PROSPECTUS
GENEREX BIOTECHNOLOGY CORPORATION
3,859,974 Shares of Common Stock
We are registering 3,859,974 shares of our common stock for resale by the
selling shareholders listed on pages 10-12.
o 1,989,974 of these shares are currently outstanding;
o 1,000,000 of these shares are to be issued to certain selling shareholders
on January 31, 2004;
o 250,000 of these shares are issuable upon exercise of outstanding options;
and
o 620,000 of these shares are issuable upon exercise of outstanding
warrants.
The prices at which the selling shareholders may sell shares of our common stock
will be determined by the prevailing market price for such shares or in
negotiated transactions.
Our common stock is quoted on the NASDAQ SmallCap Market under the symbol
"GNBT." The last sale price of our common stock on November 11, 2003, as
reported by NASDAQ, was $1.71per share.
Investing in our common stock involves a high degree of risk. See "Risk Factors"
beginning on page 2 to read about the factors you should consider before
investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is November 24, 2003
TABLE OF CONTENTS
PROSPECTUS SUMMARY.......................................................... 1
RISK FACTORS................................................................ 2
NOTE ABOUT FORWARD-LOOKING STATEMENTS....................................... 8
AVAILABILITY OF ADDITIONAL INFORMATION...................................... 9
DILUTION.................................................................... 10
USE OF PROCEEDS............................................................. 10
SELLING SHAREHOLDERS........................................................ 10
PLAN OF DISTRIBUTION........................................................ 13
LEGAL MATTERS............................................................... 14
EXPERTS..................................................................... 15
PROSPECTUS SUMMARY
About Generex
Generex Biotechnology Corporation is a Delaware corporation engaged in the
research and development of injection-free methods for delivery of large
molecule drugs. We are a development stage company.
To date, we have focused most of our efforts and resources on a platform
technology to orally administer large molecule drugs by absorption through the
walls of the mouth cavity. The mouth cavity is also known as the "buccal"
cavity. Large molecule drugs include proteins, hormones, peptides and vaccines.
Large molecule drugs, such as synthetic insulin, are presently administered
almost exclusively by injection.
The initial product that we have been trying to develop is an oral insulin
formulation for use in the treatment of diabetes. The formulation is sprayed
into the mouth using our RapidMist(TM) device, a small and lightweight aerosol
applicator that administers a metered dose for absorption. Absorption occurs
through the mucous membranes in the buccal cavity.
We have also pursued the application of our technology for the buccal delivery
of pharmaceutical products in addition to insulin, such as the buccal delivery
of morphine, fentanyl citrate and low molecular weight heparin.
In August 2003, after the end of our most recent fiscal year, we acquired
Antigen Express, Inc. (Antigen). Antigen is engaged in the research and
development of technologies for the treatment of malignant, infectious,
autoimmune and allergic diseases.
Our principal offices are located at 33 Harbour Square, Suite 202, Toronto,
Ontario, Canada M5J 2G2 and our telephone number is (416) 364-2551.
About This Prospectus
We are registering our common stock for resale by selling shareholders. The
selling shareholders and the specific number of shares that they each may resell
through this prospectus are listed on pages 10-12.
The shares offered for resale by this prospectus include the following:
o 2,989,974 shares of Common Stock;
o 250,000 options to purchase shares of Common Stock; and
o 620,000 warrants to purchase shares of Common Stock.
We issued or became obligated to issue an aggregate of 2,839,974 of these shares
of our common stock to certain selling shareholders in connection with an
Agreement and Plan of Merger (the "Merger"), dated as of August 8, 2003, among
Generex, Antigen Express, Inc. ("Antigen"), and AGEXP Acquisition, Inc., our
wholly owned subsidiary, in exchange for the outstanding capital stock of
Antigen. We issued to certain selling shareholders an additional 150,000 shares
of our common stock pursuant to service agreements between Generex and such
shareholders. We are obligated to sell to a certain selling shareholder an
additional 250,000 shares of our common stock upon such selling shareholder's
exercise of options to purchase such shares. Lastly, we issued to certain
selling shareholders warrants to purchase an aggregate 620,000 shares of our
common stock.
This prospectus may only be used where it is legal to offer and sell the shares
covered by this prospectus. We have not taken any action to register or obtain
permission for this offering or the distribution of this prospectus in any
country other than the United States.
Information on Outstanding Shares
The number of shares outstanding before and after this offering are set forth
below:
o Common stock outstanding before the offering................27,672,260
shares of Common Stock
o Common stock to be outstanding after the offering...........29,467,260
shares of Common Stock
The number set forth above for the shares of common stock outstanding before
this offering is the number of shares outstanding on October 30, 2003. The
number of shares of common stock outstanding after this offering is based on the
number of shares outstanding before the offering plus 1,000,000 shares issuable
to Antigen shareholders without condition on January 31, 2004, which are
included in this registration statement but have not been issued, and 870,000
shares - the maximum number of shares issuable upon the exercise of options and
warrants that may be resold pursuant to this prospectus.
The numbers set forth above do not include 11,957,594 shares of our common stock
that, as of the date of this prospectus, are issuable upon the exercise of
outstanding options and warrants other than those covered by this prospectus.
These additional options and warrants are exercisable at prices ranging from
$1.00 to $25.15 per share, with a weighted average exercise price of $4.88 per
share. The numbers set forth above also do not include shares of common stock
that, as of the date of this prospectus, are issuable upon conversion of
outstanding shares of our Series A Preferred Stock.
RISK FACTORS
Investment in our shares involves a high degree of risk. You should carefully
consider the following discussion of risks as well as the other information in
this prospectus before purchasing our stock. You should also consider the
information in our other reports filed (and to be filed after the date of this
prospectus) with the Securities and Exchange Commission before purchasing our
stock. Each of these risk factors could adversely affect our business,
prospects, operating results and financial condition, as well as adversely
affect the value of an investment in our common stock.
RISKS RELATED TO OUR FINANCIAL CONDITION
We have a history of losses, and will incur additional losses.
We are a development stage company with a limited history of operations, and do
not expect ongoing revenues from operation in the immediately foreseeable
future. To date, we have not been profitable and our accumulated net loss before
preferred stock dividend was approximately $76,000,000 as of July 31, 2003. Our
losses have resulted principally from costs incurred in research and
development, including clinical trials, and from general and administrative
costs associated with our operations. While we seek to attain profitability, we
cannot be sure that we will ever achieve product and other revenue sufficient
for us to attain this objective.
Our product candidates are in research or early stages of pre-clinical and
clinical development. We will need to conduct substantial additional research,
development and clinical trials. We will also need to receive necessary
regulatory clearances both in the United States and foreign countries and obtain
meaningful patent protection for and establish freedom to commercialize each of
our product candidates. We cannot be sure that we will obtain required
regulatory approvals, or successfully develop, commercialize, manufacture and
market any product candidates. We expect that these activities, together with
future general and administrative activities, will result in significant
expenses in the foreseeable future.
To progress in product development or marketing, we will need additional capital
which may not be available to us. This may delay our progress in product
development or market.
We will require funds in excess of our existing cash resources:
o to proceed under our joint venture with Elan, which requires us to fund
80.1% of initial product development costs;
o to develop our buccal insulin product;
o to develop new products based on our buccal delivery technology, including
clinical testing relating to new products;
o to develop or acquire other delivery technologies or other lines of
business;
o to establish and expand our manufacturing capabilities;
o to finance general and administrative and research activities that are not
related to specific products under development; and
o To finance the research and development activities of Antigen, our new
subsidiary. We have agreed to fund at least $2,000,000 of Antigen
expenditures during the first two years from the acquisition.
In the past, we have funded most of our development and other costs through
equity financing. We anticipate that our existing capital resources will enable
us to maintain currently planned operations through the next twelve months.
However, this expectation is based on our current operating plan, which could
change as a result of many factors, and we may need additional funding sooner
than anticipated. To the extent operating and capital resources are insufficient
to meet future requirements, we will have to raise additional funds to continue
the development and commercialization of our products. Unforeseen problems,
including materially negative developments in our joint venture with Elan, in
our clinical trials or in general economic conditions could interfere with our
ability to raise additional equity capital or materially adversely affect the
terms upon which such funding is available.
It is possible that we will be unable to obtain additional funding as and when
we need it. If we were unable to obtain additional funding as and when needed,
we could be forced to delay the progress of certain development efforts. Such a
scenario poses risks. For example, our ability to bring a product to market and
obtain revenues could be delayed, our competitors could develop products ahead
of us, and/or we could be forced to relinquish rights to technologies, products
or potential products.
New equity financing could dilute current shareholders.
If we raise funds through equity financing to meet the needs discussed above, it
will have a dilutive effect on existing holders of our shares by reducing their
percentage ownership. The shares may be sold at a time when the market price is
low because we need the funds. This will dilute existing holders more than if
our stock price was higher. In addition, equity financings normally involve
shares sold at a discount to the current market price.
Our research and development and marketing efforts are highly dependent at
present on corporate collaborators and other third parties who may not devote
sufficient time, resources and attention to our programs, which may limit our
efforts to successfully develop and market potential products.
Because we have limited resources, we have sought to enter into collaboration
agreements with other pharmaceutical companies that will assist us in
developing, testing, obtaining governmental approval for and commercializing
products using our platform technology. Any collaborator with whom we may enter
into such collaboration agreements may not support fully our research and
commercial interests since our program may compete for time, attention and
resources with such collaborator's internal programs. Therefore, these
collaborators may not commit sufficient resources to our program to move it
forward effectively, or our program may not advance as rapidly as it might if we
had retained complete control of all research, development, regulatory and
commercialization decisions.
RISKS RELATED TO OUR TECHNOLOGY
Because our technologies and products are at an early stage of development, we
cannot expect revenues in the foreseeable future.
We have no products approved for commercial sale at the present time. To be
profitable, we must successfully research, develop, obtain regulatory approval
for, manufacture, introduce, market and distribute our products under
development. We may not be successful in one or more of these stages of the
development of our products, and/or any of the products we develop may not be
commercially viable.
While over 750 patients with diabetes have been dosed with our oral insulin
formulation at approved facilities in seven countries, our clinical program has
not reached a point where we are prepared to apply for regulatory approvals to
market the product in any country. Until we have developed a commercially viable
product which receives regulatory approval, we will not receive revenues from
ongoing operations.
We will not receive revenues from operations until we receive regulatory
approval to sell our products. Many factors impact our ability to obtain
approvals for commercially viable products.
We have no products approved for commercial sale by drug regulatory authorities.
We have begun the regulatory approval process for our oral insulin formulation,
buccal morphine and fentanyl products.
Pre-clinical and clinical trials of our products, and the manufacturing and
marketing of our technology, are subject to extensive, costly and rigorous
regulation by governmental authorities in the United States, Canada and other
countries. The process of obtaining required regulatory approvals from the FDA
and other regulatory authorities often takes many years, is expensive and can
vary significantly based on the type, complexity and novelty of the product
candidates. For these reasons, it is possible we will never receive approval for
one or more product candidates.
Delays in obtaining United States or foreign approvals for our products could
result in substantial additional costs to us, and, therefore, could adversely
affect our ability to compete with other companies. If regulatory approval is
ultimately granted, the approval may place limitations on the intended use of
the product we wish to commercialize, and may restrict the way in which we are
permitted to market the product.
Due to legal and factual uncertainties regarding the scope and protection
afforded by patents and other proprietary rights, we may not have meaningful
protection from competition.
Our long-term success will substantially depend upon our ability to protect our
proprietary technology from infringement, misappropriation, discovery and
duplication and avoid infringing the proprietary rights of others. Our patent
rights, and the patent rights of biotechnology and pharmaceutical companies in
general, are highly uncertain and include complex legal and factual issues.
Because of this, our pending patent applications may not be granted. These
uncertainties also mean that any patents that we own or will obtain in the
future could be subject to challenge, and even if not challenged, may not
provide us with meaningful protection from competition. Due to our financial
uncertainties, we may not possess the financial resources necessary to enforce
our patents. Patents already issued to us or our pending applications may become
subject to dispute, and any dispute could be resolved against us.
Because a substantial number of patents have been issued in the field of
alternative drug delivery and because patent positions can be highly uncertain
and frequently involve complex legal and factual questions, the breadth of
claims obtained in any application or the enforceability of our patents cannot
be predicted. Consequently, we do not know whether any of our pending or future
patent applications will result in the issuance of patents or, to the extent
patents have been issued or will be issued, whether these patents will be
subject to further proceedings limiting their scope, will provide significant
proprietary protection or competitive advantage, or will be circumvented or
invalidated.
Also because of these legal and factual uncertainties, and because pending
patent applications are held in secrecy for varying periods in the US and other
countries, even after reasonable investigation we may not know with certainty
whether any products that we (or a licensee) may develop will infringe upon any
patent or other intellectual property right of a third party. For example, we
are aware of certain patents owned by third parties which such parties could
attempt to use in the future in efforts to affect our freedom to practice some
of the patents that we own or have applied for. Based upon the science and scope
of these third party patents, we believe that the patents that we own or have
applied for do not infringe any such third party patents, however, these
uncertainties mean that we cannot know for certain whether we could successfully
defend our position, if challenged. We may incur substantial costs if we are
required to defend ourselves in patent suits brought by third parties. These
legal actions could seek damages and seek to enjoin testing, manufacturing and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue to
manufacture or market the accused product or process.
RISKS RELATED TO MARKETING OF OUR POTENTIAL PRODUCTS
We may not become, or stay, profitable even if our products are approved for
sale.
Even if we obtain regulatory approval to market our oral insulin product or any
other product candidate, many factors may prevent the product from ever being
sold in commercial quantities. Some of these factors are beyond our control,
such as:
o acceptance of the formulation by health care professionals and diabetic
patients;
o the availability, effectiveness and relative cost of alternative diabetes
treatments that may be developed by competitors; and
o the availability of third-party (i.e., insurer and governmental agency)
reimbursements.
We may not be able to compete with diabetes treatments now being developed and
marketed, or which may be developed and marketed in the future by other
companies.
Our oral insulin product will compete with existing and new therapies for
treating diabetes, including administration of insulin by injection. We are
aware of a number of companies currently seeking to develop alternative means of
delivering insulin, as well as new drugs intended to replace insulin therapy at
least in part. In the longer term, we also face competition from companies that
seek to develop cures for diabetes through techniques for correcting the genetic
deficiencies that underlie diseases such as diabetes.
We will have to depend upon others for marketing and distribution of our
products, and we may be forced to enter into contracts limiting the benefits we
may receive from, and the control we have over, our products. We intend to rely
on collaborative arrangements with one or more other companies that possess
strong marketing and distribution resources to perform these functions for us.
We may not be able to enter into beneficial contracts, and we may be forced to
enter into contracts for the marketing and distribution of our products that
substantially limit the potential benefits to us from commercializing these
products. In addition, we will not have the same control over marketing and
distribution that we would have if we conducted these functions ourselves.
Numerous pharmaceutical, biotechnology and drug delivery companies, hospitals,
research organizations, individual scientists and nonprofit organizations are
engaged in the development of alternative drug delivery systems or new drug
research and testing including oral delivery systems, intranasal delivery
systems, transdermal systems, and colonic absorption systems. Many of these
companies have greater research and development, experience, manufacturing,
marketing, financial and managerial resources than we do. Accordingly, our
competitors may succeed in developing competing technologies, obtaining FDA
approval for products or gaining market acceptance more rapidly than we can.
If government programs and insurance companies do not agree to pay for or
reimburse patients for our products, we will not be successful.
Sales of our potential products depend in part on the availability of
reimbursement by third-party payors such as government health administration
authorities, private health insurers and other organizations. Third-party payors
often challenge the price and cost-effectiveness of medical products and
services. FDA approval of health care products does not guarantee that these
third party payors will pay for the products. Even if third party payors do
accept our product, the amounts they pay may not be adequate to enable us to
realize a profit. Legislation and regulations affecting the pricing of
pharmaceuticals may change before our products are approved for marketing and
any such changes could further limit reimbursement.
RISKS RELATING TO POTENTIAL LIABILITIES
We face significant product liability risks, which may have a negative effect on
our financial condition.
The administration of drugs to humans, whether in clinical trials or
commercially, can result in product liability claims whether or not the drugs
are actually at fault for causing an injury. Furthermore, our products may
cause, or may appear to cause, serious adverse side effects (including death) or
potentially dangerous drug interactions that we may not learn about or
understand fully until the drug has been administered to patients for some time.
Product liability claims can be expensive to defend and may result in large
judgments or settlements against us, which could have a severe negative effect
on our financial condition. We maintain product liability insurance in amounts
we believe to be commercially reasonable for our current level of activity and
exposure, but claims could exceed our coverage limits. Furthermore, due to
factors in the insurance market generally and our own experience, we may not
always be able to purchase sufficient insurance at an affordable price. Even if
a product liability claim is not successful, the adverse publicity and time and
expense of defending such a claim may interfere with our business.
Outcome of an arbitration proceeding with Sands Brothers may result in adverse
effects upon Generex.
On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based investment
banking and brokerage firm, initiated an arbitration against us under New York
Stock Exchange rules. Sands alleged that it had the right to receive, for
nominal consideration, approximately 1.5 million shares of our common stock.
Sands based its claim upon an October 1997 letter agreement that was purported
by Sands to confirm an agreement appointing Sands as the exclusive financial
advisor to Generex Pharmaceuticals, Inc., a subsidiary that we acquired in late
1997. In exchange therefor, the letter agreement purported to grant Sands the
right to acquire 17% of Generex Pharmaceuticals' common stock for nominal
consideration. Sands claimed that its right to receive shares of Generex
Pharmaceuticals' common stock applies to Generex Biotechnology common stock
since outstanding shares of Generex Pharmaceuticals' common stock were converted
into shares of Generex Biotechnology common stock in the acquisition. Sands'
claims also included additional shares allegedly due as a fee related to that
acquisition, and $144,000 in monthly fees allegedly due under the terms of the
purported agreement.
After several arbitration and court proceedings, on October 29, 2002, the
Appellate Division of the New York Supreme Court issued a decision remanding the
issue of damages to a new panel of arbitrators and limiting the issue of damages
before the new panel to reliance damages which is not to include an award of
lost profits. Reliance damages are out-of-pocket damages incurred by Sands.
On November 27, 2002, Sands filed with the Appellate Division a motion to
reargue the appeal, or, in the alternative, for leave to appeal to the Court of
Appeals of New York from the order of the Appellate Division. On March 18, 2003,
the Appellate Division denied Sands' motion.
Despite the recent favorable decisions, the case is still ongoing and our
ultimate liability cannot yet be determined with certainty. Our financial
condition would be materially adversely affected to the extent that Sands
receives shares of our common stock for little or no consideration or
substantial monetary damages as a result of this legal proceeding. We are not
able to estimate an amount or range of potential loss from this legal proceeding
at the present time.
RISKS RELATED TO THE MARKET FOR OUR STOCK
If our stock is delisted from the NASDAQ SmallCap Market and/or becomes subject
to Penny Stock regulations, the market price for our stock may be reduced and it
may be more difficult for you to sell our stock.
On June 5, 2003, our common stock was delisted from the NASDAQ National Market
because of our failure to maintain a minimum of $10,000,000 in stockholders'
equity. On June 5, 2003, our stock began trading on the NASDAQ SmallCap Market.
NASDAQ SmallCap has its own standards for continued listing, including a minimum
of $2.5 million stockholders' equity. As of July 31, 2003, our stockholders'
equity was $5,856,965.
In addition, for continued listing on the NASDAQ SmallCap Market, our stock
price must be at least $1.00. During periods in fiscal 2002 and the beginning of
fiscal 2003, our share price dropped to close to $1.00 per share. If we do not
meet this requirement in the future, we may be subject to delisting by NASDAQ.
If our stock is delisted from NASDAQ, there will be less interest for our stock
in the market. This may result in lower prices for our stock and make it more
difficult for you to sell your shares.
If our stock is not listed on NASDAQ and fails to maintain a price of $5.00 or
more per share, our stock would become subject to the SEC's "Penny Stock" rules.
These rules require a broker to deliver, prior to any transaction involving a
Penny Stock, a disclosure schedule explaining the Penny Stock Market and its
risks. Additionally, broker/dealers who recommend Penny Stocks to persons other
than established customers and accredited investors must make a special written
suitability determination and receive the purchaser's written agreement to a
transaction prior to the sale. In the event our stock becomes subject to these
rules, it will become more difficult for broker/dealers to sell our common
stock. Therefore shareholders may have more difficulty selling our common stock
in the public market.
The price of our shares may be volatile.
There may be wide fluctuation in the price of our shares. These fluctuations may
be caused by several factors including:
o announcements of research activities and technology innovations or new
products by us or our competitors;
o changes in market valuation of companies in our industry generally;
o variations in operating results;
o changes in governmental regulations;
o developments in patent and other proprietary rights;
o public concern as to the safety of drugs developed by us or others;
o results of clinical trials of our products or our competitors' products;
and
o regulatory action or inaction on our products or our competitors'
products.
From time to time, we may hire companies to assist us in pursuing investor
relations strategies to generate increased volumes of investment in our shares.
Such activities may result, among other things, in causing the price of our
shares to increase on a short-term basis.
Furthermore, the stock market generally and the market for stocks of companies
with lower market capitalizations and small biopharmaceutical companies, like
us, have from time to time experienced, and likely will again experience
significant price and volume fluctuations that are unrelated to the operating
performance of a particular company.
Our outstanding Special Voting Rights Preferred Stock and provisions of our
Certificate of Incorporation could delay or prevent the acquisition or sale of
Generex.
Holders of our Special Voting Rights Preferred Stock have the ability to prevent
any change of control of Generex. Our Vice President of Research and
Development, Dr. Pankaj Modi, owns all of our Special Voting Rights Preferred
Stock. In addition, our Certificate of Incorporation permits our Board of
Directors to designate new series of preferred stock and issue those shares
without any vote or action by the shareholders. Such newly authorized and issued
shares of preferred stock could contain terms that grant special voting rights
to the holders of such shares that make it more difficult to obtain shareholder
approval for an acquisition of Generex or increase the cost of any such
acquisition.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have made statements in this prospectus that are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. This
Act limits our liability in any lawsuit based on forward-looking statements we
have made. All statements, other than statements of historical facts, included
in this prospectus that address activities, events or developments that we
expect or anticipate will or may occur in the future, including such matters as
our projections, future capital expenditures, business strategy, competitive
strengths, goals, expansion, market and industry developments and the growth of
our businesses and operations, are forward-looking statements. These statements
can be identified by introductory words such as "expects", "plans", "intends",
"believes", "will", "estimates", "forecasts", "projects" or words of similar
meaning, and by the fact that they do not relate strictly to historical or
current facts.
Our forward-looking statements address, among other things:
o our expectations concerning product candidates for our technology;
o our expectations concerning existing or potential development and license
agreements for third-party collaborations and joint ventures;
o our expectations of when different phases of clinical activity may
commence; and
o our expectations of when regulatory submissions may be filed or when
regulatory approvals may be received.
Any or all of our forward-looking statements may turn out to be wrong. They may
be affected by inaccurate assumptions that we might make or by known or unknown
risks and uncertainties. Actual outcomes and results may differ materially from
what is expressed or implied in our forward-looking statements. Among the
factors that could affect future results are:
o the inherent uncertainties of product development based on a new and as
yet not fully proven drug delivery technology;
o the risks and uncertainties regarding the actual effect on humans of
seemingly safe and efficacious formulations when tested clinically;
o the inherent uncertainties associated with clinical trials of product
candidates;
o the inherent uncertainties associated with the process of obtaining
regulatory approval to market product candidates; and
o adverse developments in our joint venture with a subsidiary of Elan
Corporation, plc regarding buccal morphine.
Additional factors that we think could cause our actual outcomes and results to
differ materially from the forward-looking statements also include those
discussed above under the caption "Risk Factors."
Because of the risks and uncertainties associated with forward-looking
statements, you should not place undue reliance on them. Further, any
forward-looking statement speaks only as of the date on which it is made, and we
undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events.
AVAILABILITY OF ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). Our 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 Rooms in Washington, D.C. and Chicago, Illinois. The Public
Reference Room in Washington, D.C. is located at 450 Fifth Street, N.W. Please
call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Rooms.
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. 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 listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all shares offered by this prospectus are
sold:
o Annual Report on Form 10-K for the fiscal year ended July 31, 2003, as
amended.
o Current Reports on Form 8-K filed on August 15, 2003 and 8-K/A filed on
September 9, 2003.
o Definitive Proxy Statement on Schedule 14A filed on October 14, 2003.
o Preliminary Proxy Statements on Schedule 14A filed on filed on October 3,
2003 and October 7, 2003.
o The description of our common stock contained in our registration
statement on Form 10 filed on December 14, 1998, as amended by a Form 10/A
filed on February 24, 1999, and including any amendment or report
subsequently filed for the purpose of updating the description.
You may request a copy of these filings at no cost. Please direct your requests
to Mark Fletcher, Executive Vice President and General Counsel, 33 Harbour
Square, Suite 202, Toronto, Ontario, Canada M5J 2G2 (telephone 416/364-2551).
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone else
to provide you with different information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front page of those documents.
This prospectus is part of a registration statement on Form S-3 (Registration
No. 333-110493) filed with the SEC under the Securities Act of 1933. This
prospectus does not contain all of the information set forth in the registration
statement. You should read the entire registration statement for further
information about us and our common stock.
DILUTION
Purchasers of common stock offered pursuant to this prospectus will incur
dilution in their investment that is approximately equal to the difference
between the price which they pay for the shares and stockholders' equity per
share of the shares. As of July 31, 2003, the book value of our stockholders'
equity was approximately $0.23 per share of common stock.
USE OF PROCEEDS
We will not receive any proceeds from the resale of shares covered by this
prospectus.
SELLING SHAREHOLDERS
The following table lists each person who may resell shares pursuant to this
prospectus and, in addition, sets forth:
o the number of shares of outstanding common stock registered for sale and
beneficially owned by each prior to the offering;
o the number of shares of outstanding common stock registered for sale by
each in the offering and issuable on January 31, 2004;
o the number of shares registered for sale by each in the offering and
issuable upon exercise of options or warrants;
o the total number of shares registered for sale by each in the offering;
and
o the number of shares of common stock owned by each after the offering,
assuming each sells all of the shares registered for his or her benefit.
Registered Shares Issuable Total Shares Outstanding
Outstanding Upon Exercise of Options Registered for Shares Owned
Name Shares (1) or Warrants (2) Sale (3) After Offering (4)
---- ---------- --------------- -------- ------------------
ARE-ONE Innovations Drive, LLC 2293 2293 0
Klaus & Janet Boese 4587 4587 0
David Brook 56063 56063 0
Nigel & Freydis Campbell 15290 15290 0
Cantab Holdings, Ltd. 21406 21406 0
David Chella 317 317 0
Leonard Chess 317 317 0
R.S. DuFresne, Jr. 15290 15290 0
Alvin Greenberg 4587 4587 0
Adele Gulfo 96790 96790 0
Sun America, as Custodian fbo
Adele Gulfo 50966 50966 0
Joseph V. Gulfo 447996 447996 0
Sun America, as Custodian fbo
Joseph V. Gulfo 18754 18754 0
Vincent J. Gulfo 50966 50966 0
Tony & Judith Hugli 1846 1846 0
Barbara Humphreys 149842 149842 0
Daniel Humphreys 140624 140624 0
David Humphreys 140624 140624 0
Harvey Humphreys 132513 132513 0
Robert Humphreys 319614 319614 0
Rosalie Humphreys 270123 270123 0
Jack T. Johansen 125887 125887 0
Thomas R. Johnson 21406 21406 0
Brian Leyland-Jones 317 317 0
Jacky Knopp, Jr. 9174 9174 0
Edward J. Lary 19877 19877 0
Patricia Livingston as Trustee of
the Philip O. Livingston 12/01/89
Trust 25483 25483 0
Philip O. Livingston 25483 25483 0
Massachusetts Biomedical
Initiatives 117675 117675 0
George S. Mennen, William G.
Mennen, IV, Trustee 76450 76450 0
William G. Mennen, IV 31600 31600 0
Richard Morningstar 58611 58611 0
James Mule 317 317 0
James W. & Susan Ogilvie 12691 12691 0
Nicholas M. Passarelli 9938 9938 0
Registered Shares Issuable Total Shares Outstanding
Outstanding Upon Exercise of Options Registered for Shares Owned
Name Shares(1) or Warrants (2) Sale (3) After Offering (4)
---- --------- --------------- -------- ------------------
Susan Pierce 317 317 0
Saul M. Reck 5097 5097 0
Ralph Reisfield 317 317 0
Frederic M. Richards 7198 7198 0
Stephen Saltzman 13761 13761 0
Marvin G. Schorr 35677 35677 0
Eli Secarz 317 317 0
Robert K. Snider (estate) 15290 15290 0
David K. Stone 61160 61160 0
Turnstone Ventures, LP 76450 76450 0
University of Massachusetts
Medical Center 63707 63707 0
Salvatore & Grace Vinciguerra 15290 15290 0
Jeptha Wade 38226 38226 0
Per H. Wickstrom 7645 7645 0
Minzhen Xu 23805 23805 0
Global Advisory Services,
LLC 300000 150000 150000
Mark A. Fletcher 13360 250000 250000 13360
Gunn Allen Financial, Inc. 0 600000 600000 0
Bristol Investment Group, Inc. 0 20000 20000 0
TOTAL STOCK 3,153,334 870,000 3,859,974 163,360
(1) Includes all (x) outstanding shares beneficially owned by the shareholder
as of the date hereof and (y) outstanding shares owned by the shareholder,
held by the company and issuable to the shareholder on January 31, 2004.
(2) Includes all options owned by the shareholder which are exercisable within
60 days of the date hereof, with the exception of warrants to purchase
300,000 shares of our common stock issuable to Gunn Allen Financial, Inc.,
which are exercisable on January 1, 2004.
(3) See (1) and (2).
(4) Assumes sale of all shares offered by this prospectus. No selling
shareholder owns more than 1% of our common stock.
No selling shareholder has held a position as a director or executive officer
nor has a material employment relationship with us or any of our affiliates
within the past 3 years, other than Joseph V. Gulfo, M.D., Robert E. Humphreys,
M.D., Minzhen Xu, M.D. and Mark A. Fletcher. Following the Merger, Dr. Gulfo has
remained Chief Executive Officer and President of Antigen, our wholly-owned
subsidiary. Following the Merger, Dr. Humphreys has the positions of Executive
Vice President and Chief Operating Officer of Antigen, and following the Merger,
Dr. Xu is the Vice President - Biology of Antigen. Mr. Fletcher has been our
Vice President and General Counsel since March 19, 2003.
PLAN OF DISTRIBUTION
We are registering the shares of common stock covered by this prospectus on
behalf of the selling shareholders. The selling shareholders may offer and sell
shares from time to time. In addition, a selling shareholder's donees, pledgees,
transferees and other successors in interest may sell shares received from a
named selling shareholder after the date of this prospectus. In that case, the
term "selling shareholders" as used in this prospectus includes such donees,
pledgees, transferees and other successors in interest. The selling shareholders
will act independently of us in making decisions with respect to the timing,
manner and size of each sale. Sales may be made over the NASDAQ SmallCap Market
or otherwise, at then prevailing market prices, at prices related to prevailing
market prices or at negotiated prices. The shares may be sold by way of any
legally available means, including in one or more of the following transactions:
o block trade in which a broker-dealer engaged by a selling shareholder
attempts 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 pursuant to this prospectus;
o and ordinary brokerage transactions and transactions in which a
broker-dealer solicits purchasers.
Transactions under this prospectus may or may not involve brokers or dealers.
The selling shareholders may sell shares directly to purchasers or to or through
broker-dealers, who may act as agents or principals. Broker-dealers engaged by
the selling shareholders may arrange for other broker-dealers to participate in
selling shares. Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling shareholders in amounts
to be negotiated in connection with the sale. Broker-dealers or agents also may
receive compensation in the form of discounts, concessions or commissions from
the purchasers of shares for whom the broker-dealers may act as agents or to
whom they sell as principal, or both. This compensation as to a particular
broker-dealer might exceed customary commissions.
The selling shareholders have advised us that they have not, as of the date of
this prospectus, entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers for the sale of shares, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling shareholders. To our knowledge, the selling
shareholders have not entered into any agreements, understandings or
arrangements with any particular broker or market maker with respect to the sale
of the shares covered by this prospectus.
In connection with distributions of the shares or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with these transactions, broker-dealers or
financial institutions may engage in short sales of the shares in the course of
hedging the positions they assume with selling shareholders. The selling
shareholders may also:
o sell shares short and redeliver the shares to close out these short
positions;
o enter into option or other transactions with broker-dealers or other
financial institutions that require the delivery to the broker-dealer or
financial institution of the shares, which the broker-dealer or financial
institution may resell or otherwise transfer under this prospectus;
o loan or pledge the shares to a broker-dealer or other financial
institution that may sell the shares so loaned or pledged under this
prospectus upon a default; or
o sell shares covered by this prospectus that qualify for sale under Rule
144 under the Securities Act of 1933 pursuant to that Rule rather than
under this prospectus.
The selling shareholders and any broker-dealers participating in the sale of
shares covered by this prospectus may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with sales of such shares.
Any commission, discount or concession received by a broker-dealer and any
profit on the resale of shares sold by them while acting as principals might be
deemed to be underwriting discounts or commissions under the Securities Act of
1933.
We have agreed to pay the expenses of registering the shares under the
Securities Act of 1933, including registration and filing fees, printing
expenses, administrative expenses and certain legal and accounting fees. The
selling shareholders will bear all discounts, commissions or other amounts
payable to underwriters, dealers or agents, as well as fees and disbursements
for legal counsel retained by any selling shareholder.
We have agreed with some of the selling shareholders to indemnify each other and
other related parties against specified liabilities, including liabilities
arising under the Securities Act of 1933. The selling shareholders also may
agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of shares against liabilities, including
liabilities arising under the Securities Act of 1933.
A supplement to this prospectus will be filed, if required, under Rule 424(b)
under the Securities Act of 1933 to include additional disclosure before offers
and sales of the securities in question are made.
The selling shareholders and any other persons participating in a distribution
of the shares will be subject to applicable provisions of the Securities
Exchange Act of 1934 and the rules and regulations thereunder, including
Regulation M, which may restrict certain activities of, and limit the timing of
purchases and sales of the shares by the selling shareholders and other persons
participating in a distribution of the shares. Furthermore, under Regulation M,
persons engaged in a distribution of the shares are prohibited from
simultaneously engaging in market making and certain other activities with
respect to the shares for a specified period of time prior to the commencement
of such distributions subject to specified exceptions or exemptions. All of the
foregoing may affect the marketability of the shares offered hereby. We have
notified the selling stockholders that they will be subject to applicable
provisions of the Securities Exchange Act of 1934 and its rules and regulations,
including, among others, Rule 102 under Regulation M. These provisions may limit
the timing of purchases and sales of any of the shares of common stock by the
selling stockholders. Rule 102 under Regulation M provides, with some
exceptions, that it is unlawful for the selling stockholders or their affiliated
purchasers to, directly or indirectly, bid for or purchase, or attempt to induce
any person to bid for or purchase, for an account in which the selling
stockholders or affiliated purchasers have a beneficial interest, any securities
that are the subject of the distribution during the applicable restricted period
under Regulation M. All of the above may affect the marketability of the shares
of common stock. To the extent required by law, we may require the selling
stockholders, and their brokers, if applicable, to provide a letter that
acknowledges compliance with Regulation M under the Securities Exchange Act of
1934 before authorizing the transfer of the selling stockholders' shares of
common stock.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered in this
prospectus will be passed upon for us by Eckert Seamans Cherin & Mellott, LLC,
1515 Market Street, 9th Floor, Philadelphia, PA 19102. The firm of Eckert
Seamans Cherin & Mellott owns 128,172 shares of common stock which it received
in payment of legal fees and expenses in 1998 (60,000 shares of which the firm
currently owns 30,000 shares) and upon the exercise of warrants in June 1999
(98,172 shares). The firm also has been granted options exercisable for 30,000
shares at $7.56 per share under our 2000 Stock Option Plan. Members of the firm
own additional shares (less than one percent in total) that they purchased from
time to time for cash, either from us or in the public market.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus have been audited by BDO Dunwoody LLP, independent auditors, to the
extent and for the periods set forth in their report incorporated herein by
reference, and are incorporated herein in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements incorporated by reference in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, to
the extent and for the periods set forth in their report incorporated herein by
reference, and are incorporated herein in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.