AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 15, 2003
REGISTRATION NO. 333-
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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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DOR BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 41-1505029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1691 MICHIGAN AVE, SUITE 435, MIAMI, FL, 33139, (305) 534-3383
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
WILLIAM D. MILLING
CONTROLLER, TREASURER AND CORPORATE SECRETARY
1691 MICHIGAN AVE, SUITE 435, MIAMI, FL,33139, (305) 534-3383
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
MARK D. WOOD, ESQ.
CRAIG C. BRADLEY, ESQ.
Katten Muchin Zavis Rosenman
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
(312) 902-5200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ______
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ] ______
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF REGISTRATION
REGISTERED REGISTERED UNIT(1) PRICE(2) FEE
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Common Stock, $.001 par
value........................ 15,334,625 $ 0.79 $12,114,354 $ 981
=======================================================================================================================
(1) Based on the average high and low trading prices of the common stock,
as reported on the American Stock Exchange, on December 21, 1999.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of computing
the registration fee.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell and it is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER__, 2003
PROSPECTUS
DOR BIOPHARMA, INC.
15,334,625 SHARES
COMMON STOCK
Our common stock is traded on the American Stock Exchange under the
symbol "DOR." The closing sale price of our common stock on October 13, 2003 was
$0.79 per share.
AN INVESTMENT IN SHARES OF OUR COMMON STOCK INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 2
BEFORE YOU DECIDE WHETHER TO INVEST IN SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ,2003
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUMMARY............................................... 1
RISK FACTORS..................................................... 2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS............. 9
USE OF PROCEEDS.................................................. 9
SELLING STOCKHOLDERS............................................. 9
PLAN OF DISTRIBUTION............................................. 14
WHERE YOU CAN FIND MORE INFORMATION.............................. 14
LEGAL MATTERS.................................................... 15
EXPERTS.......................................................... 15
You should rely only on the information contained or incorporated by reference
in this prospectus and in any prospectus supplement. We have not authorized
anyone else to provide you with different information, and if you receive any
unauthorized information you should not rely on it. We have not authorized the
selling stockholders to make an offer of these shares in any place where the
offer is not permitted. You should not assume that the information in this
prospectus, any supplement or any document incorporated by reference is accurate
as of any date other than the date of that document.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary does not contain all of the information that you should
consider before investing in our common stock. You should read this entire
prospectus and the documents that are incorporated by reference carefully,
including the risk factors and the financial statements and related notes.
We are a pharmaceutical company currently developing a topically
active, oral steroid called orBec(R), which is in a pivotal Phase III clinical
trial for the treatment of intestinal graft-vs.-host disease, a life threatening
complication of bone marrow transplantation. In addition we are planning a Phase
II clinical program to investigate other uses for orBec(R) including prevention
of intestinal graft-vs.-host disease, as well as the treatment of inflammatory
bowel diseases and irritable bowel syndrome. Additionally, we are developing,
through collaborations with leading universities, biodefense vaccines, including
injectable and nasal vaccines against ricin toxin and a nasally delivered
vaccine against botulinum toxin. We have also developed oral drug delivery
systems, named the LPM(TM), PLP(TM), and LPE(TM) which are systems, for the
delivery of proteins and water insoluble drugs. We have preclinical animal data
demonstrating the oral delivery of the drug leuprolide, a FDA approved
injectable anticancer product. We also have preclinical animal data
demonstrating the oral delivery of the drug paclitaxel, a FDA approved
injectable anticancer product. We are in the process of trying to license these
technologies to third parties for further development and commercialization.
Our business strategy is to (1) enhance the value of our current
products through further research and development, specifically preclinical and
clinical testing towards regulatory approval; (2) identify, acquire and exploit
rights to new technologies and compounds related to our current product lines;
(3) market our therapeutic drugs through licensing agreements with major
pharmaceutical companies; (4) market our biodefense vaccine products directly to
the U.S. and European governmental agencies; and (5) work to develop additional
promising compounds utilizing collaborations with third parties such as our
licensors at the University of Texas Southwestern Medical Center and Thomas
Jefferson University.
We have assembled an experienced management team that oversees the
preclinical and human clinical trials necessary to establish proof of safety and
efficacy for our current products. We supplement our management team through a
network of consultants and contractors on an as needed basis. By operating in
this manner, we believe we can efficiently utilize our capital resources to
advance our drug and vaccine products to market.
THE OFFERING
This prospectus relates to the offer and sale from to time of up to
15,334,625 shares of our common stock by the selling stockholders. Of the shares
registered for resale through this prospectus, 14,953,206 shares were issued or
are issuable in connection with our July 2003 private placement as follows: (1)
6,796,912 shares were sold to investors in the private placement; (2) 6,796,912
shares are issuable upon exercise of warrants, exercisable until September 17,
2008 at a price of $0.8756 per share, sold to investors in the private
placement; (3) 1,359,382 shares are issuable upon exercise of warrants,
exercisable until September 17, 2008 at a price of $0.8756 per share, issued as
consideration for placement services rendered in connection with the private
placement. Of the remaining 381,419 shares registered for resale through this
prospectus, 141,305 and 203,114 shares were issued in exchange for license
rights and 37,000 shares of common stock were issued to a consultant, as payment
for consulting services rendered to us.
The selling stockholders may sell these shares in the over-the-counter
market or otherwise, at market prices prevailing at the time of sale, at prices
related to the prevailing market price, or at negotiated prices. We will not
receive any proceeds from the sale of shares by the selling stockholders.
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RISK FACTORS
You should carefully consider the risks, uncertainties and other
factors described below before you decide whether to buy shares of our common
stock. Any of the factors could materially affect our business, financial
condition and/or operating results and could negatively impact the value of your
investment. Also, you should be aware that the risks and uncertainties described
below are not the only ones facing us. Additional risks and uncertainties that
we do not yet know of, or that we currently think are immaterial, may also
impair our business operations. The trading price of the common stock offered in
this prospectus could decline, and you may lose all or part of your investment.
You should also refer to the other information contained in and incorporated by
reference into this prospectus, including our financial statements and the
related notes.
RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY
WE HAVE HAD SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES; IF
ADDITIONAL FUNDING CANNOT BE OBTAINED, WE MAY REDUCE OR DISCONTINUE OUR PRODUCT
DEVELOPMENT AND COMMERCIALIZATION EFFORTS AND WE MAY BE UNABLE TO CONTINUE OUR
OPERATIONS.
We are a development stage company that has experienced significant
losses since inception and have a significant accumulated deficit. We expect to
incur additional operating losses in the future and expect our cumulative losses
to increase. All of our products are currently in development, preclinical
studies or clinical trials, and we have not generated any revenues from sales or
licensing of these products. Through September 30, 2003, we have expended
approximately $2.2 million developing our current product candidates for our
clinical trials, and we currently have commitments to spend approximately $2.6
million over the next two years in connection with development of our oral
delivery systems, licenses, employee agreements, and consulting agreements.
Unless and until we are able to generate licensing revenue from orBec(R), our
leading product candidate, or another one of our product candidates, we will
require additional funding to meet these commitments, sustain our research and
development efforts, provide for future clinical trials, and continue our
operations. We may not be able to obtain additional required funding on terms
satisfactory to our requirements, if at all. If we are unable to raise
additional funds when necessary, we may have to reduce or discontinue
development, commercialization or clinical testing of some or all of our product
candidates or take other cost-cutting steps that could adversely affect our
ability to achieve our business objectives. If additional funds are raised by
our issuing equity securities, stockholders may experience dilution of their
ownership interests, and the newly issued securities may have rights superior to
those of the common stock. If additional funds are raised by our issuing debt,
we may be subject to limitations on our operations.
IF WE ARE UNSUCCESSFUL IN DEVELOPING OUR PRODUCTS, OUR ABILITY TO
GENERATE REVENUES WILL BE SIGNIFICANTLY IMPAIRED.
To be profitable, our organization must, along with corporate partners
and collaborators, successfully research, develop and commercialize our
technologies or product candidates. Our current product candidates are in
various stages of clinical and preclinical development and will require
significant further funding, research, development, preclinical and/or clinical
testing, regulatory approval and commercialization testing, and are subject to
the risks of failure inherent in the development of products based on innovative
or novel technologies. Specifically, each of the following is possible with
respect to orBec(R) or any of our other product candidates:
- that we will not be able to maintain our current research and
development schedules;
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- that we will encounter problems in clinical trials; or
- that the technology or product will be found to be ineffective
or unsafe.
If any of the risks set forth above occurs, or if we are unable to
obtain the necessary regulatory approvals as discussed below, we may not be able
to successfully develop our technologies and product candidates and our business
will be seriously harmed. Furthermore, for reasons including those set forth
below, we may be unable to commercialize or receive royalties from the sale of
orBec(R) or any other technology we develop, even if it is shown to be
effective, if:
- it is uneconomical or the market for the product does not
develop or diminishes;
- we are not able to enter into arrangements or collaborations to
manufacture and/or market the product;
- the product is not eligible for third-party reimbursement from
government or private insurers;
- others hold proprietary rights that preclude us from
commercializing the product;
- others have brought to market similar or superior products; or
- the product has undesirable or unintended side effects that
prevent or limit its commercial use.
OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION, WHICH CAN
BE COSTLY, TIME CONSUMING AND SUBJECT US TO UNANTICIPATED DELAYS.
All of our product offerings, as well as the processes and facilities
by which they are manufactured, are subject to very stringent United States,
federal, foreign, state and local government laws and regulations, including the
Federal Food, Drug and Cosmetic Act, the Environmental Protection Act, the
Occupational Safety and Health Act, and state and local counterparts to these
acts. These laws and regulations may be amended, additional laws and regulations
may be enacted, and the policies of the FDA and other regulatory agencies may
change.
The regulatory process applicable to our products requires pre-clinical
and clinical testing of any product to establish its safety and efficacy. This
testing can take many years and require the expenditure of substantial capital
and other resources. We may be unable to obtain, or we may experience
difficulties and delays in obtaining, necessary domestic and foreign
governmental clearances and approvals to market a product. Also, even if
regulatory approval of a product is granted, that approval may entail
limitations on the indicated uses for which the product may be marketed.
Clinical trials of our lead product candidate OrBec(R) began in 2001 and are
expected to continue for at least nine more months. We do not expect to complete
clinical testing of any of our product candidates within the next six months.
Following any regulatory approval, a marketed product and its
manufacturer are subject to continual regulatory review. Later discovery of
problems with a product or manufacturer may result in restrictions on such
product or manufacturer. These restrictions may include withdrawal of the
marketing approval for the product. Furthermore, the advertising, promotion and
export, among other things, of a product are subject to extensive regulation by
governmental authorities in the United States and other countries. If we fail to
comply with applicable regulatory requirements, we may be subject to fines,
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suspension or withdrawal of regulatory approvals, product recalls, seizure of
products, operating restrictions and/or criminal prosecution.
WE WILL BE DEPENDENT ON GOVERNMENT FUNDING, WHICH IS INHERENTLY
UNCERTAIN, FOR THE SUCCESS OF OUR BIODEFENSE OPERATIONS.
We are subject to risks specifically associated with operating in the
biodefense industry, which is a new and unproven business area. We do not
anticipate that a significant commercial market will develop for our biodefense
products. Because we anticipate that the principal potential purchasers of our
products, as well as potential sources of research and development funds, will
be the U.S. government and governmental agencies, the success of our biodefense
division will be dependent in large part upon government spending decisions. The
funding of government programs is dependent on budgetary limitations,
congressional appropriations and administrative allotment of funds, all of which
are inherently uncertain and may be affected by changes in U.S. government
policies resulting from various political and military developments.
OUR PRODUCTS, IF APPROVED, MAY NOT BE COMMERCIALLY VIABLE DUE TO HEALTH
CARE CHANGES AND THIRD PARTY REIMBURSEMENT LIMITATIONS.
Recent initiatives to reduce the federal deficit and to change health
care delivery are increasing cost-containment efforts. We anticipate that
Congress, state legislatures and the private sector will continue to review and
assess alternative benefits, controls on health care spending through
limitations on the growth of private health insurance premiums and Medicare and
Medicaid spending, price controls on pharmaceuticals, and other fundamental
changes to the health care delivery system. Any changes of this type could
negatively impact the commercial viability of our products, if approved. Our
ability to successfully commercialize our product candidates, if they are
approved, will depend in part on the extent to which appropriate reimbursement
codes and authorized cost reimbursement levels of these products and related
treatment are obtained from governmental authorities, private health insurers
and other organizations, such as health maintenance organizations. In the
absence of national Medicare coverage determination, local contractors that
administer the Medicare program may make their own coverage decisions. Any of
our product candidates, if approved and when commercially available, may not be
included within the then current Medicare coverage determination or the coverage
determination of state Medicaid programs, private insurance companies or other
health care providers. In addition, third-party payers are increasingly
challenging the necessity and prices charged for medical products, treatments
and services.
WE MAY NOT BE ABLE TO RETAIN RIGHTS LICENSED TO US BY THIRD PARTIES TO
COMMERCIALIZE KEY PRODUCTS OR TO DEVELOP THE THIRD PARTY RELATIONSHIPS WE NEED
TO DEVELOP, MANUFACTURE AND MARKET OUR PRODUCTS.
We currently rely on license agreements from, the University of Texas
Southwestern Medical Center, The University of Texas Medical Branch at
Galveston, Thomas Jefferson University, Southern Research Institute, the
University of Alabama Research Foundation, and George B. McDonald MD for the
rights to commercialize key product candidates. We may not be able to retain the
rights granted under these agreements or negotiate additional agreements on
reasonable terms, or at all. We have also entered into letters of intent or
option agreements with Ministry of Defense of the United Kingdom, the University
of Texas Southwestern Medical Center and the University of Texas Medical
Branch--Galveston, under which we plan to license issued patent and pending
patent applications for technologies relating to nasal delivery of vaccines, and
use of orBec(R) for Irritable Bowel Syndrome. Although these letters of intent
and option agreements provide for defined business terms, we may not be able to
come to
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definitive agreements with the institutions and, as a result, may not obtain
critical intellectual property rights on which we expect to rely.
Furthermore, we currently have very limited product development
capabilities and no manufacturing, marketing or sales capabilities. For us to
research, develop and test our product candidates, we need to contract with
outside researches, in most cases with or through those parties that did the
original research and from whom we have licensed the technologies. If products
are successfully developed and approved for commercialization, then we will need
to enter into collaboration and other agreements with third parties to
manufacture and market our products. We may not be able to induce the third
parties to enter into these agreements, and, even if we are able to do so, the
terms of these agreements may not be favorable to us. Our inability to enter
into these agreements could delay or preclude the development, manufacture
and/or marketing of some of our product candidates or could significantly
increase the costs of doing so. In the future, we may grant to our development
partners rights to license and commercialize pharmaceutical and related products
developed under the agreements with them, and these rights may limit our
flexibility in considering alternatives for the commercialization of these
products. Furthermore, third-party manufacturers or suppliers may not be able to
meet our needs with respect to timing, quantity and quality for the products.
Additionally, if we do not enter into relationships with third parties
for the marketing of our products, if and when they are approved and ready for
commercialization, we would have to build our own sales force. Development of an
effective sales force would require significant financial resources, time and
expertise. We may not be able to obtain the financing necessary to establish a
sales force in a timely or cost effective manner, if at all, and any sales force
we are able to establish may not be capable of generating demand for our product
candidates, if they are approved.
WE MAY SUFFER PRODUCT AND OTHER LIABILITY CLAIMS; WE MAINTAIN ONLY
LIMITED PRODUCT LIABILITY INSURANCE, WHICH MAY NOT BE SUFFICIENT.
The clinical testing, manufacture and sale of our products involves an
inherent risk that human subjects in clinical testing or consumers of our
products may suffer serious bodily injury or death due to side effects, allergic
reactions or other unintended negative reactions to our products. As a result,
product and other liability claims may be brought against us. We currently have
clinical trial and product liability insurance with limits of liability of $5
million, which may not be sufficient to cover our potential liabilities. Because
liability insurance is expensive and difficult to obtain, we may not be able to
maintain existing insurance or obtain additional liability insurance on
acceptable terms or with adequate coverage against potential liabilities.
Furthermore, if any claims are brought against us, even if we are fully covered
by insurance, we may suffer harm such as adverse publicity.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OUR COMPETITORS IN THE
BIOTECHNOLOGY INDUSTRY.
The biotechnology industry is intensely competitive, subject to rapid
change and sensitive to new product introductions or enhancements. Virtually all
of our existing competitors have greater financial resources, larger technical
staffs, and larger research budgets than we have, as well as greater experience
in developing products and conducting clinical trials. Our competition is
particularly intense in the gastroenterology and transplant areas and is also
intense in the therapeutic area of inflammatory bowel disease. We face intense
competition in the area of biodefense from various public and private companies
and universities as well as governmental agencies, such as the U.S. Army, which
may have their own proprietary technologies that may directly compete with our
technologies. In addition, there may be other companies that are currently
developing competitive technologies and products or that may in the future
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develop technologies and products that are comparable or superior to our
technologies and products. We may not be able to compete successfully with our
existing and future competitors.
WE MAY BE UNABLE TO COMMERCIALIZE OUR PRODUCTS IF WE ARE UNABLE TO
PROTECT OUR PROPRIETARY RIGHTS AND WE MAY BE LIABLE FOR SIGNIFICANT COSTS AND
DAMAGES IF WE FACE A CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD
PARTY.
Our success depends in part on our ability to obtain and maintain
patents, protect trade secrets and operate without infringing upon the
proprietary rights of others. For example, we currently hold the rights to a
patent for our Microvax(TM) technology in the field of nasally administered
ricin vaccines. In the absence of patent and trade secret protection,
competitors may adversely affect our business by independently developing and
marketing substantially equivalent or superior products and technology, possibly
at lower prices. We could also incur substantial costs in litigation and suffer
diversion of attention of technical and management personnel if we are required
to defend ourselves in intellectual property infringement suits brought by third
parties, with or without merit, or if we are required to initiate litigation
against others to protect or assert our intellectual property rights. Moreover,
any such litigation may not be resolved in our favor.
Although we and our licensors have filed various patent applications
covering the uses of our product candidates, patents may not be issued from the
patent applications already filed or from applications that we might file in the
future. Moreover, the patent position of companies in the pharmaceutical
industry generally involves complex legal and factual questions, and recently
has been the subject of much litigation. Any patents we have obtained, or may
obtain in the future, may be challenged, invalidated or circumvented. To date,
no consistent policy has been developed in the United States Patent and
Trademark Office regarding the breadth of claims allowed in biotechnology
patents.
In addition, because patent applications in the United States are
maintained in secrecy until patents issue, and because publication of
discoveries in the scientific or patent literature often lags behind actual
discoveries, we cannot be certain that we and our licensors are the first
creators of inventions covered by any licensed patent applications or patents or
that we or they are the first to file. The Patent and Trademark Office may
commence interference proceedings involving patents or patent applications, in
which the question of first inventorship is contested. Accordingly, the patents
owned or licensed to us may not be valid or may not afford us protection against
competitors with similar technology, and the patent applications licensed to us
may not result in the issuance of patents.
It is also possible that our patented technologies may infringe on
patents or other rights owned by others, licenses to which may not be available
to us. We are aware of at least one issued U.S. patent assigned to the U.S.
Government relating to one component of one of our vaccine candidates that we
may be required to license in order to commercialize those vaccine candidates.
We may not be successful in our efforts to obtain a license under such patent on
terms favorable to us, if at all. We may have to alter our products or
processes, pay licensing fees or cease activities altogether because of patent
rights of third parties.
In addition to the products for which we have patents or have filed
patent applications, we rely upon unpatented proprietary technology and may not
be able to meaningfully protect our rights with regard to that unpatented
proprietary technology. Furthermore, to the extent that consultants, key
employees or other third parties apply technological information developed by
them or by others to any of our proposed projects, disputes may arise as to the
proprietary rights to this information, which may not be resolved in our favor.
6
OUR BUSINESS COULD BE HARMED IF WE FAIL TO RETAIN OUR CURRENT PERSONNEL
OR IF THEY ARE UNABLE TO EFFECTIVELY RUN OUR BUSINESS.
We have only five employees: Dr. Ralph Ellison, our Chief Executive
Officer and President; Geoff Green, our Vice President of Clinical Operations;
William Milling, our Controller, Treasurer and Corporate Secretary; Robert Brey,
our Vice President of Research and Development; and Robin Simuncek, our Clinical
Project Manager and Administrative Assistant. We depend upon these five
employees to manage the day-to-day activities of our business. Because we have
such limited personnel, the loss of any of them, even though they have little
experience in managing or operating our business, or our inability to attract
and retain other qualified employees in a timely manner would likely have a
negative impact on our operations. Furthermore, these few employees on whom our
business depends have very limited experience in managing and operating our
business. Dr. Ellison was hired in March 2003; Mr. Green was hired in July 2003;
Mr. Milling was hired in September 2002; and Mr. Brey was hired in December
2002. In addition, Alexander Haig, our Chairman of the Board was appointed in
January 2003. Because of this inexperience in operating our business, there is
significant uncertainty as to how our management team will perform. Furthermore,
our management team may need to devote a significant amount of time to learning
about our business and its markets, which could limit their effectiveness in
managing our business for a period of time. We will not be successful if this
new management team cannot effectively manage and operate our business.
RISKS RELATED TO THE OFFERING
OUR STOCK PRICE IS HIGHLY VOLATILE AND OUR STOCK IS THINLY TRADED.
The market price of our common stock, like that of many other
development stage public pharmaceutical and biotechnology companies, has been
highly volatile and may continue to be so in the future due to a wide variety of
factors, which include, actual or anticipated fluctuations in our results of
operations, announcements of innovations by us or our competitors, additions or
departures of key personnel or general market conditions. For example, when
ricin was discovered in an apartment in London and we announced that we had
retained Mr. Haig as our chairman of the board on January 7, 2003; our stock
price went from $0.58 per share to $1.05 per share in one day and has fluctuated
between $0.70 per share and $1.57 per share from that date through September 30,
2003. From July 1, 2000 through September 30, 2003, the per share price of our
common stock ranged from a high of $9.44 per share to a low of $0.11 per share,
including a high of $2.10 per share and low of $0.11 per share since the
beginning of 2002. The fluctuation in the price of our common stock has
sometimes been unrelated or disproportionate to our operating performance.
Since it commenced trading on the American Stock Exchange on August 6,
1998, our common stock has been thinly traded. The average trading volume for
our common stock averaged approximately 43,406 shares per day from January 1,
2001 to September 30, 2003. The relatively illiquid market for our shares may
have an adverse effect on the market price for our shares and on stockholders'
ability to sell our common stock at the prevailing market price. A more active
trading market for our common stock may not develop.
OUR STOCK MAY NOT REMAIN LISTED ON THE AMERICAN STOCK EXCHANGE.
Because we continue to incur losses from continuing operations in
fiscal 2003, the stockholders' equity standard applicable to us of the American
Stock Exchange's continued listing requirements will increase from $4 million to
$6 million for fiscal years ending 2003 and beyond. Moreover, our net equity of
$2.3 million as of June 30, 2003 did not satisfy the $4 million minimum
stockholders' equity requirement applicable to calendar quarters ending during
2003, and we received notification from the
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AMEX that we were no longer in compliance with their minimum listing
requirements. On August 4, 2003 we submitted a compliance plan, and the AMEX has
accepted our plan and given us 18 months to regain compliance per our plan. If,
however, we do not conform to our plan, or if after the 18 month period we are
not in compliance with the minimum listing requirements, we may be delisted from
the AMEX. Furthermore, we cannot assure you that we will continue to satisfy
other requirements necessary to remain listed on the AMEX or that the AMEX will
not take additional actions to delist our common stock. If for any reason, our
stock were to be delisted from the AMEX, we may not be able to list our common
stock on another national exchange or market. If our common stock is not listed
on a national exchange or market, the trading market for our common stock may be
even more illiquid than it is already. Upon any such delisting, our common stock
would become subject to the penny stock rules of the SEC, which generally are
applicable to equity securities with a price of less than $5.00 per share, other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. The penny stock rules require a broker-dealer, before a transaction in a
penny stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the SEC that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with bid and ask quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the penny stock rules
require that, before a transaction in a penny stock that is not otherwise exempt
from such rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. As a result of these
requirements, if our common stock were to become subject to the penny stock
rules, it is likely that the price of our common stock would decline and that
our stockholders would find it more difficult to sell their shares.
INVESTORS MAY SUFFER SUBSTANTIAL DILUTION.
We have a number of agreements or obligations that may result in
dilution to investors. These include:
- warrants to purchase a total of approximate 6.7 million shares
of our common stock at a current weighted average exercise
price of approximately $2.17.
- conversion rights and dividend rights of preferred stock,
consisting of 124,126 shares of Series B preferred stock ($8.0
million original liquidation value) bearing an 8% cumulative
payment-in-kind dividend and convertible at the liquidation
value into common stock at $6.58 per share;
- anti-dilution rights under the above warrants and preferred
stock, which can permit purchase of additional shares and/or
lower exercise/conversion prices under certain circumstances;
and
- options to purchase approximately 7,200,000 shares of common
stock of a current weighted average exercise price of
approximately $0.75.
To the extent that anti-dilution rights are triggered, or warrants,
options or conversion rights are exercised, our stockholders will experience
substantial dilution and our stock price may decrease.
8
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it
contains, or will contain, various "forward-looking statements" that are based
on management's beliefs, as well as assumptions made by, and information
currently available to, management, including statements regarding future
economic performance, financial condition, liquidity and capital resources,
acceptance of our products and services by the market and management's
objectives. Where possible, we have tried, and will try, to identify the
forward-looking statements by using words such as "anticipates," "expects,"
"believes," "estimates," "plans," "intends" and similar expressions. These
statements are subject to various risks, uncertainties and other factors that
could cause our actual results, performance and achievements to differ
materially from those expressed in, or implied by, these statements. These
risks, uncertainties and other factors include the risk factors discussed above,
in any prospectus supplement and in any document incorporated by reference into
this prospectus. You should not place any undue reliance on any forward-looking
statements. Except as expressly required by the federal securities laws, we
undertake no obligation to update any forward-looking statements to reflect new
information, future events or developments or changes of circumstances or for
any other reason.
USE OF PROCEEDS
Any net proceeds from any sale of shares of our common stock covered by
this prospectus will be received by the selling stockholders. We will not
receive any proceeds from the sale of shares by the selling stockholders.
SELLING STOCKHOLDERS
Of the 15,334,625 shares of our common stock registered for public
resale pursuant to this prospectus and listed under the column "Shares Available
for Sale Under This Prospectus" on the table set forth below, 14,953,206 shares
were issued or are issuable in connection with our July 2003 private placement,
in which we sold shares at $0.796 per share receiving a warrant, to purchase a
share of common stock for $0.8756, for each share purchased, this placement was
completed on July 18, 2003 subject to shareholder approval of this financing and
an amendment to our Certificate of Incorporation increasing authorized shares of
common stock to 100,000,000 at our annual meeting September 15, 2003. Both
motions passed at our annual meeting, and the distribution of the shares from
this placement are: (1) 6,796,912 shares were sold to investors in the private
placement; (2) 6,796,912 shares are issuable upon exercise of warrants,
exercisable until September 17, 2008 at a price of $0.8756 per share, sold to
investors in the private placement; (3) 1,359,382 shares are issuable upon
exercise of warrants, exercisable until September 17, 2008 at a price of $0.8756
per share, issued as consideration for placement services rendered in connection
with the private placement. These shares of our common stock are included in
this prospectus pursuant to registration rights we granted in connection with
the July 2003 private placement.
Of the remaining 381,419 shares of our common stock registered for
public resale pursuant to this prospectus and listed under the column "Shares
Available for Sale Under This Prospectus" on the table set forth below, 141,305
shares were issued to Thomas Jefferson University in payment for a license to
their botulinum technology, and 203,114 shares were issued to The Board of
Regents of the University of Texas system and their designees in exchange for a
license to their ricin technology, and 37,000 shares were issued to Robert
Langer Ph.D. in exchange for consulting services. These shares of our common
stock are included in this prospectus pursuant to the registration rights we
granted in connection with these license agreements and the engagement of this
consultant.
9
The following table sets forth the number of shares beneficially owned
by each of the selling stockholders as of the date of this prospectus. We are
not able to estimate the amount of shares that will be held by each selling
stockholder after the completion of this offering because (1) the selling
stockholders may sell less than all of the shares registered under this
prospectus, (2) the selling stockholders may exercise less than all of their
warrants, and (3) to our knowledge, the selling stockholders currently have no
agreements, arrangements or understandings with respect to the sale of any of
their shares. The following table assumes that all of the currently outstanding
warrants will be exercised into common stock and all of the shares being
registered pursuant to this prospectus will be sold. The selling stockholders
are not making any representation that any shares covered by this prospectus
will be offered for sale. Except as otherwise indicated, based on information
provided to us by each selling stockholder, the selling stockholders have sole
voting and investment power with respect to their shares of common stock.
NUMBER OF
SHARES OF NUMBER OF SHARES PERCENT OF
COMMON STOCK PERCENT OF SHARES AVAILABLE OF COMMON STOCK COMMON STOCK TO BE
OWNED BEFORE COMMON STOCK FOR SALE UNDER TO BE OWNED OWNED AFTER
NAME OF SELLING THE OFFERING OWNED BEFORE THIS PROSPECTUS AFTER COMPLETION COMPLETION OF
STOCKHOLDER (1) THE OFFERING (1) OF THE OFFERING THE OFFERING
--------------------------- ------------ ------------ ---------------- ---------------- -------------
David W Ruttenberg 62,814 * 62,814 - *
Roger and Margaret
Coleman JTWROS 125,628 * 125,628 - *
Eugenia VI Venture
Holdings LTD 1,256,280 3.57% 1,256,280 - *
OrbiMed Advisors LLC (2) 5,026,000 13.55% 5,026,000 - *
Bruno Widmer 62,814 * 62,814 - *
The Osterweis Revocable
trust 125,628 * 125,628 - *
Keys Foundation 1,256,280 3.57% 1,256,280 - *
Ronald Marchand Jr &
Margaret Marchand 25,124 * 25,124 - *
A.M. Pappas (3) 753,768 2.16% 753,768 - *
Greg Dawe 62,814 * 62,814 - *
Perceptive Life Sciences 753,768 2.16% 753,768 - *
Master Fund
BNB Associates
Investments, L.P. 125,628 * 125,628 - *
John P. Ritchie & Marianne
Ritchie JTWROS 31,406 * 31,406 - *
Capital Ventures
International 1,256,280 3.57% 1,256,280 - *
Chris M. Shaughnessy 31,406 * 31,406 - *
James W. Robertson 31,406 * 31,406 - *
Dirk Goldwasser 251,256 * 251,256 - *
Michael Bollag 125,628 * 125,628 - *
Joel Good 31,406 * 31,406 - *
David J. Bershad 125,628 * 125,628 - *
David J. Rupert 62,814 * 62,814 - *
Imprimis Investors L.L.C. 628,140 1.80% 628,140 - *
10
NUMBER OF
SHARES OF NUMBER OF SHARES PERCENT OF
COMMON STOCK PERCENT OF SHARES AVAILABLE OF COMMON STOCK COMMON STOCK TO BE
OWNED BEFORE COMMON STOCK FOR SALE UNDER TO BE OWNED OWNED AFTER
NAME OF SELLING THE OFFERING OWNED BEFORE THIS PROSPECTUS AFTER COMPLETION COMPLETION OF
STOCKHOLDER (1) THE OFFERING (1) OF THE OFFERING THE OFFERING
--------------------------- ------------ ------------ ---------------- ---------------- -------------
Simon Family Trust 62,814 * 62,814 - *
Tis Prager 188,442 * 188,442 - *
Source One 125,628 * 125,628 - *
Richard A. Jacoby 62,814 * 62,814 - *
Spectrum Galaxy Fund LTD.
RE Primo Capital Growth Fund 125,628 * 125,628 - *
Heritage Finance and Trust
Company 251,256 * 251,256 - *
Sagres Group Ltd. 306,220 * 251,256 54,964 *
Steve H. Kanzer (4) 1,824,925 5.15% 251,256 1,573,669 4.46%
Ross D. Ain 62,814 * 62,814 - *
Nicholas Stergis (5) 757,132 2.02% 150,752 606,385 1.71%
Kosta J. Moustakas 82,938 * 82,938 - *
Steven P. Geras 10,000 * 10,000 - *
Evan & Dina
Myrianthopoulos JTWROS(6) 336,342 * 120,888 215,454 *
Larry Rosen 10,000 * 10,000 - *
Ken Alberstadt 3,926 * 3,926 - *
James S. Kuo M.D. 5,000 * 5,000 - *
Alexander Myrianthopoulos 27,000 * 27,000 - *
Elisabeth & Vasili
Myrianthopoulos JTWROS 82,000 * 82,000 - *
Thomas Jefferson University 141,305 * 141,305 - *
The Board of Regents of the
University of Texas system 160,460 * 160,460 - *
Roxana G. Baluma (7) 20,311 * 20,311 - *
Joan E. Smallshaw (7) 18,280 * 18,280 - *
Michelle Vitteta (7) 4,063 * 4,063 - *
Robert Langer 37,000 * 37,000 - *
Wayde Walker 8,000 * 8,000 - *
Richard A. Brewster 600 * 600 - *
Kevin R. Wilson 4,400 * 4,400 - *
Rafael Vasquez 200 * 200 - *
William Poon 600 * 600 - *
Theodore T. Wdowiak 200 * 200 - *
Shraga Y. Faskowitz 400 * 400 - *
Matthew D. Eitner 200 * 200 - *
Nathaniel R. Clay 200 * 200 - *
Daniel H. Schneiderman 200 * 200 - *
Brian Smith 200 * 200 - *
11
NUMBER OF
SHARES OF NUMBER OF SHARES PERCENT OF
COMMON STOCK PERCENT OF SHARES AVAILABLE OF COMMON STOCK COMMON STOCK TO BE
OWNED BEFORE COMMON STOCK FOR SALE UNDER TO BE OWNED OWNED AFTER
NAME OF SELLING THE OFFERING OWNED BEFORE THIS PROSPECTUS AFTER COMPLETION COMPLETION OF
STOCKHOLDER (1) THE OFFERING (1) OF THE OFFERING THE OFFERING
--------------------------- ------------ ------------ ---------------- ---------------- -------------
Richard G. Michalski 200 * 200 - *
Michael L. Jerz 200 * 200 - *
Matt McGovern 800 * 800 - *
Evan Klein 800 * 800 - *
Richard F. Sands 26,770 * 26,770 - *
William Corcoran 16,348 * 8,229 8,119 *
Scott Katzmann 367,745 * 297,842 69,903 *
Michael Rosenman 49,748 * 49,748 - *
Peter Kash 123,131 * 24,874 98,257 *
Jashua Kazamil 24,874 * 24,874 - *
Lindsay A. Rosenwald 6,250,020 16.67 367,340 5,882,680 17.71
John Knox 8,181 * 5,000 3,181 *
Basil Christakos 5,000 * 5,000 - *
David Tanen 21,932 * 15,000 6,932- *
Stephen Rocamboli 19,050 * 15,000 4,050- *
Hannah Vogler 10,000 * 10,000 - *
* Less than 1%.
(1) Includes shares of common stock issuable upon the exercise of
warrants as follows: David W. Ruttenberg, 31,407 shares; Roger
and Margaret Coleman JTWROS, 62,814 shares; Eugenia VI Venture
Holdings LTD, 628,141 shares; OrbiMed Advisors LLC, 2,513,000
shares; Bruno Widmer, 31,407 shares; The Osterweis Revocable
Trust, 62,814 shares; Keys Foundation, 628,141 shares; Ronald
Marchand Jr. and Margaret Marchand, 12,563 shares; A.M.
Pappas, 376,984 shares; Greg Dawe, 31,407 shares; Perceptive
Life Sciences Master Fund, 376,884 shares; BNB Associates
Investments L.P., 62,814 shares; John P. Ritchie and Marianne
Ritchie JTWROS, 15,704 shares; Capital Ventures International,
628,141 shares; Chris M. Schaughnessy, 15,704 shares; James W.
Robertson, 15,704 shares; Dirk Goldwasser, 125,628 shares;
Michael Bollag, 62,814 shares; Joel Good, 15,704 shares; David
J. Bershad, 62,814 shares; David J. Rupert, 25,000 shares;
Imprimis Investors L.L.C., 314,070 shares; Simon Family Trust,
31,407 shares; Tis Prager, 94,220 shares; Source One, 62,814
shares; Richard A. Jacoby, 31,407 shares; Spectrum Galaxy Fund
LTD, 62,814 shares; Heritage Finance and Trust Company,
125,628 shares; Sagres Group, 167,294 and 125,628 shares;
Steve H. Kanzer, 349,398 and 125,628 shares; Ross D. Ain,
31,407 shares; Nicholas Stergis, 245,946 and 150,742 shares;
Steven P Geras, 10,000 shares; Kosta J Moustakas, 82,469
shares; Larry Rosen, 5,000 shares; Ken Alberstadt, 1,963
shares; James S Kuo, 2,500 shares; Alexader Myrianthopoulos,
13,500 shares; Elisabeth & Vasili Myrianthopoulos JTWROS,
41,000 shares; Evan & Dina Myrianthopoulos JTWROS, 125,898 and
60,444 shares; Paramount Capital, 1,246,820 and 1,091,145
shares, Wayde Walker, 8,000 shares; Richard A. Brewster, 600
shares; Kevin R. Wilson, 4,400 shares; Rafael Vasquez, 200
shares; William Poon, 600 shares; Theodore T. Wdowiak, 200
shares; Shraga Y. Faskowitz, 400 shares; Matthew D. Eitner,
200 shares; Nathaniel R. Clay, 200 shares; Daniel H.
Schneiderman, 200 shares; Brian Smith, 200 shares; Richard G.
Michalski, 200 shares; Michael L. Jerz, 200 shares; Matt
McGovern, 800 shares; Evan Klein, 800 shares; Richard F.
Sands, 216,770 shares; William Corcoran, 16,348 and 8,229
shares; Scott
12
Katzmann, 367,745 and 297,842 shares; Michael Rosenman,
49,748 shares; Joshua Kazam, 123,131 and 24,874 shares;
Peter Kash, 24,874 shares; Lindsay A. Rosenwald, M.D.
1,950,772 and 367,340 shares; John Knox. 8,181 and 5,000
shares; Basil Christakos, 5,000 shares; David Tanen,
21,932 and 15,000 shares; Stephen Rocamboli, 19,050
and 15,000; and Hannah Vogler, 10,000 shares.
(2) OrbiMed has control over shares being registered as
follows: 480,000 shares and 480,000 warrants held by
Caduceus Capital II L.P.; 70,000 shares and 70,000
warrants held by HFR SHC Aggressive Master Trust; 900,000
shares and 900,000 warrants held by Caduceus Capital
Trust; 133,000 shares and 133,000 warrants held by PW
Eucalypts Fund LTD and 933,000 shares and 933,000 warrants
held by PW Eucalyptus Fund L.L.C.
(3) A.M. Pappas has control of shares being registered as
follows: 125,628 shares and 125,628 warrants held by A.M.
Pappas Emerging Life Science Equities II and 251,256
shares and 251,256 warrants held by A.M. Pappas Emerging
Life Science Equities III.
(4) Steve H. Kanzer is our Vice Chairman of the Board of
Directors, and from June 2002 until January 2003 was our
Chairman of the Board and Interim President. He has been a
member of our Board of Directors since 1996. Mr. Kanzer is
also Chairman, Chief Executive Officer and sole
stockholder of Accredited Ventures, Inc. (Accredited), a
merchant banking and venture capital firm specializing in
biotechnology companies, which provided placement services
in connection with our July 2003 private placement. The
number of shares beneficially owned by Mr. Kanzer includes
666,800 shares immediately issuable upon exercise of
options.
(5) Nicholas Stergis is employed by Accredited Equities, Inc.,
which served as a selected dealer to our placement agent
for the private placement. As consideration for these
placement services, we issued to Mr. Stergis warrants to
purchase 75,376 shares of our common stock, exercisable
until September 17, 2008 at a price of $0.8756 per share.
The shares subject to these warrants are registered for
resale in this prospectus (see footnote (1)). The number
of shares beneficially owned by Mr. Stergis includes
129,552 shares of common stock issuable upon exercise of
options. The number of shares beneficially owned by Mr.
Stergis does not include 42,857 shares of common stock
owned by Nicholas and Jennifer Stergis as joint tenants
with right of survivorship.
(6) Evan Myrianthopoulos has been a member of our Board of
Directors since November 2002. Mr. Myrianthopoulos
provided placement services in connection with our July
2003 private placement. As consideration for these
services, we issued to Mr. Myrianthopoulos warrants to
purchase 120,888 shares, exercisable until September 17,
2008 at a price of $0.8756 per share. The shares subject
to these warrants are registered for resale in this
prospectus (see footnote (1)).
(7) Designees of the Board of Regents of the University of
Texas System.
13
PLAN OF DISTRIBUTION
We are registering the shares of our common stock covered by this
prospectus for the selling stockholders. As used in this prospectus, "selling
stockholders" include any pledgees or donees that may later hold the shares,
provided they are named in a prospectus supplement. We will pay the costs and
fees of registering the shares of our common stock, but each selling stockholder
will pay any brokerage commissions, discounts or other expenses relating to the
sale of the shares.
Each selling stockholder may sell the shares of our common stock in the
over-the-counter market or otherwise, at market prices prevailing at the time of
sale, at prices related to the prevailing market prices, or at negotiated
prices. In addition, each selling stockholder may sell some or all of its common
shares through:
- a block trade in which a broker-dealer may resell a
portion of the block, as principal, in order to facilitate
the transaction;
- purchases by a broker-dealer, as principal, and resale by
the broker-dealer for its account; or
- ordinary brokerage transactions and transactions in which
a broker solicits purchasers.
Each selling stockholder may negotiate and pay broker-dealers
commissions, discounts or concessions for their services. Broker-dealers engaged
by each selling stockholder may allow other broker-dealers to participate in
resales. However, the selling stockholders and any broker-dealers involved in
the sale or resale of the common shares may qualify as "underwriters" within the
meaning of the Section 2(a)(11) of the Securities Act of 1933. In addition, the
broker-dealers' commissions, discounts or concessions may qualify as
underwriters' compensation under the Securities Act. If a selling stockholder
qualifies as an "underwriter," it will be subject to the prospectus delivery
requirements of Section 5(b)(2) of the Securities Act. We have informed each
selling stockholder that the anti-manipulative provisions of Regulation M under
the Securities Exchange Act of 1934 may apply to its sales in the market.
Furthermore, each selling stockholder may:
- agree to indemnify any broker-dealer or agent against
certain liabilities related to the selling of the shares,
including liabilities arising under the Securities Act;
- transfer its shares in other ways not involving market
makers or established trading markets, including directly
by gift, distribution or other transfer; or
- sell its shares under Rule 144 under the Securities Act
rather than under this prospectus, if the transaction
meets the requirements of Rule 144.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and special reports, proxy statements, and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at Judiciary Plaza Building, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549. Copies of these materials may also be
obtained from the SEC at prescribed rates by writing to the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information about the operation of the SEC public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330. Our
14
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
This prospectus is part of a registration statement we have filed with
the SEC. The SEC allows us to incorporate documents by reference. This means
that we can disclose important information by referring you to another document
we file separately with the SEC. The information incorporated by reference is
considered to be part of this prospectus, except for any information superseded
by information in this prospectus. The information we file later with the SEC
will automatically update and supersede the information contained in this
prospectus or incorporated by reference from earlier filings. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until all of the securities covered by this prospectus have been sold or we have
deregistered all of the securities then remaining unsold:
- Our annual report on Form 10-KSB for the year ended
December 31, 2002;
- Our quarterly reports on form 10-QSB for the period ended
March 31, 2003 and June 30, 2003;
- Our current report on form 8-K dated July 18, 2003; and
- The description of our common stock contained in the
Registration Statement on Form 8-A dated August 4 1998
filed under the Securities Exchange Act of 1934, and all
amendments and reports filed by us to update the
description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at our principal executive offices at the following address and
phone number:
Corporate Secretary
DOR BioPharma, Inc.
1691 Michigan Avenue
Suite 435
Miami, Florida 33139
(305) 523-3993
LEGAL MATTERS
The legality of the securities offered hereby has been passed upon for
us by Katten Muchin Zavis Rosenman, Chicago, Illinois.
EXPERTS
The consolidated financial statements of DOR BioPharma, Inc. appearing
in DOR BioPharma, Inc.'s Annual Report on Form 10-KSB for the year ended
December 31, 2002, have been audited by Ernst & Young LLP, independent certified
public accountants, as set forth in their report thereon, included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses of the
Registrant in connection with the offering described in the Registration
Statement.
Securities and Exchange Commission registration fee.................. $ 1,086
Legal fees and expenses.............................................. 5,000
Accounting fees and expenses......................................... 9,000
Miscellaneous expenses............................................... 2,914
----------
Total expenses....................................................... $ 18,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law grants the
Registrant the power to limit the personal liability of its directors to the
Registrant or its stockholders for monetary damages for breach of a fiduciary
duty. Article XI of the Registrant's Certificate of Incorporation, as amended,
provides for the limitation of personal liability of the directors of the
Registrant as follows:
A director of the Corporation shall have no personal liability to the
Corporation or its stockholders for monetary damages for breach of his fiduciary
duty as a director; provided, however, this Article shall not eliminate or limit
the liability of a director (i) for any breach of the Director's duty of loyalty
to the Corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) for the unlawful payment of dividends or unlawful stock repurchases under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the Director derived an improper personal benefit. If
the General Corporation Law is amended after approval by the stockholders of
this Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
Section 145 of the Delaware General Corporation Law grants to the
Registrant the power to indemnify its directors, officers, employees and agents
against liability arising out of their respective capacities as directors,
officers, employees or agents. Article VII of the Registrant's Bylaws provides
that the Registrant shall indemnify any person who is serving as a director,
officer, employee or agent of the Registrant, or of another entity at the
request of the Registrant, against judgments, fines, settlements and other
expenses incurred in such capacity if such person acted in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interests of
the Registrant and, with respect to any criminal action, had no reasonable cause
to believe his conduct was unlawful. In the event of an action or suit by or in
the right of the Registrant, no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Registrant unless and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper.
The Registrant has entered into indemnification agreements with its
directors that would require the Registrant, subject to any limitations on the
maximum permissible indemnification that may exist at law, to indemnify a
director for claims that arise because of his service as a director.
II-1
The Registrant has a directors' and officers' liability insurance
policy.
The above discussion is qualified in its entirety by reference to the
Registrant's Certificate of Incorporation and Bylaws and the form of the
indemnification agreement with directors.
ITEM 16. EXHIBITS
Exhibit
Number Exhibit
-------- ------------------------------------------------------------------
4.1 Amended and Restated Certificate of Incorporation, incorporated by
reference from Exhibit 3.1 to the registrant's quarterly report on
form 10-QSB for the fiscal quarter ended June 30, 2000.
4.2 Amended and Restated Bylaws of the Company, incorporated by
reference from Exhibit 3.1 to the registrant's quarterly report on
form 10-QSB for the fiscal quarter ended June 30, 2003.
5.1 Opinion of Katten Muchin Zavis Rosenman as to the validity of the
common stock.
23.1* Consent of Ernst & Young, independent certified public accountants.
23.2* Consent of Katten Muchin Zavis Rosenman (contained in its opinion
filed as Exhibit 5.1 hereto).
24.1* Powers of Attorney (included on the signature page hereto).
--------------------
* Filed herewith
ITEM 17. UNDERTAKINGS
A. The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement to include any additional or changed material
information on the plan of distribution.
(2) To, for determining liability under the Securities Act of
1933, treat each post-effective amendment as a new
registration statement relating to the securities offered
therein, and the offering of the securities at that time to be
the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "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 SEC
such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
II-2
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 Act and will be governed by the final adjudication of such
issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Miami, State of Florida, on the 15th day of
October, 2003.
DOR BIOPHARMA, INC.
By: /s/ Ralph M. Ellison
-------------------------------------
Ralph M. Ellison
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Ralph M. Ellison and William Milling, and each of them severally,
acting along and without the other, his true and lawful attorneys-in-fact and
agents, with full power of substitution, to sign on his behalf, individually and
in each capacity stated below, all amendments and post-effective amendments to
this registration statement and any registration statement registering
additional securities pursuant to Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto and any other documents in
connection therewith, with the Securities and Exchange Commission under the
Securities Act of 1933, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as each might or could do in person, hereby ratifying and confirming
each act that said attorneys-in-fact and agents may lawfully do or cause to be
done by virtue thereof.
SIGNATURES
Pursuant to the requirements of the 1933 Act, this registration
statement has been signed below on October 15, 2003 by the following persons in
the capacities indicated.
/s/ Ralph M. Ellison President and Chief Executive Officer
------------------------------- (principal executive officer)
Ralph M. Ellison
/s/ William D. Milling Controller, Treasurer and Corporate Secretary
------------------------------- (principal financial and accounting officer)
William D. Milling
/s/ Alexander M. Haig Jr. Chairman of the Board
-------------------------------
Alexander M. Haig Jr.
/s/ Steve H. Kanzer Vice Chairman of the Board
-------------------------------
Steve H. Kanzer
/s/ Peter Salomon Director
-------------------------------
Peter Salomon
/s/ Lawrence Kessel Director
-------------------------------
Lawrence Kessel
/s/ Evan Myrianthopoulos Director
-------------------------------
Evan Myrianthopoulos
/s/ Arthur Asher Kornbluth Director
-------------------------------
Arthur Asher Kornbluth
II-4
INDEX TO EXHIBITS
Exhibit
Number Exhibit
------- -----------------------------------------------------------------
5.1 Opinion of Katten Muchin Zavis Rosenman as to the validity of the
common stock.
23.1 Consent of Ernst & Young LLP, independent certified public
accountants.
23.2 Consent of Katten Muchin Zavis Rosenman (contained in its opinion
filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (included on the signature page hereto).