Filed Pursuant to Rule 424(b)(3)
File No. 333-112356
9,375,000 SHARES
SIGA TECHNOLOGIES, INC.
COMMON STOCK
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Shares of common stock of SIGA Technologies, Inc. are being offered by
this prospectus. The shares will be sold from time to time by the selling
stockholders named in this prospectus. The prices at which such selling
stockholders may sell the shares will be determined by the prevailing market
price for the shares or in negotiated transactions. We will not receive any
proceeds from the sale of shares of common stock by the selling stockholders but
we may receive proceeds from the exercise of warrants held by the selling
stockholders. Our shares are traded on the Nasdaq SmallCap Market under the
symbol "SIGA." Our principal executive offices are located at 420 Lexington
Avenue, Suite 601, New York, New York 10170. Our telephone number is (212)
672-9100.
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Investing in the shares involves a high degree of risk. For more
information, please see "Risk Factors" beginning on page 4.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
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The date of this prospectus is April 27, 2004
TABLE OF CONTENTS
Page
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ABOUT SIGA TECHNOLOGIES, INC...................................................1
RECENT DEVELOPMENTS............................................................3
RISK FACTORS...................................................................4
ABOUT THIS PROSPECTUS.........................................................13
FORWARD-LOOKING STATEMENTS....................................................14
USE OF PROCEEDS...............................................................14
SELLING STOCKHOLDERS..........................................................15
PLAN OF DISTRIBUTION..........................................................16
LEGAL MATTERS.................................................................18
EXPERTS.......................................................................18
COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.......18
ADDITIONAL INFORMATION........................................................18
INCORPORATION BY REFERENCE....................................................19
ABOUT SIGA TECHNOLOGIES, INC.
We are a technology company, whose primary focus is on biopharmaceutical
product development. Our focus is on (1) novel antibiotics and antivirals for
biological warfare defense and gram-positive and gram-negative bacterial
infections; (2) mucosal vaccines for biodefense targets, strep throat and
sexually transmitted diseases, and (3) commensal bacteria for the delivery of
vaccines. As of the date of this prospectus, none of our products have been
approved for commercial sale and, therefore, we have not generated any revenues
from the commercial sale of our products. To date, we have relied on a
combination of private financings, grants and collaboration agreements to fund
our operations.
Biological Warfare Defense
We are developing a host of technologies to aid in biological warfare
defense. These technologies include anti-smallpox drugs, and treatments for
toxins and infections that may be used in an act of terrorism.
The FDA has amended its regulations to make it easier to approve
biological warfare defense products. In addition, the U.S. federal government
increased the amount of money committed to support research in this area.
We believe that we are particularly well-suited to contribute to this area
as our Chief Scientific Officer, Dr. Dennis Hruby, has over 20 years experience
working on smallpox-related research and has been leading a SIGA/Oregon State
University consortium working on an anti-viral drug development program since
September 2000.
Anti-Infectives
Our anti-infectives research targets infections that are acquired in
hospitals and drug-resistant bacteria. Our aim is to block the ability of
bacteria to attach and colonize human tissue and to cut off infection at the
first stage in the process. We are developing technologies to treat both major
classes of bacteria--gram-positive and gram-negative.
Gram-Positive Antibiotic Technology
We are developing an antibiotic technology based on the research of our
founding scientists which makes it more difficult for gram-positive bacteria to
attach to human tissue. Our scientists found that most gram-positive bacteria
utilize a particular enzyme, a protease, to attach to and colonize human tissue.
Our strategy is to develop antibiotics that inhibit the generation of protease.
In 1997, we entered into a collaborative research and license agreement with the
Wyeth-Ayerst Laboratories Division of American Home Products Corporation to
identify and develop protease inhibitors. Wyeth has completed high throughput
screening of compound libraries and is currently evaluating lead compounds. In
the first quarter of 2001, we received a milestone payment from Wyeth at the
beginning of screening for protease inhibitors. We also licensed technology from
the University of California at Los Angeles which may be incorporated into our
development of products for Wyeth.
Gram-Negative Antibiotic Technology
We are developing a technology to inhibit the ability of gram-negative
bacteria to attach to human tissue. Gram-negative bacteria utilize structures
called pili to adhere to human tissue. We believe that inhibiting the assembly
of pili should effectively inhibit diseases caused by these structures. In July
1999 and August 2000 we were awarded research grants from the NIH to support our
development efforts in this area. We entered into agreements with Med Immune
Inc., Astra AB and Washington University, pursuant to which we acquired rights
to certain gram-negative antibiotic targets, products, screens and services
developed at Washington University. In February 2000, we ended our collaborative
relationship with
Washington University on this technology, but we are still developing the
technology which we acquired in the initial agreements.
Broad-Spectrum Antibiotic Technology
We have identified a stress response enzyme, DegP, which is conserved in
both gram-positive and gram-negative bacteria. It appears to enable bacteria to
deal with external stress factors such as temperature or oxygen radicals. Our
scientists have found that organisms lacking a functional DegP proteinase have a
decreased ability to cause disease. We believe that DegP represents a true
broad-spectrum anti-infective development target. This line of research is still
too early to make accurate assessments of its development possibilities.
Mucosal Vaccines
We are developing vaccines and a delivery system for these vaccines. We
are currently developing mucosal vaccines for strep throat and for sexually
transmitted diseases, or "STDs." A mucosal vaccine is a vaccine that activates
the immune system at the mucus-lined surfaces of the body--the mouth, the nose,
the lungs and the gastrointestinal and urogenital tracts--the sites of entry for
most infectious agents. The system we are developing to deliver these mucosal
vaccines uses genetically engineered commensal bacteria. Commensal bacteria are
harmless bacteria that naturally inhabit the body's surfaces, particularly the
mucus-lined areas.
Strep Throat Vaccine Candidate
We are developing with technology we licensed from The Rockefeller
University, or "Rockefeller," a mucosal vaccine for strep throat. This vaccine
has demonstrated an ability to colonize and induce both a local and systemic
immune response in mice and rabbits. We are collaborating with the National
Institute of Health, or "NIH," and the University of Maryland Center for Vaccine
Development on the clinical development of this vaccine candidate. In December
1997, we, in cooperation with the NIH, filed an Investigational New Drug
Application with the United States Food and Drug Administration, or "FDA." In
September 1999, the NIH awarded us a research grant to help support the research
cost of our strep program.
The first stage of clinical trials was completed at the University of
Maryland in 2000. The study showed the delivery system to be well-tolerated and
that the commensal bacteria was spontaneously or easily eradicated. A second
clinical trial of the commensal delivery system without the strep throat vaccine
technology was initiated in 2000 at the University of Maryland. This trial was
completed in January 2002 and the results corroborated the conclusions of the
earlier study regarding tolerance and eradication. We are currently performing
experiments to test the vaccine formulation prior to initiating Phase I human
trials with the vaccine.
Sexually Transmitted Disease Vaccine Candidates
We are developing a mucosal vaccine for STDs utilizing technology we
licensed from Oregon State University and Washington University. We are
primarily focused on developing a vaccine for chlamydia, the most common form of
STD, and Neisseria, the agent which causes gonorrhea. As both of these STDs
enter people via mucus-lined surfaces of the body, we believe that a mucosal
vaccine will be a more effective delivery method than a traditional vaccine. In
February 2000, we entered into an agreement with the Ross Products Division of
Abbott Laboratories under which Ross provided us with funding for development of
an STD vaccine. The research program was completed in late 2001. The agreement
was extended through the first quarter of 2003 to permit an additional set of
experiments to be conducted, one of which has not been conducted as of the date
of this prospectus. The parties to the agreement are currently considering
whether to proceed with the remaining experiment.
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Surface Protein Expression System
We are developing a technology to overproduce many bacterial and human
proteins. The current methods of overproducing such proteins have faced
difficulties in purifying the proteins. By applying their knowledge of
gram-positive bacterial protein expression, our scientists have developed our
surface protein expression system, or "SPEX." Our scientists believe that SPEX
eases the protein purification, as well as increasing the likelihood that the
secreted proteins will be folded properly. We have recently used the SPEX system
to obtain large quantities of a pure protein antigen in preclinical studies. We
have commenced a program to transfer the method from a laboratory scale
environment to a commercial production facility. Our business strategy is to
license this technology on a non-exclusive basis for a broad range of
applications.
Immunological Bioinformatics
With our acquisition of Plexus Vaccines, Inc., a California corporation,
on May 23, 2003, we believe that we possess rational vaccine design capability
with which to develop both therapeutic and prophylactic vaccines against either
traditional human health threats or biowarfare agents. This capability includes
an artificial neural net algorithim intended for the analysis of genomic
sequences and the prediction of human T-cell eptiopes, and structural biology
modeling intended for the identification of B-cell epitopes and their delivery
in virus-like particles. As a proof-of-principle, we are employing these
technologies to formulate and test a vaccine candidate for severe acute
respiratory syndrome, or SARS.
RECENT DEVELOPMENTS
On January 8, 2004, MacAndrews & Forbes Holdings Inc., a corporation
wholly-owned by Ronald O. Perelman ("MacAndrews & Forbes"), and its affiliate,
TransTech Pharma, Inc., a privately held drug discovery company ("TransTech
Pharma"), completed the final portion of their $10,000,000 investment in us,
following the approval of our stockholders at our annual meeting of stockholders
held on January 8, 2004. Immediately following our stockholders' meeting,
MacAndrews & Forbes invested $1,840,595 in us in exchange for 1,278,191 shares
of our common stock at a price of $1.44 per share, and warrants to purchase up
to an additional 639,095 shares of our common stock at an exercise price of
$2.00 per share; and TransTech Pharma invested $5,000,000 in us in exchange for
3,472,222 shares of our common stock and warrants to purchase up to an
additional 1,736,111 shares of our common stock on the same terms. On August 13,
2003, MacAndrews & Forbes and certain other investors described herein invested
an aggregate of $1,000,000 in us in exchange for an aggregate of 694,444 shares
of our common stock at a price of $1.44 per share and warrants to purchase an
additional aggregate amount of 347,222 shares of our common stock at an exercise
price of $2.00 per share. On October 8, 2003, MacAndrews & Forbes and such other
investors invested an aggregate of $2,159,405 in us in exchange for an aggregate
of 1,499,587 shares of our common stock at a price of $1.44 per share and
warrants to purchase up to an additional aggregate amount of 749,794 shares of
our common stock at an exercise price of $2.00 per share.
Also on January 8, 2004, in accordance with the terms of the investment,
Paul G. Savas and Adnan M. M. Mjalli, Ph.D., the respective designees of
MacAndrews & Forbes and TransTech Pharma, were appointed to serve on our board
of directors. We have agreed to use our reasonable best efforts to continue to
appoint to our board of directors one individual designated by MacAndrews &
Forbes and one individual designated by TransTech Pharma for so long as, with
respect to the individual designated by MacAndrews & Forbes, MacAndrews &
Forbes, together with its affiliates (other than TransTech Pharma), beneficially
owns at least 1,700,000 shares of our common stock and, with respect to the
individual designated by TransTech Pharma, TransTech Pharma together with its
affiliates (other than MacAndrews & Forbes or its officers or affiliates),
beneficially owns at least 1,700,000 shares of our common stock.
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RISK FACTORS
Investing in our common stock involves a high degree of risk, and you
should be able to bear losing your entire investment. You should carefully
consider the risks presented by the following factors.
We have incurred operating losses since our inception and expect to incur net
losses and negative cash flow for the foreseeable future.
We incurred a net loss of approximately $5.3 million and approximately
$3.3 million for the years ended December 31, 2003 and 2002, respectively. As of
December 31, 2003 and December 31, 2002, our accumulated deficit was
approximately $34.8 million and approximately $29.5 million, respectively. We
expect to continue to incur significant operating expenditures. We will need to
generate significant revenues to achieve and maintain profitability.
We cannot guarantee that we will achieve sufficient revenues for
profitability. Even if we do achieve profitability, we cannot guarantee that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, then our business,
results of operations and financial condition will be materially and adversely
affected. Because our strategy includes acquisitions of other businesses,
acquisition expenses and any cash used to make these acquisitions will reduce
our available cash.
Our business will suffer if we are unable to raise additional funding.
We continue to be dependent on our ability to raise money in the equity
markets. There is no guarantee that we will continue to be successful in raising
such funds. If we are unable to raise additional equity funds, we may be forced
to discontinue or cease certain operations. We currently have sufficient
operating capital to finance our operations into 2005. Our annual operating
needs vary from year to year depending upon the amount of revenue generated
through grants and licenses and the amount of projects we undertake, as well as
the amount of resources we expend, in connection with acquisitions all of which
may materially differ from year to year and may adversely affect our business.
Our stock price is, and we expect it to remain, volatile, which could limit
investors' ability to sell stock at a profit.
The volatile price of our stock makes it difficult for investors to
predict the value of their investment, to sell shares at a profit at any given
time, or to plan purchases and sales in advance. A variety of factors may affect
the market price of our common stock. These include, but are not limited to:
o publicity regarding actual or potential clinical results relating to
products under development by our competitors or us;
o delay or failure in initiating, completing or analyzing pre-clinical
or clinical trials or the unsatisfactory design or results of these
trials;
o achievement or rejection of regulatory approvals by our competitors
or us;
o announcements of technological innovations or new commercial
products by our competitors or us;
o developments concerning proprietary rights, including patents;
o developments concerning our collaborations;
o regulatory developments in the United States and foreign countries;
o economic or other crises and other external factors;
o period-to-period fluctuations in our revenues and other results of
operations;
o changes in financial estimates by securities analysts; and
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o sales of our common stock.
Additionally, because there is not a high volume of trading in our stock,
any information about SIGA in the media may result in significant volatility in
our stock price.
We will not be able to control many of these factors, and we believe that
period-to-period comparisons of our financial results will not necessarily be
indicative of our future performance.
In addition, the stock market in general, and the market for biotechnology
companies in particular, has experienced extreme price and volume fluctuations
that may have been unrelated or disproportionate to the operating performance of
individual companies. These broad market and industry factors may seriously harm
the market price of our common stock, regardless of our operating performance.
The following table presents the high and low bid range of our stock for
the past eight quarters.
Bid Range
2002 High Low
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Second Quarter.............................. $2.63 $0.81
Third Quarter............................... $1.39 $0.65
Fourth Quarter.............................. $2.15 $0.65
2003 High Low
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First Quarter............................... $1.48 $1.02
Second Quarter.............................. $1.91 $1.09
Third Quarter............................... $2.97 $1.63
Fourth Quarter.............................. $2.30 $1.55
2004 High Low
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First Quarter............................... $2.82 $1.83
We are in various stages of product development and there can be no assurance of
successful commercialization.
In general, our research and development programs are in early stages of
development. The strep vaccine program is in Phase I clinical trials. All other
programs are in the pre-clinical stage of development. Our biological warfare
defense products do not need human clinical trials for approval by the FDA. We
will need to perform two animal models and provide safety data for a product to
be approved. Our other products will be subject to the approval guidelines under
FDA regulatory requirements which include a number of phases of testing in
humans.
The FDA has not approved any of our biopharmaceutical product candidates.
Any drug candidates developed by us will require significant additional research
and development efforts, including extensive pre-clinical and clinical testing
and regulatory approval, prior to commercial sale. We cannot be sure our
approach to drug discovery will be effective or will result in the development
of any drug. We cannot expect that any drugs resulting from our research and
development efforts will be commercially available for many years, if at all.
We have limited experience in conducting pre-clinical testing and clinical
trials. Even if we receive initially positive pre-clinical or clinical results,
such results do not mean that similar results will be obtained in the later
stages of drug development, such as additional pre-clinical testing or human or
animal clinical trials. All of our potential drug candidates are prone to the
risks of failure inherent in pharmaceutical product development, including the
possibility that none of our drug candidates will or can:
o be safe, non-toxic and effective;
o otherwise meet applicable regulatory standards;
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o receive the necessary regulatory approvals;
o develop into commercially viable drugs;
o be manufactured or produced economically and on a large scale;
o be successfully marketed;
o be reimbursed by government and private insurers; and
o achieve customer acceptance.
In addition, third parties may preclude us from marketing our drugs
through enforcement of their proprietary rights, or third parties may succeed in
marketing equivalent or superior drug products. Our failure to develop safe,
commercially viable drugs would have a material adverse effect on our business,
financial condition and results of operations.
Most of our immediately foreseeable future revenues are contingent upon
collaborative and license agreements and we may not achieve sufficient revenues
from these agreements to attain profitability.
Until and unless we successfully make a product, our ability to generate
revenues will largely depend on our ability to enter into additional
collaborative and license agreements with third parties and maintain the
agreements we currently have in place. Substantially all of our revenues for the
years ended December 31, 2003 and 2002 were derived from revenues related to
collaborative and license agreements. We will receive little or no revenues
under our collaborative agreements if our collaborators' research, development
or marketing efforts are unsuccessful, or if our agreements are terminated
early. Additionally, if we do not enter into new collaborative agreements, we
will not receive future revenues from new sources. Our future revenue is
substantially dependent on the continuing grant and contract work being
performed for the NIH which expires in May 2004 and the U.S. Army which expires
at the end of December 2007. These agreements are for specific work to be
performed under the agreements and could only be canceled by the other party
thereto for non-performance by the other party thereto.
Several factors will affect our future receipt of revenues from
collaborative arrangements, including the amount of time and effort expended by
our collaborators, the timing of the identification of useful drug targets and
the timing of the discovery and development of drug candidates. Under our
existing agreements, we may not earn significant milestone payments until our
collaborators have advanced products into clinical testing, which may not occur
for many years, if at all.
We have material agreements with the following collaborators:
o The Rockefeller University. The term of our agreement with
Rockefeller is for the duration of the patents and a number of
pending patents. As we do not currently know when any patents
pending or future patents will expire, we cannot at this time
definitively determine the term of this agreement. The agreement can
be terminated earlier if we are in breach of the provisions of the
agreement and do not cure the breach in the allowed cure period. We
are current in all obligations under this agreement.
o Oregon State University ("OSU"). We have two agreements with OSU.
OSU is a signatory of our agreement with Rockefeller. The term of
this agreement is for the duration of the patents and a number of
pending patents. As we do not currently know when any patents
pending or future patents will expire, we cannot at this time
definitively determine the term of this agreement. The agreement can
be terminated earlier if we are in breach of the provisions of the
agreement and do not cure the breach in the allowed cure period. We
are current in all obligations under the contract. We also entered
into a sub-contract agreement with OSU for us to perform work under
a grant OSU has from the NIH, which sub-contract agreement was
renewable annually and expired in accordance with its terms on
August 31, 2003. Work under this agreement was completed in 2003.
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o Wyeth. Our license agreement expires on the earlier of June 30, 2007
or the last to expire patent that we have sub-licensed to them.
Wyeth has the right to terminate the agreement on 90 days written
notice. If terminated, all rights granted to Wyeth will revert to
us, except for any compound identified by Wyeth prior to the date of
termination and subject to the milestones and royalty obligations of
the agreement.
o National Institutes of Health. Under our collaborative agreement
with the NIH, it is required to conduct and pay for the clinical
trials of our strep vaccine product through phase II human trials.
The NIH can terminate the agreement on 60 days written notice. If
terminated, we receive copies of all data, reports and other
information related to the trials. If terminated, we would have to
find another source of funds to continue to conduct the trials. We
are party to another collaborative agreement with the NIH under
which we received a grant for approximately $865,000. The term of
this agreement expires in May 2004. We are paid as the work is
performed and the agreement can be cancelled for non-performance. We
are current in all our obligations under this agreement.
o Washington University. We have licensed certain technology from
Washington under a non-exclusive license agreement. The term of our
agreement with Washington is for the duration of the patents and a
number of pending patents. As we do not currently know when any
patents pending or future patents will expire, we cannot at this
time definitively determine the term of this agreement. The
agreement cannot be terminated unless we fail to pay our share of
the joint patent costs for the technology licensed. We have
currently met all our obligations under this agreement.
o Regents of the University of California. We have licensed certain
technology from Regents under an exclusive license agreement. We are
required to pay minimum royalties under this agreement. This
agreement is related to our agreement with Wyeth and expires at the
same time as that agreement. It can be cancelled earlier if we
default on our obligations or if Wyeth cancels its agreement with
SIGA and we are not able to find a replacement for Wyeth. We have
currently met all our obligations under this agreement.
o TransTech Pharma, Inc. Under our collaborative agreement with
TransTech, TransTech is required to collaborate with us on the
discovery, optimization and development of lead compounds into
therapeutic agents aimed at certain biological targets. We and
TransTech have agreed to share the costs of development and revenues
generated from licensing and profits from any commercialized product
sales. The agreement will be in effect until terminated by the
parties or upon cessation of research or sales of all products
developed under the agreement. We are current in all obligations
under this agreement.
We may face limitations on our ability to attract suitable acquisition
opportunities or to integrate additional acquired businesses and the failure to
consummate an acquisition may significantly drain our resources.
As part of our business strategy we expect to enter into business
combinations and acquisitions. Some of these transactions could be material in
size and scope. While we will continually be searching for additional
acquisition opportunities, we may not be successful in identifying suitable
acquisitions. We compete for acquisition candidates with other entities, some of
which have greater financial and other resources than we have. Increased
competition for acquisition candidates may make fewer acquisition candidates
available to us and may cause acquisitions to be made on less attractive terms,
such as higher purchase prices. Acquisition costs may increase to levels that
are beyond our financial capability or that would adversely affect our results
of operations and financial condition.
Our ability to make acquisitions will depend in part on the relative
attractiveness of shares of our common stock as consideration for potential
acquisition candidates. This attractiveness may depend
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largely on the relative market price, our ability to register common stock and
capital appreciation prospects of our common stock. If the market price of our
common stock were to decline materially over a prolonged period of time, our
acquisition program could be materially adversely affected. Failure to making an
acquisition will limit our ability to grow, but will not be central to our
continued existence. Costs associated with failed acquisitions, such as our
plans to merge with Allergy Therapeutics and Hypernix, may result in significant
operating costs that may need to be financed from operations or from additional
equity capital. The total costs associated with the failed acquisition in 2002
of Allergy Therapeutics were approximately $600,000, of which approximately
$127,000 remain unpaid. The costs were associated with professional fees for
attorneys and accountants. Additionally, there was significant time spent by our
management in the contemplated transaction.
We may have difficulty managing our growth.
We expect to experience growth in the number of our employees and the
scope of our operations. This growth has placed, and may continue to place, a
significant strain on our management and operations. Our ability to manage this
growth will depend upon our ability to broaden our management team and our
ability to attract, hire and retain skilled employees. Our success will also
depend on the ability of our officers and key employees to continue to implement
and improve our operational and other systems and to hire, train and manage our
employees.
We may not be able to consummate potential acquisitions or an acquisition may
not enhance our business or may decrease rather than increase our earnings.
In the future, we may issue additional securities in connection with one
or more acquisitions, which may dilute our existing shareholders. Future
acquisitions could also divert substantial management time and result in short
term reductions in earnings or special transaction or other charges. In
addition, we cannot guarantee that we will be able to successfully integrate the
businesses that we may acquire into our existing business. Our shareholders may
not have the opportunity to review, vote on or evaluate future acquisitions.
The biopharmaceutical market in which we compete and will compete is highly
competitive.
The biopharmaceutical industry is characterized by rapid and significant
technological change. Our success will depend on our ability to develop and
apply our technologies in the design and development of our product candidates
and to establish and maintain a market for our product candidates. There also
are many companies, both public and private, including major pharmaceutical and
chemical companies, specialized biotechnology firms, universities and other
research institutions engaged in developing pharmaceutical and biotechnology
products. Many of these companies have substantially greater financial,
technical, research and development, and human resources than us. Competitors
may develop products or other technologies that are more effective than any that
are being developed by us or may obtain FDA approval for products more rapidly
than us. If we commence commercial sales of products, we still must compete in
the manufacturing and marketing of such products, areas in which we have no
experience. Many of these companies also have manufacturing facilities and
established marketing capabilities that would enable such companies to market
competing products through existing channels of distribution. Two companies with
similar profiles are VaxGen, Inc. which is developing vaccines against anthrax,
Smallpox and HIV/AIDS; and Avant Immunotherapeutics, Inc. which has vaccine
programs for agents of biological warfare.
Because we must obtain regulatory clearance to test and market our products in
the United States, we cannot predict whether or when we will be permitted to
commercialize our products.
A pharmaceutical product cannot be marketed in the U.S. until it has
completed rigorous pre-clinical testing and clinical trials and an extensive
regulatory clearance process implemented by the FDA. Pharmaceutical products
typically take many years to satisfy regulatory requirements and require the
expenditure of substantial resources depending on the type, complexity and
novelty of the product.
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Before commencing clinical trials in humans, we must submit and receive
clearance from the FDA by means of an Investigational New Drug ("IND")
application. Institutional review boards and the FDA oversee clinical trials and
such trials:
o must be conducted in conformance with the FDA's good laboratory
practice regulations;
o must meet requirements for institutional review board oversight;
o must meet requirements for informed consent;
o must meet requirements for good clinical and manufacturing
practices;
o are subject to continuing FDA oversight;
o may require large numbers of test subjects; and
o may be suspended by us or the FDA at any time if it is believed that
the subjects participating in these trials are being exposed to
unacceptable health risks or if the FDA finds deficiencies in the
IND application or the conduct of these trials.
Before receiving FDA clearance to market a product, we must demonstrate
that the product is safe and effective on the patient population that will be
treated. Data we obtain from preclinical and clinical activities are susceptible
to varying interpretations that could delay, limit or prevent regulatory
clearances. Additionally, we have limited experience in conducting and managing
the clinical trials and manufacturing processes necessary to obtain regulatory
clearance.
If regulatory clearance of a product is granted, this clearance will be
limited only to those states and conditions for which the product is
demonstrated through clinical trials to be safe and efficacious. We cannot
ensure that any compound developed by us, alone or with others, will prove to be
safe and efficacious in clinical trials and will meet all of the applicable
regulatory requirements needed to receive marketing clearance.
If our technologies or those of our collaborators are alleged or found to
infringe the patents or proprietary rights of others, we may be sued or have to
license those rights from others on unfavorable terms.
Our commercial success will depend significantly on our ability to operate
without infringing the patents and proprietary rights of third parties. Our
technologies, along with our licensors' and our collaborators' technologies, may
infringe the patents or proprietary rights of others. If there is an adverse
outcome in litigation or an interference to determine priority or other
proceeding in a court or patent office, then we, or our collaborators and
licensors, could be subjected to significant liabilities, required to license
the disputed rights from or to other parties and/or required to cease using a
technology necessary to carry out research, development and commercialization.
At present we are unaware of any or potential infringement claims against our or
our licensors' or collaborators' patent portfolios.
The costs to establish the validity of patents, to defend against patent
infringement claims of others and to assert infringement claims against others
can be expensive and time consuming, even if the outcome is favorable. An
outcome of any patent prosecution or litigation that is unfavorable to us or one
of our licensors or collaborators may have a material adverse effect on us. We
could incur substantial costs if we are required to defend ourselves in patent
suits brought by third parties, if we participate in patent suits brought
against or initiated by our licensors or collaborators or if we initiate such
suits. We may not have sufficient funds or resources in the event of litigation.
Additionally, we may not prevail in any such action.
Any conflicts resulting from third-party patent applications and patents
could significantly reduce the coverage of the patents owned, optioned by or
licensed to us or our collaborators and limit our ability or that of our
collaborators to obtain meaningful patent protection. If patents are issued to
third parties that contain competitive or conflicting claims, we, our licensors
or our collaborators may be legally prohibited from researching, developing or
commercializing potential products or be required to obtain licenses to these
patents or to develop or obtain alternative technology. We, our licensors and/or
our collaborators
9
may be legally prohibited from using patented technology, may not be able to
obtain any license to the patents and technologies of third parties on
acceptable terms, if at all, or may not be able to obtain or develop alternative
technologies.
In addition, like many biopharmaceutical companies, we may from time to
time hire scientific personnel formerly employed by other companies involved in
one or more areas similar to the activities conducted by us. We and/or these
individuals may be subject to allegations of trade secret misappropriation or
other similar claims as a result of their prior affiliations.
Our ability to compete may decrease if we do not adequately protect our
intellectual property rights.
Our commercial success will depend in part on our and our collaborators'
ability to obtain and maintain patent protection for our proprietary
technologies, drug targets and potential products and to effectively preserve
our trade secrets. Because of the substantial length of time and expense
associated with bringing potential products through the development and
regulatory clearance processes to reach the marketplace, the pharmaceutical
industry places considerable importance on obtaining patent and trade secret
protection. The patent positions of pharmaceutical and biotechnology companies
can be highly uncertain and involve complex legal and factual questions. No
consistent policy regarding the breadth of claims allowed in biotechnology
patents has emerged to date. Accordingly, we cannot predict the type and breadth
of claims allowed in these patents.
We have licensed from Rockefeller University the rights to seven issued
U.S. patents and three issued European patents. These patents have varying lives
and are related to the technology for the strep and gram positive products. We
have also licensed from Rockefeller University two U.S. patent applications and
two European patent applications relating to this technology. We and Washington
University are co-owners of seven issued U.S. patents and two issued European
patents. These patents have varying lives and are related to the technology used
for the gram-negative product opportunities. We and Washington University are
also co-owners with respect to four U.S. patent applications relating to this
technology. We exclusively own one U.S. patent and are the exclusive owners with
respect to one U.S. patent application and one European application. These
patents and patent applications relate to our DegP product opportunities.
-------------------------------------------------------------------------------------------------------------
Number
Licensed Number
from Co-owned with Number
Rockefeller Washington Owned by Years of Expiration Dates
PATENTS Univ. Univ. SIGA of Patents
-------------------------------------------------------------------------------------------------------------
United States 7 7 1 2013, 2014 (3 patents), 2015 (4
patents), 2016 (2 patents),
2017, 2019 (2 patents), 2020,
2021
-------------------------------------------------------------------------------------------------------------
Europe 3 2 2004, 2009, 2010, 2014, 2020
-------------------------------------------------------------------------------------------------------------
2004, 2009, 2014 (2 patents),
Australia 5 2 2015, 2016, 2019, 2020
-------------------------------------------------------------------------------------------------------------
Japan 4 2 2004 (2 patents), 2010, 2012,
2014, 2020
-------------------------------------------------------------------------------------------------------------
Canada 3 1 2004, 2010, 2014, 2019
-------------------------------------------------------------------------------------------------------------
Hungary 2 2013, 2016
-------------------------------------------------------------------------------------------------------------
Mexico 1 2016
-------------------------------------------------------------------------------------------------------------
New Zealand 1 2016
-------------------------------------------------------------------------------------------------------------
APPLICATIONS
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United States 2 4 1
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Europe 2 1
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Japan 3 1
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Canada 3 1 1
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Australia 1 1
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China 1
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Finland 1
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10
We also rely on copyright protection, trade secrets, know-how, continuing
technological innovation and licensing opportunities. In an effort to maintain
the confidentiality and ownership of trade secrets and proprietary information,
we require our employees, consultants and some collaborators to execute
confidentiality and invention assignment agreements upon commencement of a
relationship with us. These agreements may not provide meaningful protection for
our trade secrets, confidential information or inventions in the event of
unauthorized use or disclosure of such information, and adequate remedies may
not exist in the event of such unauthorized use or disclosure.
We depend on a key employee in a competitive market for skilled personnel.
We are highly dependent on Dr. Dennis Hruby, our Chief Scientific Officer.
We currently have an employment agreement which expires on December 31, 2005
with Dr. Hruby who we consider to be a "key employee." The loss of his services
prior to the termination of his employment agreement would have a material
adverse effect on our business. We do not maintain a key person life insurance
policy on the life of any employee.
Our future success also will depend in part on the continued service of
our key scientific, software, bioinformatics and management personnel and our
ability to identify, hire and retain additional personnel, including, when we
have a product for commercialization, customer service, marketing and sales
staff. We experience intense competition for qualified personnel. We may not be
able to continue to attract and retain personnel necessary to develop our
business.
Our activities involve hazardous materials and may subject us to environmental
regulatory liabilities.
Our biopharmaceutical research and development involves the controlled use
of hazardous and radioactive materials and biological waste. We are subject to
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of these materials and certain waste products.
Although we believe that our safety procedures for handling and disposing of
these materials comply with legally prescribed standards, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of an accident, we could be held liable for damages, and this
liability could exceed our resources. The research and development activities of
our company do not produce any unusual hazardous products. We do use small
amounts of radioactive substances, including 32P, 35S and 3H, which are stored,
used and disposed of in accordance with Nuclear Regulatory Commission
regulations. We maintain general liability insurance in the amount of
approximately $5,000,000 and we believe this amount should be sufficient to
cover any contingent losses.
We believe that we are in compliance in all material respects with
applicable environmental laws and regulations and currently do not expect to
make material additional capital expenditures for environmental control
facilities in the near term. However, we may have to incur significant costs to
comply with current or future environmental laws and regulations.
Our potential products may not be acceptable in the market or eligible for third
party reimbursement resulting in a negative impact on our future financial
results.
Any products successfully developed by us or our collaborative partners
may not achieve market acceptance. The antibiotic products which we are
attempting to develop will compete with a number of well-established traditional
antibiotic drugs manufactured and marketed by major pharmaceutical companies.
The degree of market acceptance of any of our products will depend on a number
of factors, including:
o the establishment and demonstration in the medical community of the
clinical efficacy and safety of such products,
o the potential advantage of such products over existing treatment
methods, and
o reimbursement policies of government and third-party payers.
11
Physicians, patients or the medical community in general may not accept or
utilize any products that we or our collaborative partners may develop. Our
ability to receive revenues and income with respect to drugs, if any, developed
through the use of our technology will depend, in part, upon the extent to which
reimbursement for the cost of such drugs will be available from third-party
payers, such as government health administration authorities, private health
care insurers, health maintenance organizations, pharmacy benefits management
companies and other organizations. Third-party payers are increasingly disputing
the prices charged for pharmaceutical products. If third-party reimbursement was
not available or sufficient to allow profitable price levels to be maintained
for drugs developed by us or our collaborative partners, it could adversely
affect our business.
If our products harm people, we may experience product liability claims that may
not be covered by insurance.
We face an inherent business risk of exposure to potential product
liability claims in the event that drugs we develop are alleged to cause adverse
effects on patients. Such risk exists for products being tested in human
clinical trials, as well as products that receive regulatory approval for
commercial sale. We may seek to obtain product liability insurance with respect
to drugs we and/or our collaborative partners develop. However, we may not be
able to obtain such insurance. Even if such insurance is obtainable, it may not
be available at a reasonable cost or in a sufficient amount to protect us
against liability.
We may be required to perform additional clinical trials or change the labeling
of our products if we or others identify side effects after our products are on
the market, which could harm sales of the affected products.
If we or others identify side effects after any of our products, if any,
after they are on the market, or if manufacturing problems occur:
o regulatory approval may be withdrawn;
o reformulation of our products, additional clinical trials, changes
in labeling of our products may be required;
o changes to or re-approvals of our manufacturing facilities may be
required;
o sales of the affected products may drop significantly;
o our reputation in the marketplace may suffer; and
o lawsuits, including class action suits, may be brought against us.
Any of the above occurrences could harm or prevent sales of the affected
products or could increase the costs and expenses of commercializing and
marketing these products.
Healthcare reform and controls on healthcare spending may limit the price we
charge for any products and the amounts thereof that we can sell.
The U.S. federal government and private insurers have considered ways to
change, and have changed, the manner in which healthcare services are provided
in the United States. Potential approaches and changes in recent years include
controls on healthcare spending and the creation of large purchasing groups. In
the future, the U.S. government may institute further controls and limits on
Medicare and Medicaid spending. These controls and limits might affect the
payments we could collect from sales of our products. Uncertainties regarding
future healthcare reform and private market practices could adversely affect our
ability to sell any products profitably in the U.S. We are not currently aware
of any recent material change in the healthcare market that could result in
government intervention in our business. As we do not currently have a
commercial product, we are not able to speculate with any assurance on changes
in the healthcare market which may, in the future, be material to us.
12
The manufacture of genetically engineered commensals is a time-consuming and
complex process which may delay or prevent commercialization of our products, or
may prevent our ability to produce an adequate volume for the successful
commercialization of our products.
Although our management believes that we have the ability to acquire or
produce quantities of genetically engineered commensals sufficient to support
our present needs for research and our projected needs for our initial clinical
development programs, management believes that improvements in our manufacturing
technology will be required to enable us to meet the volume and cost
requirements needed for certain commercial applications of commensal products.
Products based on commensals have never been manufactured on a commercial scale.
The manufacture of all of our products will be subject to current GMP
requirements prescribed by the FDA or other standards prescribed by the
appropriate regulatory agency in the country of use. There can be no assurance
that we will be able to manufacture products, or have products manufactured for
us, in a timely fashion at acceptable quality and prices, that we or third-party
manufacturers can comply with GMP or that we or third-party manufacturers will
be able to manufacture an adequate supply of product.
The future issuance of preferred stock may adversely affect the rights of the
holders of our common stock.
Our certificate of incorporation allows our Board of Directors to issue up
to 10,000,000 shares of preferred stock and to fix the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of these shares without any further vote or action by the
stockholders. The rights of the holders of common stock will be subject to, and
could be adversely affected by, the rights of the holders of any preferred stock
that we may issue in the future. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of our outstanding voting stock, thereby
delaying, deferring or preventing a change in control.
Concentration of ownership of our capital stock could delay or prevent change of
control.
Our directors, executive officers and principal stockholders beneficially
own a significant percentage of our common stock and preferred stock. They also
have, through the exercise or conversion of certain securities, the right to
acquire additional common stock. As a result, these stockholders, if acting
together, have the ability to control or otherwise significantly influence the
outcome of corporate actions requiring shareholder approval. Additionally, this
concentration of ownership may have the effect of delaying or preventing a
change in control of SIGA. At April 8, 2004, directors, officers and principal
stockholders beneficially owned approximately 50.2% of our outstanding capital
stock.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. The prospectus relates to 9,375,000 shares
of our common stock which the selling stockholders named in this prospectus may
sell from time to time. We will not receive any of the proceeds from these sales
but we may receive proceeds from the exercise of warrants held by the selling
stockholders. We have agreed to pay the expenses incurred in registering the
shares, including legal and accounting fees.
The shares have not been registered under the securities laws of any state
or other jurisdiction as of the date of this prospectus. Brokers or dealers
should confirm the existence of an exemption from registration or effectuate
such registration in connection with any offer and sale of the shares.
This prospectus describes certain risk factors that you should consider
before purchasing the shares. See "Risk Factors" beginning on page 4. You should
read this prospectus together with the additional information described under
the heading "Where You Can Find More Information."
13
FORWARD-LOOKING STATEMENTS
This prospectus and the other reports we have filed with the Securities
and Exchange Commission, contain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, or the "Securities
Act," and Section 21E of the Securities Exchange Act of 1934, as amended, or the
"Exchange Act." The words or phrases "can be", "expects", "may affect", "may
depend", "believes", "estimate", "project", and similar words and phrases are
intended to identify such forward-looking statements. Such forward-looking
statements are subject to various known and unknown risks and uncertainties and
we caution you that any forward-looking information provided by or on behalf of
SIGA is not a guarantee of future performance. Our actual results could differ
materially from those anticipated by such forward-looking statements due to a
number of factors, some of which are beyond our control, in addition to those
risks discussed in "Risk Factors" in this prospectus and in our other public
filings, press releases and statements by our management, including (i) the
volatile and competitive nature of the biotechnology industry, (ii) changes in
domestic and foreign economic and market conditions, and (iii) the effect of
federal, state and foreign regulation on our businesses. All forward-looking
statements are current only as of the date on which such statements were made.
We do not undertake any obligation to publicly update any forward-looking
statement to reflect events or circumstances after the date on which any such
statement is made or to reflect the occurrence of unanticipated events.
USE OF PROCEEDS
The net proceeds from the sale of the shares of common stock offered will
be received by the selling stockholders. We will not receive any of the proceeds
from the sale of the shares of common stock offered by the selling stockholders
but we may receive proceeds from the exercise of the warrants held by the
selling stockholders. We will use proceeds from the exercise of warrants as
general working capital.
14
SELLING STOCKHOLDERS
The table below sets forth information regarding ownership of our common
stock by the selling stockholders as of April 8, 2004, and the shares of common
stock to be sold by them under this prospectus. Beneficial ownership is
determined in accordance with rules of the Securities and Exchange Commission
and includes voting or investment power with respect to the securities. Except
as indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all shares of common stock shown as beneficially owned by them. The rules of the
Securities and Exchange Commission require that the number of shares of common
stock outstanding used in calculating the percentage for each listed person
includes the shares of common stock underlying warrants or options held by such
person that are exercisable within 60 days of April 8, 2004. As of April 8,
2004, 23,437,492 shares of our common stock were outstanding.
Securities Owned Prior to Offering Securities Owned After Offering
----------------------------------------------------- -------------------------------
Shares of Common Number of Percent of
Shares of Common Percent of Stock Offered Shares of Common
Name of Selling Stockholder Stock Common Stock Hereby Common Stock Stock
--------------------------- ---------------- ------------ ---------------- ------------ ----------
MacAndrews & Forbes
Holdings Inc. ........... 5,535,385(1) 22.0% 4,011,980(2) 1,523,405(3)(4) 6.2%
Michael C. Borofsky .......... 20,833(5) * 18,750(6) 2,083(7)(8) *
Matthew A. Drapkin ........... 20,833(5) * 18,749(9) 2,084(10)(8) *
Paul G. Savas ................ 26,042(11) * 23,438(12) 2,604(13)(8) *
Barry F. Schwartz ............ 52,083(14) * 46,875(15) 5,208(16)(8) *
Todd J. Slotkin .............. 52,083(14) * 46,875(15) 5,208(16)(8) *
TransTech Pharma, Inc. ....... 5,208,333(17) 20.7% 5,208,333(17) 0 0.0%
----------
* Less than one percent
(1) Includes 1,678,820 shares of common stock issuable upon exercise of
warrants.
(2) Includes 1,337,327 shares of common stock issuable upon exercise of
warrants.
(3) A registration statement on Form S-3 (File No. 333-103231) relating to,
among other things, the resale of 1,024,479 of such shares was declared
effective by the Securities and Exchange Commission on September 22, 2003.
(4) Includes 341,493 shares of common stock issuable upon exercise of
warrants.
(5) Includes 6,944 shares of common stock issuable upon exercise of warrants.
(6) Includes 6,250 shares of common stock issuable upon exercise of warrants.
(7) Includes 694 shares of common stock issuable upon exercise of warrants.
(8) A registration statement on Form S-3 (File No. 333-103231) relating to,
among other things, the resale of such shares was declared effective by
the Securities and Exchange Commission on September 22, 2003.
(9) Includes 6,249 shares of common stock issuable upon exercise of warrants.
(10) Includes 695 shares of common stock issuable upon exercise of warrants.
(11) Includes 8,681 shares of common stock issuable upon exercise of warrants.
(12) Includes 7,813 shares of common stock issuable upon exercise of warrants.
(13) Includes 868 shares of common stock issuable upon exercise of warrants.
(14) Includes 17,361 shares of common stock issuable upon exercise of warrants.
(15) Includes 15,625 shares of common stock issuable upon exercise of warrants.
(16) Includes 1,736 shares of common stock issuable upon exercise of warrants.
(17) Includes 1,736,111 shares of common stock issuable upon exercise of
warrants.
15
The information provided in the table above with respect to the selling
stockholders has been obtained from such selling stockholders.
The selling stockholders have not within the past three years had any
position, office or other material relationship with us or any of our
predecessors or affiliates, except that (a) the vice chairman of MacAndrews &
Forbes Holdings Inc. is Donald A. Drapkin, the chairman of our Board of
Directors, (b) Matthew A. Drapkin is the son of Donald A. Drapkin and an
employee of MacAndrews & Forbes, (c) Paul G. Savas, Senior Vice President -
Finance of MacAndrews & Forbes, was appointed to serve on our Board of Directors
on January 8, 2004, as MacAndrews & Forbes' designee, in accordance with the
terms of the investment, which was completed on January 8, 2004, (d) Adnan M. M.
Mjalli, Ph.D., chief executive officer and director of TransTech Pharma, was
appointed to serve on our Board of Directors on January 8, 2004, as TransTech
Pharma's designee, in accordance with the terms of the investment, which was
completed on January 8, 2004, and (e) Michael C. Borofsky, Barry F. Schwartz and
Todd J. Slotkin are employees of MacAndrews & Forbes.
Because the selling stockholders may sell all or some portion of the
shares of common stock beneficially owned by them, only an estimate (assuming
the selling stockholders sell all of the shares offered hereby) can be given as
to the number of shares of common stock that will be beneficially owned by the
selling stockholders after this offering. In addition, the selling stockholders
may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the dates on which
they provided the information regarding the shares beneficially owned by them,
all or a portion of the shares beneficially owned by them in transactions exempt
from the registration requirements of the Securities Act.
We have filed with the Securities and Exchange Commission, under the
Securities Act of 1933, a registration statement on Form S-3, of which this
prospectus forms a part, with respect to the resale of the securities from time
to time on the Nasdaq SmallCap Market or in privately-negotiated transactions
and have agreed to prepare and file such amendments and supplements to the
registration statement as may be necessary to keep the registration statement
effective until the earlier of (i) four years from the date of the later of (x)
the date of the final issuance of shares underlying warrants registered on this
registration statement on Form S-3 or (y) the date on which this registration
statement on Form S-3 becomes effective, or (ii) the date on which the selling
stockholders have sold all of the shares of common stock.
PLAN OF DISTRIBUTION
This prospectus covers the sale of shares of common stock from time to
time by the selling stockholders named in the table above. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The selling stockholders may effect such transactions
by selling the shares to or through broker-dealers. The shares may be sold by
one or more of, or a combination of, the following:
o a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In effecting
sales, broker-dealers engaged by the selling stockholder may arrange for other
broker-dealers to participate in the resales.
16
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus.
The selling stockholders also may loan or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default the broker-dealer may sell the pledged shares pursuant to this
prospectus. Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. Broker-dealers or agents and any other participating broker-dealers or
the selling stockholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because the
selling stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. 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 their securities. There is
no underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, the
selling stockholders will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
We will file a supplement to this prospectus, if required, pursuant to
Rule 424(b) under the Securities Act upon being notified by the selling
stockholders that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
o the name of the selling stockholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
17
o that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
o other facts material to the transaction.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. We have agreed
to indemnify certain selling stockholders against certain liabilities, including
liabilities under the Securities Act in connection with the offering of the
shares or to contribute to payments which such selling stockholders may be
required to make in respect thereof. The selling stockholders may agree to
indemnify certain persons, including broker-dealers and agents, against certain
liabilities in connection with the offering of the shares, including liabilities
arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Kramer Levin Naftalis & Frankel LLP.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-KSB for the year ended December 31, 2003 and the
audited financial statements of Plexus Vaccine Inc. incorporated in this
prospectus by reference to Amendment No. 1 to the Current Report on Form 8-K
dated May 23, 2003 (filed on July 22, 2003), have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
COMMISSION'S POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons,
we have been advised 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. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by that director, officer or controlling person in connection with the
securities being registered, we 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 that indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of that issue.
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission relating to the common stock offered by this prospectus.
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. Statements contained in this prospectus concerning the contents of
any contract or other document referred to are not necessarily complete and in
each instance we refer you to the copy of the contract or other document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference.
For further information with respect to us and the common stock being
offered, please refer to the registration statement. A copy of the registration
statement can be inspected by anyone without charge at the public reference room
of the Securities and Exchange Commission, Room 1024, 450 Fifth Street, N.W.,
18
Washington, D.C. 20549. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the operation of the public reference
room. Copies of these materials can be obtained by mail from the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Securities and Exchange
Commission maintains a web site (http://www.sec.gov) that contains information
regarding registrants that file electronically with the Securities and Exchange
Commission.
INCORPORATION BY REFERENCE
Incorporated by reference into this prospectus is the information set
forth in the following documents:
o the Annual Report on Form 10-KSB for the year ended December 31,
2003;
o the description of our common stock contained in our registration
statement on Form 8-A under Section 12 of the Exchange Act, dated
September 5, 1997, including any amendment or reports filed for the
purpose of updating such description;
o our current reports on Form 8-K filed on June 9, 2003 (as amended on
July 22, 2003 and September 5, 2003), January 13, 2004, January 30,
2004, March 22, 2004 and April 21, 2004.
All documents subsequently filed by us pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, prior to the termination of the offering, shall
be deemed to be incorporated by reference into this prospectus.
We will furnish to any person to whom this prospectus is delivered,
without charge, a copy of these documents upon written or oral request to Thomas
N. Konatich, Acting Chief Executive Officer and Chief Financial Officer, 420
Lexington Avenue, Suite 601, New York, New York 10170, tel. (212) 672-9100.
19