file
separately with the SEC. The information incorporated by reference is considered
to be part of this prospectus, except for any information superseded by
information in this prospectus. The information we file later with the SEC will
automatically update and supersede the information contained in this prospectus
or incorporated by reference from earlier filings. We incorporate by reference
the documents listed below and any future filings we make with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of the
securities covered by this prospectus have been sold or we have deregistered all
of the securities then remaining unsold:
| · |
Our
Annual Report on Form 10-KSB for the year ended December 31, 2004,
filed on March 11, 2005; and |
| · |
The
description of our common stock contained in our registration statement on
Form 8-A, as filed with the SEC on August 4, 1998, and any amendment
and report subsequently filed by us for the purpose of updating that
description. |
You may
request a copy of these filings, at no cost, by writing or telephoning us at our
principal executive offices at the following address and phone number:
Corporate
Secretary
DOR
BioPharma, Inc.
1691
Michigan Avenue
Suite
435
Miami,
Florida 33139
(305)
534-3393
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
14. Other
Expenses of Issuance and Distribution.
The
following table sets forth the estimated costs and expenses of the Registrant in
connection with the offering described in the registration statement.
|
SEC
Registration Fee
|
$787
|
|
Accounting
Fees and Expenses
|
$2,000
|
|
Legal
Fees and Expenses
|
$15,000
|
|
Miscellaneous
|
$5,000
|
| |
|
|
Total
|
$22,787
|
ITEM
15. Indemnification
of Directors and Officers.
Section
102(b)(7) of the Delaware General Corporation Law grants the Registrant the
power to limit the personal liability of its directors to the Registrant or its
stockholders for monetary damages for breach of a fiduciary duty. Article X of
the Registrant’s Certificate of Incorporation, as amended, provides for the
limitation of personal liability of the directors of the Registrant as follows:
"A
Director of the Corporation shall have no personal liability to the corporation
or its stockholders for monetary damages for breach of his fiduciary duty as a
Director; provided, however, this Article shall not eliminate or limit the
liability of a Director (i) for any breach of the Director’s duty of loyalty to
the Corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) for the unlawful payment of dividends or unlawful stock repurchases under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the Director derived an improper personal benefit. If
the General Corporation Law is amended after approval by the stockholders of
this Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so
amended."
Article
VIII of the Registrant's Bylaws, as amended and restated, provide for
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law.
The
Registrant has entered into indemnification agreements with its directors that
would require the Registrant, subject to any limitations on the maximum
permissible indemnification that may exist at law, to indemnify a director for
claims that arise because of his service as a director.
The
Registrant has a directors’ and officers’ liability insurance policy.
The above
discussion is qualified in its entirety by reference to the Registrant’s
Certificate of Incorporation and Bylaws and the form of the indemnification
agreement with directors.
ITEM
16. Exhibits
|
Exhibit
Number |
Exhibit
|
|
4.1
|
Amended
and Restated Certificate of Incorporation, incorporated by reference from
Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-QSB for the
fiscal quarter ended September 30, 2003. |
|
4.2
|
Amended
and Restated Bylaws of the Company, incorporated by reference from Exhibit
3.1 to the Registrant’s Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 2003. |
|
4.3.1 |
Securities
Purchase Agreement ("Purchase Agreement") dated as of February 1, 2005
among the Registrant and the investors named therein, incorporated by
reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
filed on February 3, 2005. |
|
4.3.2 |
Amendment
No. 1 dated as of February 17, 2005
to the Purchase Agreement, incorporated by reference from Exhibit 10.20 to
the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004. |
|
4.4 |
Form
of Common Stock Purchase Warrant, incorporated by reference from Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed on February 3,
2005. |
|
4.5 |
Registration
Rights Agreement dated as of February 1, 2005 among the Registrant and the
investors named therein, incorporated by reference from Exhibit 10.3 to
the Registrant’s Current Report on Form 8-K filed on February 3,
2005. |
|
5.1*
|
Opinion
of Edwards & Angell LLP.
|
|
23.1*
|
Consent
of Sweeney, Gates & Co., independent Registered public accounting
firm. |
|
23.2
|
Consent
of Edwards & Angell LLP (contained in its opinion filed as Exhibit 5.1
hereto). |
|
24.1
|
Powers
of Attorney (included on the signature page hereto).
|
* Filed
herewith
ITEM
17. Undertakings
(a) The
undersigned Registrant hereby undertakes as follows:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in this registration statement;
Provided,
however, That
paragraphs (a)1(i) and (a)(1)(ii) of this section do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in this registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of this
offering.
(b) The
undersigned hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the Registrant's annual report pursuant
to section 13(a) or section 15(d) of the Exchange Act that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The
undersigned Registrant hereby undertakes that:
(1) For
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Miami, State of Florida, on the 11th day of March, 2005.
DOR
BIOPHARMA, INC.
By:
/s/
Michael T. Sember
Michael
T. Sember
President
and Chief Executive Officer
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints Michael T.
Sember and Evan Myrianthopoulos, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead in any and all
capacities, to sign any or all amendments to this Registration Statement on Form
S-3 (including post-effective amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
|
Signature |
|
Title |
|
Date |
|
/s/ MICHAEL
T. SEMBER
Michael
T. Sember |
|
Director,
President and Chief Executive Officer (Principal Executive Officer)
|
|
March
11, 2005 |
|
/s/ EVAN
MYRIANTHOPOULOS
Evan
Myrianthopoulos |
|
Director,
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
March
11, 2005 |
|
/s/ ALEXANDER
P. HAIG
Alexander
P. Haig |
|
Chairman
of the Board |
|
March
11, 2005 |
|
/s/ STEVE
M. KANZER
Steve
M. Kanzer |
|
Vice-Chairman
of the Board |
|
March
11, 2005 |
|
/s/ JAMES
S. KUO
James
S. Kuo |
|
Director |
|
March
11, 2005 |
|
/s/ STUART
SEDLACK
Stuart
Sedlack |
|
Director |
|
March
11, 2005 |
INDEX
TO EXHIBITS
|
Exhibit
Number
|
Exhibit
|
|
5.1
|
Opinion
of Edwards & Angell LLP.
|
|
23.1
|
Consent
of Sweeney, Gates & Co., independent Registered public accounting
firm. |