As filed with the Securities and Exchange Commission on November 17, 2006
Registration No. _______________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 408
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 Financial Officer
SIGA Technologies, Inc.
420 Lexington Avenue
Suite 408
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
1177 Avenue of the Americas
New York, New York 10036
(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 this Form is a registration statement pursuant to General Instruction
I.D. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box. |_|
If this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 431(b) under the
Securities Act, check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered Per Unit Price Registration Fee
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common stock, par value $.0001
per share ..................... 3,272,400(1) $ 3.98(2) $ 13,007,790 $ 1,391.83
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(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 2,000,000 shares issued and 1,000,000 shares underlying
warrants issued pursuant to a securities purchase agreement dated October
19, 2006, between SIGA and certain investors thereto, as well as 136,200
shares underlying warrants issued pursuant to an Exclusive Finder's
Agreement dated November 1, 2005, between SIGA and The Shemano Group,
Inc., and 136,200 shares underlying warrants issued pursuant to a Finder's
Agreement dated October 19, 2006, between SIGA and Empire Financial Group,
Inc., In addition, this registration covers any additional indeterminate
number of shares of common stock, which may become issuable as a result of
anti-dilution provisions of the warrants.
(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 $3.98, which
was the average high and low prices for SIGA's common stock as reported on
the NASDAQ Capital Market on November 15, 2006.
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 said Section 8(a),
may determine.
Preliminary Prospectus, Subject to Completion, dated November 17, 2006
3,272,400 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. The market price of our
common stock as of the close of business day on November 15, 2006, was $4.02 per
share. We will not receive any proceeds from the sale of shares of common stock
by the selling stockholders. Our shares are traded on the NASDAQ Capital Market
under the symbol "SIGA." Our principal executive offices are located at 420
Lexington Avenue, Suite 408, 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 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
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The date of this prospectus is November 17, 2006
TABLE OF CONTENTS
ABOUT SIGA TECHNOLOGIES, INC .............................................. 1
RISK FACTORS .............................................................. 6
ABOUT THIS PROSPECTUS ..................................................... 14
FORWARD-LOOKING STATEMENTS ................................................ 14
USE OF PROCEEDS ........................................................... 15
SELLING STOCKHOLDERS ...................................................... 16
PLAN OF DISTRIBUTION ...................................................... 17
LEGAL MATTERS ............................................................. 18
EXPERTS ................................................................... 19
COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ... 19
ADDITIONAL INFORMATION .................................................... 19
INCORPORATION BY REFERENCE ................................................ 19
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS .......................... 20
SIGNATURES ................................................................ 22
EXHIBIT INDEX ............................................................. 25
EXHIBIT 5.1 ............................................................... 26
EXHIBIT 23.1 .............................................................. 28
ABOUT SIGA TECHNOLOGIES, INC.
We are a biotechnology company incorporated in Delaware on December 9,
1996. We aim to discover, develop and commercialize novel anti-infectives,
antibiotics and vaccines for serious infectious diseases, including products for
use in defense against biological warfare agents such as smallpox and
arenaviruses (hemorrhagic fevers). Our lead product under development, SIGA-246,
is an orally administered anti-viral drug that targets the smallpox virus. In
December 2005, the FDA accepted our IND application for SIGA-246 and granted the
program "Fast-Track" status. Fast Track programs of the FDA are designed to
facilitate the development and expedite the review of new drugs that are
intended to treat serious or life-threatening conditions and that demonstrate
the potential to address unmet medical needs. Our anti-viral programs are
designed to prevent or limit the replication of the viral pathogen. Our
anti-infectives programs are aimed at the increasingly serious problem of drug
resistance. We are also working to develop a technology for the mucosal delivery
of our vaccines which may allow the vaccines to activate 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.
Product Candidates and Market Potential
SIGA Biological Warfare Defense Product Portfolio
Anti-Smallpox Drug: Smallpox virus is classified as a Category A agent by
the Center for Disease Control and Prevention ("CDC") and is considered one of
the most significant threats for use as a biowarfare agent. While deliberate
introduction of any pathogenic agent would be devastating, we believe the one
that has greatest potential to harm the general U.S. population is smallpox. At
present there is no effective drug with which to treat or prevent smallpox
infections. To address this serious risk, SIGA scientists have identified a lead
drug candidate, SIGA-246, which inhibits vaccinia, cowpox, ectromelia
(mousepox), monkeypox, camelpox, and variola replication in cell culture but not
other unrelated viruses. There might be several uses for an effective smallpox
antiviral drug: prophylactically, to protect the non-immune who are at risk to
exposure; therapeutically, to prevent disease or death in those exposed to
smallpox; and last, as an adjunct treatment to the immunocompromised. SIGA
scientists are also working on several other smallpox drug targets, including
the viral proteinases, to develop additional drug candidates for use in
combination therapy if necessary. In December 2005, the FDA approved our IND
application for SIGA-246. We initiated a Phase I clinical trial in the second
quarter of 2006. The Phase I human trials were performed at Advance Biomedical
Research, Inc.'s clinical unit in Hackensack, New Jersey. The primary objective
of the initial study was to evaluate the safety and tolerability of single
escalating doses of SIGA-246 in healthy volunteers. In 2005, the drug
demonstrated antiviral activity in various animal models of poxvirus disease,
including the complete protection of golden ground squirrels from lethal doses
of monkeypox virus. In October, 2006, we reported that the drug demonstrated
100% protection against human smallpox virus in a primate trial conducted at the
federal Centers for Disease Control and Prevention. Further, in November 2006,
we reported that the drug also demonstrated protection against monkeypox virus
in a primate trial.
Anti-Arenavirus Drug: Arenaviruses are hemorrhagic fever viruses that have
been classified as Category A agents by the CDC due to the great risk that they
pose to public health and national safety. Among the Category A viruses
recognized by the CDC, there are four New World hemorrhagic fever arenaviruses
(Junin, Machupo, Guanarito and Sabia viruses) for which there are no FDA
approved treatments available. In order to meet this threat, SIGA scientists
have identified a lead drug candidate, ST-294, which has demonstrated antiviral
activity in cell culture assays against arenavirus pathogens. SIGA also has
earlier stage programs in development against other hemorrhagic fever viruses,
including Lassa virus, Lymphocytic choriomeningitis virus ("LCMV"), and Ebola.
We believe that the availability of hemorrhagic fever virus antiviral drugs
could address national and global security needs by acting as a deterrent and
defense against the use of arenaviruses as weapons of bioterrorism.
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Bacterial Commensal Vectors: Our scientists have developed methods that allow
essentially any gene sequence to be expressed in Generally Regarded As Safe
("GRAS") gram-positive bacteria, with the foreign protein being displayed on the
surface of the live recombinant organisms. Since organisms are inexpensive to
grow and are very stable, this technology affords the possibility of rapidly
producing live recombinant vaccines against any variety of biological agents
that might be encountered, such as Bacillus anthracis ("anthrax") or smallpox.
SIGA scientists are working to develop an alternative vaccine with improved
safety for use in preventing human disease caused by pathogenic orthopoxviruses
such as variola virus. To accomplish this goal we are utilizing our
newly-developed BCV (bacterial commensal vector) technology. BCV utilizes
gram-positive commensal bacteria, such as Streptococcus gordonii, ("S.
Gordonii") to express heterologous antigens of interest, either in secreted form
or attached to its external surface. Phase I human clinical trials indicate that
this S. Gordonii strain is safe and well-tolerated in humans. In several
different animal model systems, S. Gordonii has been shown to efficiently
express various antigens and elicit protective immune responses (cellular,
humoral and mucosal). However, these trials are not a predictor of future
success.
Surface Protein Expression ("SPEX/PLEX") System: Our scientists have
harnessed the protein expression pathways of gram-positive bacteria and turned
them into protein production factories. Using our proprietary SPEX or PLEX
systems, we can produce foreign proteins at high levels in the laboratory for
use in subunit vaccine formulations or other therapeutic applications.
Furthermore, we can envision engineering these bacteria to colonize the mucosal
surfaces of soldiers and/or civilians and secrete therapeutic molecules -- e.g.
anti-toxins that protect against aerosolized botulism toxin.
Antibiotics: To combat the problems associated with emerging antibiotic
resistance, our scientists are developing drugs designed to address a new target
-- the bacterial adhesion organelles. Specifically, by using novel enzymes
required for the transport and/or assembly of the proteins and structures that
bacteria require for adhesion or colonization, we are developing new classes of
broad spectrum antibiotics. This may prove useful in providing prompt treatment
to individuals encountering an unknown bacterial pathogen in the air or food
supply.
Market for Biological Defense Programs.
The Department of Homeland Security ("DHS") appropriation bill signed by
President Bush on October 1, 2003 created a discretionary reserve of $5.6
billion to fund Project BioShield for a period of 10 years
(www.aamc.org/advocacy/library/laborhhs/labor0022.htm). $3.4 billion may be
obligated during the first 5 years of the bill, and was included in the United
States government's budgets for fiscal 2004 and 2005
(www.whitehouse.gov/omb/budget/fy2006/tables.html). The remainder is reserved
for the last 5 years of the bill. Project BioShield was introduced to encourage
pharmaceutical and biotechnology companies to develop bioterrorism
countermeasures. One of the major concerns in the field of biological warfare
agents is smallpox -- although declared extinct in 1980 by the World Health
Organization ("WHO"), there is a threat that a rogue nation or a terrorist group
may have an illegal inventory of the virus that causes smallpox. It is generally
believed that the only legal inventories of the virus are held under extremely
tight security at the CDC in Atlanta, Georgia and at a laboratory in Russia. As
a result of this threat, the U.S. government has announced its intent to
allocate significant expenditures to find a way to counteract the virus if
turned loose by terrorists or on a battlefield.
Although enough smallpox vaccine exists to vaccinate the entire U.S. population,
a number of issues exist. There is no proven safe and effective treatment for
smallpox. According to the Center for Disease Control, vaccination after
exposure to the smallpox virus offers some benefit; however, after 7 days post
exposure, the benefit is significantly limited. In addition, side effects can be
serious in approximately 1,000 out of every million people receiving a smallpox
vaccination. Up to 52 people out of every million vaccinated would be expected
to experience life threatening reactions, with 1 to 2 people per million
expected to die. Importantly, existing smallpox vaccines are contraindicated in
immunosupressed individuals and in individuals with immunosupressed family
members. This contraindication translates into approximately 30 percent of the
U.S. population that cannot be vaccinated against smallpox without taking on
significant
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health risks. There are two medications that may help persons who have adverse
reactions to the vaccination: vaccinia immune globulin (VIG) and cidofovir.
Although used extensively in the past, VIG has been shown in controlled studies
to not be effective. The antiviral drug, cidofovir, licensed for treatment of
CMV retinitis has demonstrated activity against pox viruses. It is currently
available under treatment IND in the event of adverse reactions to smallpox
vaccine where VIG is not efficacious.
The FDA amended its regulations, effective June 30, 2002, so that certain
new drug and biological products used to reduce or prevent the toxicity of
chemical, biological, radiological, or nuclear substances may be approved for
use in humans based on evidence of effectiveness derived only from appropriate
animal studies and any additional supporting data. We believe that this change
could make it possible for us to have our products which have been found to be
effective in animal studies to be approved for sale within a relatively short
time.
SIGA Antibiotics Product Portfolio
Our anti-infectives program is targeted principally at drug-resistant
bacteria and hospital-acquired infections. According to estimates from the CDC,
approximately two million hospital-acquired infections occur each year in the
United States. Our anti-infectives approaches aim to block the ability of
bacteria to attach to and colonize human tissue, thereby blocking infection at
the first stage in the infection process. By comparison, antibiotics available
today act by interfering with either the structure or the metabolism of a
bacterial cell, affecting its ability to survive and to reproduce. No currently
available antibiotics target the attachment of a bacterium to its target tissue.
We believe that by preventing attachment, the bacteria should be readily cleared
by the body's immune system. SIGA has Gram-positive, Gram-negative and broad
spectrum antibiotic technologies.
SIGA Antivirals Product Portfolio
SIGA currently has the following antiviral programs which are in various
stages of development, ranging from initial research and screening to initiation
of Phase I human clinical trials: smallpox antiviral, New World Arenavirus
antiviral, Old World Arenavirus antiviral, Filovirus (Ebola & Marburg)
antivirals, Dengue Fever virus antiviral, and Bunyavirus antivirals. Currently
there are no approved antivirals available against any of these viruses.
Market for Anti-infective Programs
There are currently approximately 83 million prescriptions written for
antibiotics annually in the U.S (www.iatrogenic.org/library/antibioticlib.html)
and it is estimated that the worldwide market for antibiotics was worth
approximately $23.7 billion in 2004 (www.pharmaprojectsplus.com). Although our
products are too early in development to make accurate assessments of how well
they might compete, if successfully developed and marketed against other
products currently existing or in development at this time, the successful
capture of even a relatively small global market share could lead to a large
dollar volume of sales. Some of the antivirals that SIGA is developing are for
biowarfare agents and the market for that area is currently unknown; however,
there is funding available to purchase these drugs in Project Bioshield as well
as through the DoD. Markets for the other antiviral programs at SIGA vary widely
depending on the virus and where they are endemic. Each of these programs will
be assessed on an individual basis as it approaches the New Drug Application
stage.
Technology
Antiviral Technology-Two Approaches: SIGA has two approaches to the
discovery and development of new antiviral compounds: rational drug design and
high-throughput screening ("HTS"). For rational drug design, SIGA applies
advanced receptor structure-based Virtual Ligand Screening technology for
ligand/inhibitor discovery. The analysis of the structure reveals potentially
"drugable" pockets. The
3
technology allows us to utilize the three-dimensional structure of the target
receptor to screen large virtual compound collections, as well as databases of
commercially available compounds, and prioritize them for subsequent
experimental validation. Rational drug design is also used to develop structure
activity relationships and lead optimization.
For HTS, SIGA uses whole cell virus inhibition assays, pseudotype virus
inhibition assays, as well as validated target biochemical assays. SIGA
currently has an in-house compound library consisting of 200,000 small molecules
that is utilized for screening in these various assays. This strategy allows for
both target specific and target neutral screening and identification of novel
antiviral compounds. Compounds are also screened for toxicity in various cell
lines to develop a therapeutic index ("TI"), which is the concentration that the
compound is toxic to 50% of the cells (CC50) divided by the concentration of
compound required to inhibit 50% of the virus (EC50) (TI=CC50/EC50). Once hits
are identified with an acceptable TI, they are selected for chemical
optimization and proceed in to the antiviral drug development pipeline.
Vaccine Technologies: Mucosal Immunity and Vaccine Delivery
Using proprietary technology licensed from Rockefeller University
(Rockefeller), SIGA is developing specific commensal bacteria ("commensals") as
a means to deliver mucosal vaccines. Commensals are harmless bacteria that
naturally occupy the body's surfaces with different commensals inhabiting
different surfaces, particularly the mucosal surfaces. Our vaccine candidates
use genetically engineered commensals to deliver antigens for a variety of
pathogens to the mucosal immune system. When administered, the genetically
engineered commensals colonize the mucosal surface and replicate. By activating
a local mucosal immune response, our vaccine candidates are designed to prevent
infection and disease at the earliest possible stage, as opposed to most
conventional vaccines which are designed to act after infection has already
occurred.
By using an antigen unique to a given pathogen, the technology may
potentially be applied to any infectious agent that enters the body through a
mucosal surface. Our scientists have expressed and anchored a variety of viral
and bacterial antigens on the outside of S. Gordonii, including the M6 protein
from group A streptococcus, a group of organisms that causes a range of
diseases, including strep throat, necrotizing fasciitis, impetigo and scarlet
fever. In addition, proteins from other infectious agents, such as HIV and human
papilloma virus, have also been expressed using this system. We believe this
technology will enable the expression of most antigens regardless of size or
shape. In animal studies, we have found that the administration of a genetically
engineered S. Gordonii vaccine prototype induces both a local mucosal immune
response and a systemic immune response.
Surface Protein Expression Systems ("SPEX" & "PLEX")
The ability to overproduce many bacterial and human proteins has been made
possible through the use of recombinant DNA technology. The introduction of DNA
molecules into Escherichia coli ("E. coli") has been the method of choice to
express a variety of gene products, because of this bacterium's rapid
reproduction and well-understood genetics. Yet, despite the development of many
efficient E. coli-based gene expression systems, the most important concern
continues to be associated with subsequent purification of the product.
Recombinant proteins produced in this manner do not readily cross E. coli's
outer membrane, and as a result, proteins must be purified from the bacterial
cytoplasm or periplasmic space. Purification of proteins from these cellular
compartments can be very difficult. Frequently encountered problems include low
product yields, contamination with potentially toxic cellular material (i.e.,
endotoxin) and the formation of large amounts of partially folded polypeptide
chains in non-active aggregates termed inclusion bodies.
To overcome these problems, we have taken advantage of our knowledge of
Gram-positive bacterial protein expression and anchoring pathways. This pathway
has evolved to handle the transport of surface proteins that vary widely in
size, structure and function. Modifying the approach used to create bacterial
4
commensal mucosal vaccines, we have developed methods which, instead of
anchoring the foreign protein to the surface of the recombinant Gram-positive
bacteria, result in it being secreted into the surrounding medium in a manner
which is readily amenable to simple batch purification. We believe the
advantages of this approach include the ease and lower cost of Gram-positive
bacterial growth, the likelihood that secreted recombinant proteins will be
folded properly, and the ability to purify recombinant proteins from the culture
medium without having to disrupt the bacterial cells and liberating cellular
contaminants. Gram-positive bacteria may be grown simply in scales from those
required for laboratory research up to commercial mass production. Recent
developments in the construction of these recombinant bacteria have resulted in
a plasmid-based expression system ("PLEX"), in which engineered genetic elements
(plasmids) are cloned into commensal bacteria for protein production. This
system allows for higher protein production levels than the original SPEX
constructs. In addition, the PLEX and SPEX systems may be used in concert,
enabling greater flexibility in protein secretion for purification or for
surface expression of multiple proteins, e.g. for multi-component combination
vaccines.
5
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.
This prospectus contains forward-looking statements and other prospective
information relating to future events. These forward-looking statements and
other information are subject to risks and uncertainties that could cause our
actual results to differ materially from our historical results or currently
anticipated results including the following:
We have incurred operating losses since our inception and expect to incur net
losses and negative cash flow for the foreseeable future.
We incurred net losses of approximately $5.6 million for the nine months
ended September 30, 2006, and $2.3 million, $9.4 million, and $5.3 million for
the years ended December 31, 2005, 2004, and 2003, respectively. As of December
31, 2005, 2004 and 2003, our accumulated deficit was approximately $46.5
million, $44.2 million and $34.8 million, respectively. We expect to continue to
incur significant operating expenditures. We will need to generate significant
revenues to achieve and maintain profitability.
We cannot guarantee that we will achieve sufficient revenues for
profitability. Even if we do achieve profitability, we cannot guarantee that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, then our business,
results of operations, financial condition and cash flows will be materially and
adversely affected. Because our strategy might include 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 equity 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 beyond the next twelve months. Our
annual operating needs vary from year to year depending upon the amount of
revenue generated through grants and licenses and the amount of projects we
undertake, as well as the amount of resources we expend, in connection with
acquisitions all of which may materially differ from year to year and may
adversely affect our business.
Our stock price is, and we expect it to remain, volatile, which could limit
investors' ability to sell stock at a profit.
The volatile price of our stock makes it difficult for investors to
predict the value of their investment, to sell shares at a profit at any given
time, or to plan purchases and sales in advance. A variety of factors may affect
the market price of our common stock. These include, but are not limited to:
o publicity regarding actual or potential clinical results relating to
products under development by our competitors or us;
o delay or failure in initiating, completing or analyzing pre-clinical or
clinical trials or the unsatisfactory design or results of these trials;
o achievement or rejection of regulatory approvals by our competitors or us;
o announcements of technological innovations or new commercial products by
our competitors or us;
o developments concerning proprietary rights, including patents;
o developments concerning our collaborations;
o regulatory developments in the United States and foreign countries;
6
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 and short selling activity 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.
We are in various stages of product development and there can be no assurance of
successful commercialization.
In general, our research and development programs are at an early stage of
development. To obtain FDA approval for our biological warfare defense products
we will be required to perform two animal models and provide animal and human
safety data. 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 that we are not aware of, 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.
7
Most of our immediately foreseeable future revenues are contingent upon grants
and contracts from the United States government and 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 agreements, strategic alliances, research grants, contracts and
license agreements with third parties and maintain the agreements we currently
have in place. Substantially all of our revenues for the years ended December
31, 2005, 2004 and 2003, respectively, were derived from revenues related to
grants, contracts and license agreements. The majority of our current revenue is
derived from contract work being performed for the NIH under two major grants
and a contract, all of which are scheduled to expire in September 2009, and
contracts with the U.S. Air Force which expire November 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. We may not earn
significant milestone payments under our existing collaborative agreements 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 National Institutes of Health. Under our collaborative agreement with the
NIH we have received SBIR Grants totaling approximately $10.8 million in
2006. The term of these grants expire in September 2009. We have also
received a three year, $16.5 million contract from the NIH, also expiring
in September 2009. We are paid as the work is performed and the agreement
can be cancelled for non-performance. If terminated, we would have to find
another source of funds to continue to conduct the trials. We are current
in all our obligations under our agreements.
o United States Air Force. In November 2006 we received two contracts from
the USAF for a total of $2.3 million. The contracts expire in November
2007. We are current in all our obligations under our agreements.
o United States Army Medical Research and Material Command. In September
2005 we entered into a $3.2 million, one year contract with the USAMRMC.
The agreement, for the rapid identification and treatment of anti-viral
diseases, is funded through the USAF. It is anticipated that our efforts
will aid the USAF Special Operations Command in its use of computational
biology to design and develop specific countermeasures against biological
threat agents Smallpox and Adenovirus. We are current in all our
obligations under our agreement.
o United States Army Medical Research Acquisition Activity. In December
2002, we entered into a four year contract with USAMRAA to develop a drug
to treat Smallpox. We are current in all our obligations under our
agreement.
o 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 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
subcontract agreement with OSU for us to perform work under a grant OSU
has from the NIH.
8
The subcontract agreement was renewable annually and the current terms
expired on August 31, 2003. Work on this agreement was completed in 2003.
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. We have currently
met all our obligations under this agreement.
o TransTech Pharma, Inc. Under our collaborative agreement with TransTech
Pharma, a related party, TransTech Pharma is collaborating with us on the
discovery, optimization and development of lead compounds to certain
therapeutic agents. We and TransTech Pharma have agreed to share the costs
of development and revenues generated from licensing and profits from any
commercialized products 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.
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.
Before commencing clinical trials in humans, we must submit and receive
clearance from the FDA by means of an 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;
9
o must meet requirements for informed consent;
o must meet requirements for good clinical and manufacturing practices;
o are subject to continuing FDA oversight;
o may require large numbers of test subjects; and
o may be suspended by us or the FDA at any time if it is believed that the
subjects participating in these trials are being exposed to unacceptable
health risks or if the FDA finds deficiencies in the IND application or
the conduct of these trials.
Before receiving FDA clearance to market a product, we must demonstrate
that the product is safe and effective on the patient population that will be
treated. Data we obtain from preclinical and clinical activities are susceptible
to varying interpretations that could delay, limit or prevent regulatory
clearances. Additionally, we have limited experience in conducting and managing
the clinical trials and manufacturing processes necessary to obtain regulatory
clearance.
If regulatory clearance of a product is granted, this clearance will be
limited only to those states and conditions for which the product is
demonstrated through clinical trials to be safe and efficacious. We cannot
ensure that any compound developed by us, alone or with others, will prove to be
safe and efficacious in clinical trials and will meet all of the applicable
regulatory requirements needed to receive marketing clearance.
If our technologies or those of our collaborators are alleged or found to
infringe the patents or proprietary rights of others, we may be sued or have to
license those rights from others on unfavorable terms.
Our commercial success will depend significantly on our ability to operate
without infringing the patents and proprietary rights of third parties. Our
technologies, along with our licensors' and our collaborators' technologies, may
infringe the patents or proprietary rights of others. If there is an adverse
outcome in litigation or an interference to determine priority or other
proceeding in a court or patent office, then we, or our collaborators and
licensors, could be subjected to significant liabilities, required to license
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
patent portfolio.
The costs to establish the validity of patents, to defend against patent
infringement claims of others and to assert infringement claims against others
can be expensive and time consuming, even if the outcome is favorable. An
outcome of any patent prosecution or litigation that is unfavorable to us or one
of our licensors or collaborators may have a material adverse effect on us. We
could incur substantial costs if we are required to defend ourselves in patent
suits brought by third parties, if we participate in patent suits brought
against or initiated by our licensors or collaborators or if we initiate such
suits. We may not have sufficient funds or resources in the event of litigation.
Additionally, we may not prevail in any such action.
Any conflicts resulting from third-party patent applications and patents
could significantly reduce the coverage of the patents owned, optioned by or
licensed to us or our collaborators and limit our ability or that of our
collaborators to obtain meaningful patent protection. If patents are issued to
third parties that contain competitive or conflicting claims, we, our licensors
or our collaborators may be legally prohibited from researching, developing or
commercializing 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
10
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 eight issued U.S. patents and three 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 one additional patent application in the U.S. and one
application in Europe relating to this technology. We are joint owner with
Washington University of seven issued patents in the U.S. and one in Europe. In
addition, there are four co-owned U.S. patent applications. These patents are
for the technology used for the Gram-negative product opportunities. We are also
exclusive owner of one U.S. patent and three U.S. patent applications. One of
these U.S. patent applications relates to our DegP product opportunities.
We included a summary of out patent positions as of December 31, 2005 in
Part I, Item 1 of our Annual report on Form 10-K for the year ended December 31,
2005.
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 may have difficulty managing our growth.
We expect to experience growth in the number of our employees and the
scope of our operations. This future growth could 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.
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 32P, 35S and 3H, which are stored, used and disposed of in accordance
with Nuclear Regulatory Commission ("NRC")
11
regulations. We maintain liability insurance in the amount of approximately
$5,000,000 and we believe this should be sufficient to cover any contingent
losses.
We believe that we are in compliance in all material respects with
applicable environmental laws and regulations and currently do not expect to
make material additional capital expenditures for environmental control
facilities in the near term. However, we may have to incur significant costs to
comply with current or future environmental laws and regulations.
Our potential products may not be acceptable in the market or eligible for third
party reimbursement resulting in a negative impact on our future financial
results.
Any products successfully developed by us or our collaborative partners
may not achieve market acceptance. The antibiotic products which we are
attempting to develop will compete with a number of well-established traditional
antibiotic drugs manufactured and marketed by major pharmaceutical companies.
The degree of market acceptance of any of our products will depend on a number
of factors, including:
o the establishment and demonstration in the medical community of the
clinical efficacy and safety of such products,
o the potential advantage of such products over existing treatment methods,
and
o reimbursement policies of government and third-party 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 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;
12
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.
The manufacture of biotechnology products can be 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.
Our management believes that we have the ability to acquire or produce
quantities of products sufficient to support our present needs for research and
our projected needs for our initial clinical development programs. The
manufacture of all of our products will be subject to current Good Manufacturing
Practices (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.
Healthcare reform and controls on healthcare spending may limit the price we
charge for any products and the amounts thereof that we can sell.
The U.S. federal government and private insurers have considered ways to
change, and have changed, the manner in which healthcare services are provided
in the U.S. Potential approaches and changes in recent years include controls on
healthcare spending and the creation of large purchasing groups. In the future,
the U.S. government may institute further controls and limits on Medicare and
Medicaid spending. These controls and limits might affect the payments we could
collect from sales of any products. Uncertainties regarding future healthcare
reform and private market practices could adversely affect our ability to sell
any products profitably in the U.S. At present, we do not foresee any changes in
FDA regulatory policies that would adversely affect our development programs.
The future issuance of preferred stock may adversely affect the rights of the
holders of our common stock.
Our certificate of incorporation allows our Board of Directors to issue up
to 10,000,000 shares of preferred stock and to fix the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of these shares without any further vote or action by the
stockholders. The rights of the holders of common stock will be subject to, and
could be adversely affected by, the rights of the holders of any preferred stock
that we may issue in the future. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of our outstanding voting stock, thereby
delaying, deferring or preventing a change in control.
Concentration of ownership of our capital stock could delay or prevent change of
control.
Our directors, executive officers and principal stockholders beneficially
own a significant percentage of our common stock and preferred stock. They also
have, through the exercise or conversion of certain securities, the right to
acquire additional common stock. As a result, these stockholders, if acting
together, have the ability to 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 October 31, 2006, Directors, Officers and principal stockholders
beneficially owned approximately 49.8% of our stock.
13
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. The prospectus relates to 2,000,000 shares
of our common stock which the selling stockholders named in this prospectus may
sell from time to time and 1,272,400 shares of our common stock which may be
issued under certain warrant agreements and 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. We have agreed to pay the expenses incurred in
registering the shares, including legal and accounting fees.
The shares have not been registered under the securities laws of any state
or other jurisdiction as of the date of this prospectus. Brokers or dealers
should confirm the existence of an exemption from registration or effectuate
such registration in connection with any offer and sale of the shares.
This prospectus describes certain risk factors that you should consider
before purchasing the shares. See "Risk Factors" beginning on page 6. 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 contains or implies certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, as
amended, including statements regarding the efficacy of potential products, the
timelines for bringing such products to market and the availability of funding
sources for continued development of such products. Forward-looking statements
are based on management's estimates, assumptions and projections, and are
subject to uncertainties, many of which are beyond the control of SIGA. Actual
results may differ materially from those anticipated in any forward-looking
statement. Factors that may cause such differences include the risks that (a)
potential products that appear promising to SIGA or its collaborators cannot be
shown to be efficacious or safe in subsequent pre-clinical or clinical trials,
(b) SIGA or its collaborators will not obtain appropriate or necessary
governmental approvals to market these or other potential products, (c) SIGA may
not be able to obtain anticipated funding for its development projects or other
needed funding, (d) SIGA may not be able to secure funding from anticipated
government contracts and grants, (e) SIGA may not be able to secure or enforce
adequate legal protection, including patent protection, for its products, (f)
unanticipated internal control deficiencies or weaknesses or ineffective
disclosure controls and procedures and (g) regulatory approval for SIGA's
products may require further or additional testing that will delay or prevent
approval. More detailed information about SIGA and risk factors that may affect
the realization of forward-looking statements, including the forward-looking
statements in this presentation, is set forth in SIGA's filings with the
Securities and Exchange Commission, including SIGA's Annual Report on Form 10-K
for the fiscal year ended December 31, 2005, and in other documents that SIGA
has filed with the Commission. SIGA urges investors and security holders to read
those documents free of charge at the Commission's Web site at
http://www.sec.gov. Interested parties may also obtain those documents free of
charge from SIGA. Forward-looking statements speak only as of the date they are
made, and except for any obligation under the U.S. federal securities laws, we
undertake no obligation to publicly update any forward-looking statements
whether as a result of new information, future events or otherwise.
Although we believe that our expectations are reasonable, we cannot assure
you that our expectations will prove to be correct. Should any one or more of
these risks or uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from those described in this
prospectus as anticipated, believed, estimated, expected, intended or planned.
14
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.
15
SELLING STOCKHOLDERS
The table below sets forth information regarding ownership of our common
stock by the selling stockholders as of November 16, 2006, and the shares of
common stock to be sold by them under this prospectus. Beneficial ownership is
determined in accordance with rules of the Securities and Exchange Commission
and includes voting or investment power with respect to the securities. Except
as indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all shares of common stock shown as beneficially owned by them. The rules of the
Securities and Exchange Commission require that the number of shares of common
stock outstanding used in calculating the percentage for each listed person
includes the shares of common stock underlying warrants or options held by such
person that are exercisable within 60 days of November 16, 2006. As of November
16, 2006, 31,796,454 shares of our common stock were outstanding.
Securities Owned After
Securities Owned Prior to Offering Offering (1)
Number of
Shares of Percent of Shares of Shares of Percent of
Common Common Common Stock Common Common
Name of Selling Stockholder Stock Stock Offered Hereby Stock Stock
Smithfield Fiduciary LLC (1) 966,961 3.22% 716,961 -- 0.0%
Omicron Master Trust (5) 357,157 1.19% 132,157 -- 0.0%
Iroquois Capital LP (2) 966,961 3.22% 716,961 -- 0.0%
Rockmore Investment Master Fund, Ltd (3) 849,107 2.82% 716,961 -- 0.0%
Cranshire Capital LP (4) 1,025,461 3.41% 716,961 -- 0.0%
Gary J. Shemano 205,340 0.68% 95,340 -- 0.0%
Michael R. Jacks 77,420 0.26% 45,920 -- 0.0%
William Corbett 149,420 0.50% 45,920 -- 0.0%
Terrence Cush 25,430 0.08% 20,430 -- 0.0%
Empire Financial Group 39,360 0.13% 39,360 -- 0.0%
Lee Osman 5,000 0.02% 5,000 -- 0.0%
Daniel Schwartz 20,430 0.07% 20,430 -- 0.0%
(1) Highbridge Capital Management, LLC is the trading manager of Smithfield
Fiduciary LLC and consequently has voting control and investment discretion over
securities held by Smithfield Fiduciary LLC. Glenn Dubin and Henry Swieca
control Highbridge Capital Management, LLC. Each of Highbridge Capital
Management, LLC, Glenn Dubin and Henry Swieca disclaims beneficial ownership of
the securities held by Smithfield Fiduciary LLC.
(2) Joshua Silverman has voting control and investment decision over securities
held by Iroquois Capital, LP. Mr. Silverman disclaims beneficial ownership of
the shares held by Iroquois Capital, LP.
(3) Bruce Bernstein has voting control and investment decision over securities
held by Rockmore Investment Master Fund Ltd. Mr. Bernstein disclaims beneficial
ownership of the shares held by Rockmore Investment Master Fund Ltd.
(4) Mitchell P. Kopin, the president of Downsview Capital, Inc., the general
partner of Cranshire Capital, L.P, has sole voting control and investment
discretion over securities held by Cranshire Capital, L.P. Each of Mitchell P.
Kopin and Downsview Capital, Inc. disclaims beneficial ownership of the shares
held by Cranshire Capital, L.P.
(5) Omicron Capital, L.P., a Delaware limited partnership ("Omicron Capital"),
serves as investment manager to Omicron Master Trust, a trust formed under the
laws of Bermuda ("Omicron"), Omicron Capital, Inc., a Delaware corporation
("OCI"), serves as general partner of Omicron Capital, and Winchester Global
Trust Company Limited ("Winchester") serves as the trustee of Omicron. By reason
of such relationships, Omicron Capital and OCI may be deemed to share
dispositive power over the shares of our common stock owned by Omicron, and
Winchester may be deemed to share voting and dispositive power over the shares
of our common stock owned by Omicron. Omicron
16
Capital, OCI and Winchester disclaim beneficial ownership of such shares of our
common stock. As of the date of this prospectus, Mr. Olivier H. Morali, an
officer of OCI, and Mr. Bruce T. Bernstein, a consultant to OCI, have delegated
authority from the board of directors of OCI regarding the portfolio management
decisions with respect to the shares of our common stock owned by Omicron. By
reason of such delegated authority, Messrs. Morali and Bernstein may be deemed
to share dispositive power over the shares of our common stock owned by Omicron.
Messrs. Morali and Bernstein disclaim beneficial ownership of such shares of our
common stock and neither of such persons has any legal right to maintain such
delegated authority. No other person has sole or shared voting or dispositive
power with respect to the shares of our common stock being offered by Omicron,
as those terms are used for purposes under Regulation 13D-G of the Securities
Exchange Act of 1934, as amended. Omicron and Winchester are not "affiliates" of
one another, as that term is used for purposes of the Exchange Act or of any
other person named in this prospectus as a selling stockholder. No person or
"group" (as that term is used in Section 13(d) of the Exchange Act or the SEC's
Regulation 13D-G) controls Omicron and Winchester
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.
Because the selling stockholders may sell all or some portion of the
shares of common stock beneficially owned by them, only an estimate (assuming
the selling stockholders sell all of the shares offered hereby) can be given as
to the number of shares of common stock that will be beneficially owned by the
selling stockholders after this offering. In addition, the selling stockholders
may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the dates on which
they provided the information regarding the shares beneficially owned by them,
all or a portion of the shares beneficially owned by them in transactions exempt
from the registration requirements of the Securities Act.
We have filed with the Securities and Exchange Commission, under the
Securities Act of 1933, a registration statement on Form S-3, of which this
prospectus forms a part, with respect to the resale of the securities from time
to time on the NASDAQ Capital 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) five years from the date on which this
registration statement on Form S-3 becomes effective, or (ii) the date on which
the selling stockholders have sold all of the shares of common stock.
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
17
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares of common stock purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares of common stock. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934 may apply to sales of our common stock and activities of the selling
stockholders.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Kramer Levin Naftalis & Frankel LLP. Thomas E. Constance, a
director of SIGA, is Chairman of Kramer Levin Naftalis & Frankel LLP, a law firm
in New York City, which SIGA has retained to provide legal services.
18
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 2005 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting.
COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons,
we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by that director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether that indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of that issue.
ADDITIONAL INFORMATION
Government Filings.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of the SEC's
public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330.
We have filed with the SEC a registration statement on form S-3 to
register the shares of common stock to be offered. This prospectus is part of
that registration statement and, as permitted by the SEC's rules, does not
contain all the information included in the registration statement. For further
information about us and our common stock, you should refer to that registration
statement and to the exhibits and schedules filed as part of that registration
statement, as well as the documents we have incorporated by reference which are
discussed below. You can review and copy the registration statement, its
exhibits and schedules, as well as the documents we have incorporated by
reference, at the public reference facilities maintained by the SEC as described
above. The registration statement, including its exhibits and schedules, are
also available on the SEC's web site, given above.
Stock Market.
Shares of our common stock are traded on the NASDAQ Capital Market.
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents
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listed below and any further filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, until this offering has been completed:
o the Annual Report on Form 10-K for the year ended December 31, 2005;
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 quarterly report on Form 10-Q for the quarter ended March 31, 2006;
o quarterly report on Form 10-Q for the quarter ended June 30, 2006;
o quarterly report on Form 10-Q for the quarter ended September 30,
2006; and
o amended quarterly report on Form 10-Q/A for the quarter ended
September 30, 2006;
o proxy statement on Schedule 14A for the annual meeting of
stockholders dated December 19, 2006; and
o Our current reports on Form 8-K filed on January 5, 2006, February
3, 2006, February 7, 2006, March 14, 2006, March 22, 2006, April 3,
2006, April 20, 2006, May 4, 2006, June 13, 2006, June 20, 2006,
July 25, 2006, August 28, 2006, September 25, 2006, October 4, 2006,
October 11, 2006, October 18, 2006, and October 20, 2006.
We will furnish to any person, including any beneficial owner, to whom
this prospectus is delivered, without charge, a copy of these documents upon
written or oral request to Thomas N. Konatich, Chief Financial Officer, 420
Lexington Avenue, Suite 408, New York, New York 10170, tel. (212) 672-9100.
20
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, other than
underwriting discounts and commissions, all of which are being borne by us.
Amount
--------------
SEC filing fee .................................... $ 1,391.83
Printing Expenses ................................. $ 5,000.00
Legal fees and expenses ........................... $ 25,000.00
Accounting fees and expenses ...................... $ 5,000.00
Miscellaneous ..................................... $ 500.00
--------------
Total ................................... $ 36,891.83
==============
All of the amounts shown are estimates except for the fee payable to the
Securities and Exchange Commission.
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).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
21
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act 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;
(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 that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(4) 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 statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or 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 Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed 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
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, New York on November 17, 2006.
SIGA Technologies, Inc.
By: /s/ Thomas N. Konatich
----------------------------------
Name: Thomas N. Konatich
Title: Acting Chief Executive
Officer and Chief
Financial 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 Date
Acting Chief Executive
Officer and Chief Financial
/s/ Thomas N. Konatich Officer (Principal Financial November 17, 2006
-------------------------- Officer and Principal
Thomas N. Konatich Accounting Officer)
/s/ Donald G. Drapkin
--------------------------
Donald G. Drapkin Chairman of the Board November 15, 2006
/s/ James J. Antal
--------------------------
James J. Antal Director November 15, 2006
--------------------------
Bernard L. Kasten, M.D. Director
/s/ Judy S. Slotkin
--------------------------
Judy S. Slotkin Director November 15, 2006
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/s/ Thomas E. Constance
--------------------------
Thomas E. Constance Director November 15, 2006
/s/ Adnan M. Mjalli
--------------------------
Adnan M. Mjalli, Ph.D. Director November 16, 2006
/s/ Mehmet C. Oz
--------------------------
Mehmet C. Oz Director November 16, 2006
/s/ Eric A. Rose
--------------------------
Eric A. Rose Director November 16, 2006
/s/ Paul G. Savas
--------------------------
Paul G. Savas Director November 16, 2006
/s/ Michael Weiner
--------------------------
Michael Weiner Director November 15, 2006
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EXHIBIT INDEX
Exhibit No. Description Page No.
----------- ----------- --------
5.1 Opinion of Kramer Levin Naftalis & Frankel LLP. 26
23.1 Consent of PricewaterhouseCoopers LLP. 28
23.2 Consent of Kramer Levin Naftalis & Frankel LLP (contained in the opinion
filed as Exhibit 5.1 hereto) 26
24.1 Power of Attorney (included on the signature page of this Registration Statement) 23
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