As filed with the Securities and Exchange Commission on September 5, 2003
Registration No. 333-103231
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIGA Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3864870
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
420 Lexington Avenue
Suite 601
New York, New York 10170
(212) 672-9100
(Address, including zip code, and
telephone number, including area code, of
Registrant's principal executive office)
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Thomas N. Konatich
Acting Chief Executive Officer
SIGA Technologies, Inc.
420 Lexington Avenue
Suite 601
New York, New York 10170
(212) 672-9100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
Thomas E. Constance, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
Approximate date of commencement of proposed sale to the public: From time
to time as determined by the Selling Stockholders.
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
-------------------------------------------------------------------------------------------------------------
Number of Proposed Maximum
Title of Shares to be Shares to be Maximum Offering Aggregate Offering Amount of
Registered Registered Price Per Share Price Registration Fee
-------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.0001 per share.............. 9,033,594(1) $ (2) $13,716,340.84(2) $ 1,163.39(3)
-------------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
registration statement also covers such indeterminate number of shares of
common stock as may be required to prevent dilution resulting from stock
splits, stock dividends or similar events. This number represents the
aggregate of the following issuances of shares of common stock: (a)
3,913,966 shares issued pursuant to securities purchase agreements dated
September 30, 2002 and December 31, 2002 between SIGA and certain
investors; (b) 1,950,000 shares issued pursuant to an asset purchase
agreement dated May 14, 2003 between SIGA and Plexus Vaccine Inc.; (c)
77,200 shares underlying warrants issued pursuant to the asset purchase
agreement with Plexus; (d) 1,250,000 shares issued pursuant to securities
purchase agreements dated June 20, 2003 between SIGA and certain
investors; (e) 675,000 shares underlying warrants issued pursuant to
securities purchase agreements dated June 20, 2003 between SIGA and
certain investors; (f) 762 additional shares issued pursuant to securities
purchase agreements dated September 30, 2002 and December 31, 2002 between
SIGA and certain investors; (g) 125,000 shares underlying warrants issued
in connection with our January 2003 financing; (h) 694,444 shares issued
pursuant to a securities purchase agreement dated August 13, 2003 between
SIGA and an investor and (i) 347,222 shares underlying warrants issued
pursuant to the securities purchase agreement dated August 13, 2003
between SIGA and an investor.
(2) Estimated solely for the purpose of computing the amount of the
registration fee, in accordance with Rule 457(c) under the Securities Act
of 1933, as amended. The maximum offering price per share is $1.285 for
the 3,913,966 shares of common stock issued pursuant to securities
purchase agreements dated September 30, 2002 and December 31, 2002, which
was the average high and low prices for SIGA's common stock as reported on
the Nasdaq SmallCap Market on February 7, 2003. The maximum offering price
per share is $1.695 for the 4,077,200 shares of common stock issued and
shares of common stock underlying warrants issued pursuant to the asset
purchase agreement dated May 14, 2003 between SIGA and Plexus and the
securities purchase agreements between SIGA and certain investors dated
June 20, 2003, the additional shares issued pursuant to securities
purchase agreements
dated September 30, 2002 and December 31, 2002 between SIGA and certain
investors and the shares underlying warrants issued in connection with our
January 2003 financing, which was the average high and low prices for
SIGA's common stock as reported on the Nasdaq SmallCap Market on July 21,
2003. The maximum offering price per share is $1.680 for the 1,041,666
shares of common stock issued and shares of common stock underlying
warrants issued pursuant to the securities purchase agreement dated August
13, 2003, which was the average high and low prices for SIGA's common
stock as reported on the Nasdaq SmallCap Market on September 3, 2003.
(3) Of the registration fee, $462.71 was submitted on February 14, 2003 with
the original filing of this registration statement, $559.10 was submitted
on July 25, 2003 with the filing of Amendment No. 2 to this registration
statement and the remaining $141.58 is being submitted simultaneously with
filing with the SEC of this Amendment No. 3.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
9,033,594 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 SEC is effective. This preliminary prospectus is not an offer to sell
not 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 September 5, 2003
TABLE OF CONTENTS
Page
----
ABOUT SIGA TECHNOLOGIES, INC..................................................1
RECENT DEVELOPMENTS...........................................................3
RISK FACTORS..................................................................4
ABOUT THIS PROSPECTUS........................................................14
FORWARD-LOOKING STATEMENTS...................................................15
USE OF PROCEEDS..............................................................15
SELLING STOCKHOLDERS.........................................................15
PLAN OF DISTRIBUTION.........................................................22
LEGAL MATTERS................................................................24
EXPERTS......................................................................24
COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES......24
ADDITIONAL INFORMATION.......................................................24
INCORPORATION BY REFERENCE...................................................25
PART II INFORMATION NOT REQUIRED IN PROSPECTUS............................II-1
SIGNATURES.................................................................II-4
EXHIBIT INDEX..............................................................II-5
ABOUT SIGA TECHNOLOGIES, INC.
We are a technology company, whose primary focus is on biopharmaceutical
product development. Our focus is on mucosal vaccines for strep throat and
sexually transmitted diseases, commensal bacteria for the delivery of vaccines,
novel antibiotics for gram positive and gram negative bacteria and biological
warfare defense. 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. The description of our business reflects our recent acquisition
of substantially all the assets of Plexus Vaccine Inc.
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.
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
1
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, that 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
to early to make accurate assessments of its development.
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.
2
Veterinary Vaccines
We believe that we may be able to adapt our vaccine technology to the
field of veterinary medicine. We are in discussions with a number of potential
strategic partners to undertake collaborative development agreements in the
field. To date, we have not concluded any agreements with these potential
strategic partners. In April 2002, we executed a proof-of-concept research
agreement with one of the major vaccine providers to test our commensal vector
technology for veterinary application. This project has been completed and the
partner company is currently evaluating the data.
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 recent acquisition of Plexus, 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 syndrone, or SARS.
RECENT DEVELOPMENTS
On May 23, 2003, we acquired substantially all of the assets of Plexus, a
California corporation, in exchange for our issuance to Plexus of 1,950,000
shares of our common stock and our assumption of certain liabilities of Plexus
in accordance with the terms of an asset purchase agreement dated as of May 14,
2003. We also issued options and warrants to purchase an aggregate of 190,950
shares of our common stock to certain holders of options or warrants to purchase
shares of common stock of Plexus. The transaction had a total value of
approximately $4.0 million.
Pursuant to our asset purchase agreement with Plexus, we acquired certain
tangible and intangible assets of Plexus, including, without limitation,
licenses, intellectual property, all of the issued and outstanding capital stock
of its Danish subsidiary, consulting agreements with individuals affiliated with
its Danish subsidiary and rights to two awarded federal grants.
Plexus is a rational design and development vaccine company incorporated
in 2001. Prior to the asset acquisition, Plexus had operations in San Diego and
a wholly-owned subsidiary in Copenhagen, Denmark. Plexus's technologies are
directed toward the convergence of structural biology, pharmacogenomics and
molecular immunology. For the twelve months ended December 31, 2002 and the
three months ended March 31, 2003, Plexus had revenues of $172,378 and $65,100,
respectively.
In June 2003, we raised gross proceeds of $1.5 million through a private
placement of our common stock. The securities purchase agreements for this
private placement specified that the purchase price for each share of our common
stock was $1.20. Each investor was entitled to receive a warrant to purchase one
share of our common stock at an initial exercise price of $2.00 per share for
every two shares
3
of our common stock purchased by that investor. We issued to the private
investors a total of 1,250,000 shares of our common stock and warrants to
purchase 675,000 shares of our common stock. We collected approximately
$1,350,000 in net proceeds from this offering.
On August 13, 2003, we entered into a securities purchase agreement with
MacAndrews & Forbes Holdings Inc. ("MacAndrews & Forbes") a Delaware corporation
wholly-owned by Ronald O. Perelman, pursuant to which MacAndrews & Forbes and
certain other investors as described herein invested an aggregate of $1,000,000
in our company 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 up to an aggregate
of additional 347,222 shares of our common stock at an exercise price of $2.00
per share. Pursuant to the securities purchase agreement, MacAndrews & Forbes
and certain other investors were also granted an option, exercisable through
October 13, 2003, and, if required, subject to shareholder approval, to make
additional investments in our company of up to an aggregate amount of $9,000,000
in exchange for an aggregate of up to an additional 6,250,000 shares of our
common stock and warrants to purchase up to an aggregate of an additional
3,125,000 shares of our common stock.
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 $2.1 million for the six months ended June 30,
2003 and incurred net losses of approximately $3.3 million and approximately
$3.7 million for the years ended December 31, 2002 and 2001, respectively. As of
June 30, 2003, December 31, 2002 and December 31, 2001, our accumulated deficit
was approximately $31.6 million, approximately $29.5 million and approximately
$26.2 million, respectively. We expect to continue to incur significant
operating expenditures. However we do not foresee significant capital
expenditures in the near future, other than as discussed herein. 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 approximately the first quarter
of 2004. With the addition of Plexus, we expect to consume cash at a rate equal
to approximately $235,000 per month. 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. We had an
increase in selling, general and administrative expenses in the second quarter
of 2003 in connection with the preparation and negotiation of definitive
documents for our purchase of substantially all of the assets of Plexus. We will
require additional cash flows to integrate Plexus's business with our own.
4
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
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
2001 High Low
---- ---- ---
Third Quarter............................ $4.05 $2.24
Fourth Quarter........................... $5.21 $1.91
2002 High Low
---- ---- ---
First Quarter............................ $2.91 $2.01
Second Quarter........................... $2.63 $0.81
Third Quarter............................ $1.39 $0.65
Fourth Quarter........................... $2.15 $0.65
2003 High Low
---- ---- ---
First Quarter............................ $1.48 $1.02
Second Quarter........................... $1.91 $1.09
5
We are in various stages of product development and there can be no assurance of
successful commercialization.
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
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;
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
six months
6
ended June 30, 2003 and for the years ended December 31, 2002 and 2001,
respectively, 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 the contract.
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 have also
entered into a sub-contract agreement with OSU for us to perform
work under a grant OSU has from the NIH. The sub-contract agreement
is renewable annually and the current terms expire on August 31,
2003. 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 our obligations under the
sub-contract agreement.
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.
7
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 MolSoft LLC. We have licensed certain technology from Molsoft under
a non-exclusive license agreement. The term of our license agreement
with Molsoft is five years and expires on June 11, 2006, unless
extended by the mutual consent of both parties. The agreement can be
terminated earlier if we are in breach of the provisions of the
agreement and do not cure the breach within the 30 day cure period.
We are current in all obligations under this agreement.
o Messrs. Brunak and Buus. We have licensed certain technology from
Soeren Brunak and Soeren Buus under an exclusive license agreement.
The term of our agreement with Messrs. Brunak and Buus is for the
duration of certain identified patents held by them and a number of
pending patents filed by them. 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 within the 90
day cure period. We have currently met all our obligations under
this agreement.
o Technical University of Denmark BioCentrum-DTU ("DTU"). We have
licensed certain technology from DTU under an exclusive license
agreement. The term of our license agreement with DTU is two years
and expires on June 20, 2004, unless extended by the mutual consent
of both parties. The agreement can be terminated if we are in breach
of the provisions of the agreement and do not cure the breach within
the 90 day cure period. We are current in all 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 to
therapeutic agents. 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 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
8
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 of Allergy Therapeutics were approximately $625,000, of which
approximately $200,000 remain unpaid. These costs were associated with
professional fees for attorneys and accountants. Additionally, there was
significant time spent by our management in the contemplated transaction. The
proposed Hypernix transaction resulted in expenses of $511,000 for advances made
to them. We recovered approximately $85,000 from them.
Additionally, we have recently acquired substantially all of the assets of
Plexus. We will require additional cash flow to integrate Plexus's business with
our own, and we will be materially adversely affected if we do not successfully
do so.
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.
9
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 an
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
10
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 of 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 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 the rights to seven issued United States patents and two
issued European patents. These patents have varying lives and they are related
to the technology licensed from Rockefeller University for the strep and gram
positive products. We have three additional patent applications in the U.S. and
three applications in Europe relating to this technology. We are joint owner
with Washington University of four issued patents in the U.S. and one in Europe.
In addition, there are seven co-owned patent applications in the U.S. and one in
Europe. These patents are for the technology used for the gram-negative product
opportunities. We are also exclusive owner of two U.S. patents and three U.S.
patent applications. Furthermore, there are three U.S. patent applications and
two European applications. These patents relate to our DegP product
opportunities.
------------------------------------------------------------------------------------------------------------
Number Licensed Number Number Years of Expiration Dates
from Rockefeller Co-owned with Owned by of Patents
PATENTS Univ. Washington Univ. SIGA
------------------------------------------------------------------------------------------------------------
U.S. 7 4 2 2013, 2014 (3 patents),
2015 (3 patents),
2016 (2 patents), 2017,
2019 (2 patents), 2020
------------------------------------------------------------------------------------------------------------
Europe 2 1 2004, 2009, 2010
------------------------------------------------------------------------------------------------------------
Japan 4 2004 (2 patents),
2010, 2012
------------------------------------------------------------------------------------------------------------
Australia 6 1 2004, 2009, 2013,
2014 (2 patents),
2015, 2016
------------------------------------------------------------------------------------------------------------
Canada 3 2004, 2010, 2019
------------------------------------------------------------------------------------------------------------
Mexico 1 2016
------------------------------------------------------------------------------------------------------------
APPLICATIONS
---------------------------------------------------------------------------------
U.S. 3 7 3
---------------------------------------------------------------------------------
Europe 3 2
---------------------------------------------------------------------------------
Japan 2 1 2
---------------------------------------------------------------------------------
Canada 5 1 2
---------------------------------------------------------------------------------
Hungary 1
---------------------------------------------------------------------------------
China 1
---------------------------------------------------------------------------------
Korea 1
---------------------------------------------------------------------------------
New Zealand 1
---------------------------------------------------------------------------------
Australia 2
---------------------------------------------------------------------------------
11
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 $3,000,000 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:
12
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 payors.
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
payors, such as government health administration authorities, private health
care insurers, health maintenance organizations, pharmacy benefits management
companies and other organizations. Third-party payors 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 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.
Health care reform and controls on health care 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 health care services are provided
in the U.S. Potential approaches and changes in recent years include controls on
health care spending and the creation of large purchasing
13
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 health care 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 health care market which may, in the future, be material to us.
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 effect 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 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 December 31, 2002, directors, officers and principal stockholders
beneficially own approximately 37% 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 "SEC"). The prospectus relates to
9,033,594 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.
14
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."
FORWARD-LOOKING STATEMENTS
This prospectus and the other reports we have filed with the SEC, 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.
SELLING STOCKHOLDERS
The table below sets forth information regarding ownership of our common
stock by the selling stockholders as of August 22, 2003, and the shares of
common stock to be sold by them under this prospectus. Beneficial ownership is
determined in accordance with SEC rules 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. SEC rules 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 August 22, 2003. As of
August 22, 2003, 17,149,682 shares of our common stock were outstanding.
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------------- -------------------------------
Shares of
Shares of Common Percent of Common Stock Number of Shares Percent of
Name of Selling Stockholder Stock Common Stock Offered Hereby of Common Stock Common Stock
----------------------------------- ---------------- ------------ -------------- ---------------- ------------
Murray Alon........................ 50,000 * 50,000 0 0
Leonard Cohen...................... 25,000 * 25,000 0 0
Marvin Sheeber..................... 50,000 * 50,000 0 0
Ronald Schaffer.................... 25,000 * 25,000 0 0
15
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------------- -------------------------------
Shares of
Shares of Common Percent of Common Stock Number of Shares Percent of
Name of Selling Stockholder Stock Common Stock Offered Hereby of Common Stock Common Stock
----------------------------------- ---------------- ------------ -------------- ---------------- ------------
Robert Walker...................... 12,500 * 12,500 0 0
Jerome Belson...................... 50,000 * 50,000 0 0
Robert Karsten, DDS................ 50,000 * 50,000 0 0
Guy Michael Dart................... 50,000 * 50,000 0 0
Jeanette Dart...................... 12,500 * 12,500 0 0
Robert M. Rosenblum................ 25,000 * 25,000 0 0
Gerald Brauser..................... 100,000 * 100,000 0 0
Maximillian Santos................. 22,727 * 22,727 0 0
Bruce B. Federman.................. 25,000 * 25,000 0 0
Leo Berman......................... 18,750(1) * 18,750(1) 0 0
E. Gerald Kay...................... 75,000(2) * 75,000(2) 0 0
Delores Bowman..................... 87,500(3) * 87,500(3) 0 0
C. Ames Byrd & Donna Byrd JTWROS... 75,000(2) * 75,000(2) 0 0
Paul Becker........................ 150,000(4) * 150,000(4) 0 0
Kevin Hurley....................... 75,000(2) * 75,000(2) 0 0
Dennis Levine...................... 62,500(3) * 62,500(3) 0 0
Urs Brunner........................ 150,000(4) * 150,000(4) 0 0
Lance Investments Holdings Ltd..... 150,000(4) * 150,000(4) 0 0
Henderson Orthopedics Profit
Sharing Plan.................. 37,500(3) * 37,500(3) 0 0
Kenneth Wilk....................... 64,773(3) * 64,773(3) 0 0
Tis Prager......................... 75,000(2) * 75,000(2) 0 0
Keys Foundation.................... 112,500(5) * 112,500(5) 0 0
Israel Cohen....................... 75,000(2) * 75,000(2) 0 0
Lindsay E. Dart.................... 75,000(2) * 75,000(2) 0 0
Joseph Giamanco.................... 150,000(4) * 150,000(4) 0 0
Warren Gilbert & Marianne
Gilbert JT
IN THE ENTIRETY............... 37,500(3) * 37,500(3) 0 0
Bruno Widmer....................... 37,500(3) * 37,500(3) 0 0
Harold Miller...................... 31,250(1) * 31,250(1) 0 0
Daniel Orenstein................... 31,250(1) * 31,250(1) 0 0
Frank Lagano....................... 62,500(3) * 62,500(3) 0 0
Ronald J. Menello.................. 75,000(2) * 75,000(2) 0 0
Bridge Ventures, Inc............... 300,000(6) 1.7% 300,000(6) 0 0
Langley Partners................... 366,667(7) 2.1% 300,000 66,667(7) *
Gryphpon Master Fund, L.P.......... 500,000(8) 2.9% 400,000 100,000(8) *
Cranshire Capital.................. 408,333(9) 2.4% 200,000 208,333(9) 1.2%
Alfons Melohn...................... 643,478(10) 3.7% 400,000 243,478(11) 1.4%
First Montauk...................... 26,736(12) * 26,736(12) 0 0
Christine Walker................... 3,176(13) * 3,176(13) 0 0
Kevin J. Martin.................... 74,169(14) * 74,169(14) 0 0
Daniel Walsh....................... 74,169(14) * 74,169(14) 0 0
Michael Jacks...................... 10,000(15) * 10,000(15) 0 0
Gary J. Shemano.................... 40,000(16) * 40,000(16) 0 0
Willaim Corbett.................... 40,000(16) * 40,000(16) 0 0
Scarborough, Ltd................... 10,228(17) * 10,228(17) 0 0
The Promotion Factory.............. 65,000(18) * 65,000(18) 0 0
Bridington Ltd..................... 65,000(18) * 65,000(18) 0 0
Michael Gruber..................... 2,500(19) * 2,500(19) 0 0
Mich B. Hein....................... 3,000(20) * 3,000(20) 0 0
Stephen Koonin..................... 2,500(19) * 2,500(19) 0 0
Myron Levine....................... 3,000(20) * 3,000(20) 0 0
Robert Modlin, M.D................. 8,000(21) * 8,000(21) 0 0
Glenn Songer....................... 3,000(20) * 3,000(20) 0 0
16
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------------- -------------------------------
Shares of
Shares of Common Percent of Common Stock Number of Shares Percent of
Name of Selling Stockholder Stock Common Stock Offered Hereby of Common Stock Common Stock
----------------------------------- ---------------- ------------ -------------- ---------------- ------------
Jesus Velasco...................... 3,000(20) * 3,000(20) 0 0
VCE Capital, Inc................... 1,250(22) * 1,250(22) 0 0
GCWF Investment Partners........... 1,000(23) * 1,000(23) 0 0
T. Knox Bell....................... 12,243(24) * 12,243(24) 0 0
Nancy & Edward Fody................ 178,754(25) 1.0% 178,754(25) 0 0
Bernard L. Kasten.................. 408,801(26) 2.4 % 308,801(27) 100,000(28) *
Rockport Venture Partners, LLC..... 5,100(29) * 5,100(29) 0 0
IIG Equity Opportunities Fund Ltd.. 300,000(8) 1.7% 300,000(8) 0 0
Spiga Limited...................... 975,000(30) 5.6% 975,000(30) 0 0
Venezuela Recovery Fund N.V........ 75,000(2) * 75,000(2) 0 0
Steve Horowitz..................... 37,500(3) * 37,500(3) 0 0
Jay Lobell......................... 150,000(4) * 150,000(4) 0 0
Christoph Bruening................. 37,500(3) * 37,500(3) 0 0
SAGGI Capital Corp................. 30,000(31) * 30,000(31) 0 0
Willstar Consultants, Inc.......... 20,000(32) * 20,000(32) 0 0
Euroba Management Limited.......... 125,000(33) * 125,000(33) 0 0
A.J. International Corporate
Holdings, Ltd................. 22,308 * 22,308 0 0
Ruben Abagyan...................... 91,924(34) * 91,924(34) 0 0
Camilio A. Amendado................ 51,532 * 51,532 0 0
Samuel Anderson.................... 118,837(35) * 118,837(35) 0 0
James & Laurie Antal TTEES, Antal
Trust 2000.................... 11,154 * 11,154 0 0
Ted Bauer.......................... 18,962 * 18,962 0 0
T. Knox Bell, trustee UTA 3-3-94... 11,243 * 11,243 0 0
BioAbility LLC..................... 2,231 * 2,231 0 0
Andreas Bremer..................... 11,154 * 11,154 0 0
Roger Brent........................ 125,712(36) * 4,462 121,250(36) *
Susan K. Burgess................... 440,783(37) 2.6% 315,783 125,000(37) *
Danish Technical University........ 11,154 * 11,154 0 0
Robert J. Deans.................... 22,308 * 22,308 0 0
Alfred G. Ferris................... 28,722 * 28,722 0 0
GCWF Investment Partners II........ 11,243 * 11,243 0 0
Juerg F. Geigy..................... 206,202 1.2% 206,202 0 0
Diana Gomez........................ 36,436 * 36,436 0 0
Hematec, Inc....................... 11,154 * 11,154 0 0
James Holland...................... 36,436 * 36,436 0 0
James D. Kasten.................... 46,939 * 46,939 0 0
Edward Lanphier.................... 91,710 * 91,710 0 0
Ole Lund........................... 446 * 446 0 0
The Maggio Family Trust Dated
April 11, 1997 111,541 * 111,541 0 0
Steven Mark........................ 36,436 * 36,436 0 0
Mark Ventures LLC.................. 5,577 * 5,577 0 0
Ernst Pernet....................... 5,577 * 5,577 0 0
Rutherglen Ltd..................... 120,239 * 120,239 0 0
Benjamin Seibel.................... 446 * 446 0 0
Gregory Shlopak.................... 6,692 * 6,692 0 0
Structural Bioinformatics, Inc..... 13,385 * 13,385 0 0
Mary Sumner........................ 27,331(38) * 27,331(38) 0 0
Neal R. Sunderman.................. 11,154 * 11,154 0 0
Ralf von Ziegesar.................. 5,577 * 5,577 0 0
MolSoft LLC........................ 44,616 * 44,616 0 0
Samuel D. Anderson, Trustee of the
Samuel and Mary Ann Anderson
Trust UTD 3-22-79............. 112,587 * 112,587 0 0
17
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------------- -------------------------------
Shares of
Shares of Common Percent of Common Stock Number of Shares Percent of
Name of Selling Stockholder Stock Common Stock Offered Hereby of Common Stock Common Stock
----------------------------------- ---------------- ------------ -------------- ---------------- ------------
MacAndrews & Forbes Holdings Inc.
(39).......................... 3,735,673(40) 19.0% 1,024,479(41) 2,711,194(42) 14.0%
Michael C. Borofsky (43)(44)....... 6,582(45) * 2,083(46) 4,499(47) *
Matthew A. Drapkin (43)(48)........ 6,583(49) * 2,084(50) 4,499(51) *
Paul G. Savas (43)(52)............. 8,227(53) * 2,604(54) 5,623(55) *
Barry F. Schwartz (43)(56)......... 16,454(57) * 5,208(58) 11,246(59) *
Todd J. Slotkin (43)(56)........... 16,454(57) * 5,208(58) 11,246(59) *
----------
* Less than one percent
(1) Includes 6,250 shares of common stock issuable upon exercises of warrants.
(2) Includes 25,000 shares of common stock issuable upon exercises of
warrants.
(3) Includes 12,500 shares of common stock issuable upon exercises of
warrants.
(4) Includes 50,000 shares of common stock issuable upon exercises of
warrants.
(5) Includes 37,500 shares of common stock issuable upon exercises of
warrants.
(6) Includes 250,000 shares of common stock issuable upon exercises of
warrants.
(7) Includes 66,667 shares of common stock issuable upon exercises of
warrants.
(8) Includes 100,000 shares of common stock issuable upon exercises of
warrants.
(9) Includes 208,333 shares of common stock issuable upon exercises of
warrants.
(10) Includes 243,478 shares of common stock issuable upon exercises of
warrants held prior to this offering and 100,000 shares of common stock
issuable upon exercise of warrants pursuant to the securities purchase
agreement dated June 20, 2003.
(11) Includes 243,478 shares of common stock issuable upon exercises of
warrants.
(12) Includes 26,736 shares of common stock issuable upon exercise of warrants.
(13) Includes 3,176 shares of common stock issuable upon exercises of warrants.
(14) Includes 74,169 shares of common stock issuable upon exercises of
warrants.
(15) Includes 10,000 shares of common stock issuable upon exercises of
warrants.
(16) Includes 40,000 shares of common stock issuable upon exercises of
warrants.
(17) Includes 10,228 shares of common stock issuable upon exercises of
warrants.
(18) Includes 65,000 shares of common stock issuable upon exercises of options.
(19) Includes 2,500 shares of common stock issuable upon exercise of warrants.
(20) Includes 3,000 shares of common stock issuable upon exercise of warrants.
18
(21) Includes 8,000 shares of common stock issuable upon exercise of warrants.
(22) Includes 1,250 shares of common stock issuable upon exercise of warrants.
(23) Includes 1,000 shares of common stock issuable upon exercise of warrants.
(24) Includes 1,000 shares of common stock issuable upon exercise of warrants
and 11,243 shares of common stock beneficially owned by T. Knox Bell,
trustee UTA 3-3-94. As trustee of the trust, Mr. Bell may be deemed to
beneficially own all of the shares held by it.
(25) Includes 5,000 shares of common stock issuable upon exercise of warrants.
(26) Includes 1,350 shares of common stock issuable upon exercise of warrants
and 100,000 shares of common stock issuable upon exercise of options.
(27) Includes 1,350 shares of common stock issuable upon exercise of warrants.
(28) Includes 100,000 shares of common stock issuable upon exercise of options.
(29) Includes 5,100 shares of common stock issuable upon exercise of warrants.
(30) Includes 325,000 shares of common stock issuable upon exercise of
warrants.
(31) Includes 30,000 shares of common stock issuable upon exercise of warrants.
(32) Includes 20,000 shares of common stock issuable upon exercise of warrants.
(33) Includes 125,000 shares of common stock issuable upon exercise of
warrants.
(34) Includes 25,000 shares of common stock issuance upon exercise of warrants
and 44,616 shares of common stock beneficially owned by MolSoft LLC. Mr.
Abagyan is a managing member of MolSoft. Consequently, Mr. Abagyan may be
deemed to be beneficially own all of the shares held by MolSoft.
(35) Includes 6,250 shares of common stock issuable upon exercises of warrants
and 112,587 shares of common stock beneficially owned by Samuel D.
Anderson, Trustee of the Samuel and Mary Ann Anderson Trust UTD 3-22-99.
As trustee of the trust, Mr. Anderson may be deemed to beneficially own
all of the shares held by it.
(36) Includes 121,250 shares of common stock issuable upon exercise of options.
(37) Includes 125,000 shares of common stock issuable upon exercise of options.
(38) Includes 6,250 shares of common stock issuable upon exercise of warrants.
(39) MacAndrews & Forbes Holdings Inc. is a direct wholly-owned subsidiary of
Mafco Holdings Inc., a holding company whose sole stockholder is Ronald O.
Perelman. Pursuant a securities purchase agreement dated as of August 13,
2003, MacAndrews& Forbes acquired (i) (x) 682,986 shares of common stock
and (y) a warrant to purchase 341,493 shares of common stock; and (ii) an
option to purchase (x) up to 6,146,875 shares of common stock and (y) a
warrant, for no additional consideration, to purchase a number of shares
of common stock equal to 50% of the number of shares described in (ii)(x).
(40) Includes 341,493 shares of common stock issuable upon exercise of a
warrant and an aggregate of up to approximately 2,212,268 shares of common
stock issuable, without approval of our
19
stockholders, upon exercise of the option described in footnote 39. Does
not include an aggregate of up to approximately 7,008,045 additional
shares of common stock, which may be purchased if approval of our
stockholders is obtained.
(41) Includes 341,493 shares of common stock issuable upon exercise of a
warrant.
(42) Includes an aggregate of up to approximately 2,212,268 shares of common
stock issuable, without approval of our stockholders, upon exercise of the
option described in footnote 39. Does not include not include an aggregate
of up to approximately 7,008,045 additional shares of common stock, which
may be purchased if approval of our stockholders is obtained.
(43) Pursuant to an assignment letter agreement dated as of August 13, 2003
among MacAndrews & Forbes and certain of the selling stockholders and the
securities purchase agreement referred to in footnote 39, certain of the
selling stockholders acquired an aggregate of (i) (x) 11,458 shares of
common stock and (y) warrants, for no additional consideration, to
purchase 5,729 shares of common stock; and (ii) an option to purchase (x)
up to 103,125 shares of common stock and (y) warrants, for no additional
consideration, to purchase shares a number of shares of common stock equal
to 50% of the shares of common stock described in (ii)(x). Each option
assigned to the selling stockholders is only exercisable upon, and only to
the extent, on a pro rata basis of, the exercise of MacAndrews & Forbes'
option referred to in footnote 39.
(44) Of the securities acquired by the selling stockholders as described in
footnote 43, the selling stockholder acquired (i) (x) 1,389 shares of
common stock and (y) a warrant, for no additional consideration, to
purchase 694 shares of common stock; and (ii) an option to purchase (x) up
to 12,500 shares of common stock at an exercise and (y) a warrant, for no
additional consideration, to purchase a number of shares of common stock
equal to 50% of the shares of common stock described in (ii)(x).
(45) Includes 694 shares of common stock issuable upon exercises of warrants
and an aggregate of up to approximately 4,499 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include an aggregate of up to
approximately 14,251 additional shares of common stock, which may be
purchased if approval of our stockholders is obtained.
(46) Includes 694 shares of common stock issuable upon exercise of a warrant.
(47) Includes an aggregate of up to approximately 4,449 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include not include an aggregate
of up to approximately 14,251 additional shares of common stock, which may
be purchased if approval of our stockholders is obtained.
(48) Of the securities acquired by the selling stockholders as described in
footnote 43, the selling stockholder acquired (i) (x) 1,389 shares of
common stock and (y) a warrant, for no additional consideration, to
purchase 695 shares of common stock; and (ii) an option to purchase (x) up
to 12,500 shares of common stock at an exercise and (y) a warrant, for no
additional consideration, to purchase a number of shares of common stock
equal to 50% of the shares of common stock described in (ii)(x).
(49) Includes 695 shares of common stock issuable upon exercises of warrants
and an aggregate of up to approximately 4,499 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include an aggregate of up to
approximately 14,251 additional shares of common stock, which may be
purchased if approval of our stockholders is obtained.
(50) Includes 695 shares of common stock issuable upon exercise of a warrant.
20
(51) Includes an aggregate of up to approximately 4,499 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include not include an aggregate
of up to approximately 14,251 additional shares of common stock, which may
be purchased if approval of our stockholders is obtained.
(52) Of the securities acquired by the selling stockholders as described in
footnote 43, the selling stockholder acquired (i) (x) 1,736 shares of
common stock and (y) a warrant for no additional consideration, to
purchase 868 shares of common stock; and (ii) an option to purchase (x) up
to 15,625 shares of common stock at an exercise and (y) a warrant, for no
additional consideration, to purchase a number of shares of common stock
equal to 50% of the shares of common stock described in (ii)(x).
(53) Includes 868 shares of common stock issuable upon exercises of warrants
and an aggregate of up to approximately 5,623 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include an aggregate of up to
approximately 17,815 additional shares of common stock, which may be
purchased if approval of our stockholders is obtained.
(54) Includes 868 shares of common stock issuable upon exercise of a warrant.
(55) Includes an aggregate of up to approximately 5,623 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include not include an aggregate
of up to approximately 17,815 additional shares of common stock, which may
be purchased if approval of our stockholders is obtained.
(56) Of the securities acquired by the selling stockholders as described in
footnote 43, the selling stockholder acquired (i) (x) 3,472 shares of
common stock and (y) a warrant for no additional consideration, to
purchase 1,736 shares of common stock; and (ii) an option to purchase (x)
up to 31,250 shares of common stock at an exercise and (y) a warrant, for
no additional consideration, to purchase a number of shares of common
stock equal to 50% of the shares of common stock described in (ii)(x).
(57) Includes 1,736 shares of common stock issuable upon exercise of a warrant
and an aggregate of up to approximately 11,246 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include an aggregate of up to
approximately 35,629 additional shares of common stock, which may be
purchased if approval of our stockholders is obtained.
(58) Includes 1,736 shares of common stock issuable upon exercises of warrants.
(59) Includes an aggregate of up to approximately 11,246 shares of common stock
issuable, without approval of our stockholders, upon exercise of the
option described in footnote 43. Does not include not include an aggregate
of up to approximately 35,629 additional shares of common stock, which may
be purchased if approval of our stockholders is obtained.
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., one of the selling stockholders, is Donald A. Drapkin,
the chairman of our board of directors, and (b) Matthew A. Drapkin, another of
the selling stockholders, is the son of Donald A. Drapkin. 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,
21
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 SEC, 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, with respect to shares of common stock issued and shares of common
stock underlying warrants issued pursuant to the securities purchase agreement
with MacAndrews & Forbes, two years after the last day of the calendar month
following the month in which this registration statement on Form S-3 becomes
effective with respect to shares of common stock issued and shares of common
stock underlying warrants issued pursuant to the asset purchase agreement with
Plexus or three years after the last day of the calendar month following the
month in which this registration statement on Form S-3 becomes effective with
respect to the remaining shares; (ii) the date when the selling stockholders may
sell all of the shares of common stock under Rule 144 without volume or other
restrictions or limits, with respect to shares other than shares of common stock
issued and shares of common stock underlying warrants issued pursuant to the
securities purchase agreement with MacAndrews & Forbes or (iii) 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.
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
22
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;
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.
23
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 SIGA by Kramer Levin Naftalis & Frankel LLP.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
Amendment No. 1 to the Annual Report on Form 10-KSB for the year ended December
31, 2002 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
In the opinion of the Securities and Exchange Commission, or "Commission,"
indemnification for certain acts of directors, officers and controlling persons
is against public policy, as expressed in the Securities Act, and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer or
controlling person of SIGA in the successful defense of any action, suit or
proceeding) is asserted by any SIGA 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 such indemnification by
SIGA 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 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 Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices located at 233 Broadway, New York, New
York 10279, and 500 West Madison Street, Chicago, Illinois 60601. Please call
the 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 Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site
(http://www.sec.gov) that contains information regarding registrants that file
electronically with the Commission.
24
INCORPORATION BY REFERENCE
Incorporated by reference into this prospectus is the information set
forth in the following documents:
o Amendment No. 1 to the Annual Report on Form 10-KSB for the year
ended December 31, 2002;
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 quarterly report on Form 10-QSB for the quarter ended March 31,
2003;
o our quarterly report on Form 10-QSB for the quarter ended June 30,
2003; and
o our current reports on Form 8-K filed on January 14, 2003, May 22,
2003, June 9, 2003 (as amended on July 22, 2003 and September 5,
2003), July 10, 2003, July 11, 2003 and August 18, 2003.
All documents subsequently filed by SIGA 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.
25
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
sale and distribution of the securities being registered, all of which are being
borne by us.
Amount
------------
SEC filing fee.................................... $ 1,163.39
Printing expenses................................. 2,600.00
Legal Fees and Expenses........................... 17,500.00
Accounting Fees and Expenses...................... 6,500.00
Miscellaneous..................................... 245.00
Total.................................... $ 28,008.39
All of the amounts shown are estimates except for the fee payable to the
SEC.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers, as well as other employees and
individuals, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by any such person
in connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Article IX of the Registrant's Certificate of Incorporation and Article VII of
the Registrant's Bylaws provides for indemnification by the Registrant of its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (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
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
provides for such limitation of liability.
Item 16. Exhibits
Exhibit No. Description
---------- ----------
5.1 Opinion of Kramer Levin Naftalis & Frankel LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Kramer Levin Naftalis & Frankel LLP (contained in the
opinion filed as Exhibit 5.1 hereto).
II-1
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sale; 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 of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the 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 the
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 a 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 the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply
if the registration statement is on Form S-3, and the information required
to be, included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or
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otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SIGA
Technologies, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, New York on
September 5, 2003.
SIGA Technologies, Inc.
By: /s/ Thomas N. Konatich
-----------------------
Thomas N. Konatich
Acting Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that the persons whose signatures
appear below each severally constitutes and appoints Thomas N. Konatich and
Donald G. Drapkin his true and lawful attorneys-in-fact and agents, with full
powers of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
pre-effective and post-effective amendments) to this registration statement and
to sign any registration statement (and any post-effective amendments) relating
to the same offering as this registration statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the
same, with all exhibits, 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 to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all which said attorneys-in-fact and agents, or their substitute, may
lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title of Capacities Date
/s/ Thomas N. Konatich Acting Chief Executive Officer
----------------------------- and Chief Financial Officer September 5, 2003
Thomas N. Konatich
*
-----------------------------
Donald G. Drapkin Chairman of the Board September 5, 2003
*
-----------------------------
Roger Brent, Ph.D. Director September 5, 2003
*
-----------------------------
Charles Cantor, Ph.D Director September 5, 2003
*
-----------------------------
Thomas E. Constance Director September 5, 2003
*
-----------------------------
Bernard L. Kasten, Jr., M.D. Director September 5, 2003
*
-----------------------------
Mehmet C. Oz Director September 5, 2003
*
-----------------------------
Eric A. Rose Director September 5, 2003
*
-----------------------------
Michael Weiner Director September 5, 2003
* By: /s/ Thomas N. Konatich
-----------------------
Thomas N. Konatich
Attorney-in-Fact
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EXHIBIT INDEX
Exhibit No. Description
---------- ----------
5.1 Opinion of Kramer Levin Naftalis & Frankel LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Kramer Levin Naftalis & Frankel LLP (contained in the
opinion filed as Exhibit 5.1 hereto).
II-5