As filed with the Securities and Exchange Commission on January 11, 2006
Registration Statement No. 333-[______]
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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IMMTECH INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
Delaware 39-1523370
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 Fairway Drive, Suite 150, Vernon Hills, Illinois 60061
Telephone (847) 573-0033
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------------------------------------
T. Stephen Thompson, President
150 Fairway Drive, Suite 150, Vernon Hills, Illinois 60061
Telephone (847) 573-0033 (Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copy to: John F. Fritts, Esq.
Cadwalader, Wickersham & Taft LLP
One World Financial Center, New York, New York 10281
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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, as amended, 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. |_|
If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box: |_|
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box: |_|
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of each class of securities to Amount to be offering price per aggregate offering Amount of
be registered registered(1) share(2) price(2) registration fee(2)
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Common Stock, par value
$0.01 per share 3,744,540 $7.30 $27,335,142 $2,924.86*
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(1) 744,540 shares of common stock registered hereunder are registered for
resale by the selling stockholders named in the prospectus upon conversion of
preferred stock or exercise of outstanding warrants. In accordance with Rules
416(a) and 416(b) under the Securities Act of 1933, as amended ("Securities
Act"), the registrant is also registering hereunder an indeterminate number of
shares that may be issued and resold to prevent dilution resulting from stock
splits, stock dividends or similar transactions and an indeterminate number of
shares that may be issued as dividends on the preferred stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act. Prices are based on the average
of the high and low reported sales prices of our common stock of $7.30 on the
American Stock Exchange LLC ("AMEX") on January 9, 2006. The maximum price per
share will be determined from time to time in connection with the issuance by
the registrant or resale by the selling stockholders of the shares registered
under this registration statement.
================================================================================
The registrant amends this registration statement on such date or dates as may
be necessary to delay its effective date until the registrant files a further
amendment, which specifically states that this registration statement will
thereafter become effective in accordance with Section 8(a) of the Securities
Act or until this registration statement becomes effective on such date as the
Securities and Exchange Commission, acting pursuant to Section 8(a) of the
Securities Act, may determine.
Subject to completion, dated January 11, 2006.
The information in this prospectus is not complete and may be changed. Neither
we nor the Selling Stockholders may sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities 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 January 11, 2006
PROSPECTUS IMMTECH INTERNATIONAL, INC. [LOGO]
3,744,540 Shares Common Stock
-----------------------------
This is a public offering of 3,744,540 shares of our common stock. We may
from time to time offer and sell, subject to American Stock Exchange LLC
("AMEX") rules, up to 3,000,000 shares of common stock for our own account and
the stockholders ("Selling Stockholders") named under the caption "Selling
Stockholders" may from time to time offer and sell up to an additional 744,540
shares of common stock. By this registration statement, the Company is
registering for Selling Stockholders (1) 593,040 shares of common stock
underlying its Series E Convertible Preferred Stock ("Series E Stock") of which
(a) 474,434 shares underlie 133,600 shares of Series E Stock which was issued to
investors in connection with a private placement on December 13, 2005 and (b)
118,606 shares which underlie 33,400 shares of Series E Stock which are issuable
to the private placement investors if each exercises his, her or its option
("Series E Stock Purchase Option") to purchase up to an additional 25% of the
number of shares of Series E Stock purchased on December 13, 2005 and (2)
151,500 shares underlying warrants ("Common Stock Purchase Warrants") issued to
the private placement investors (warrants to purchase 83,500 shares of common
stock) and an entity that assisted the Company to complete the private placement
(a warrant to purchase 68,000 shares of common stock). The shares registered
hereunder may be sold in transactions occurring either on or off the AMEX at
prevailing market prices or at negotiated prices. Sales may be made through
brokers or through dealers, who are expected to receive customary commissions or
discounts. We will receive no proceeds from the sale of shares sold by Selling
Stockholders under this prospectus.
Our common stock is traded on the AMEX under the symbol "IMM". The last
reported sale of our common stock on the AMEX on January 10, 2006 was $7.40.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 1 OF THIS PROSPECTUS
BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is January 11, 2006
TABLE OF CONTENTS
RISK FACTORS...................................................................1
ABOUT THIS PROSPECTUS.........................................................16
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION OF
DOCUMENTS BY REFERENCE.....................................................17
FORWARD-LOOKING STATEMENTS....................................................19
THE COMPANY...................................................................19
USE OF PROCEEDS...............................................................20
SELLING STOCKHOLDERS..........................................................20
DESCRIPTION OF CAPITAL STOCK..................................................22
PLAN OF DISTRIBUTION..........................................................23
LEGAL MATTERS.................................................................24
EXPERTS.......................................................................24
INTERESTS OF NAMED EXPERTS AND COUNSEL........................................25
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES.................................................25
GLOSSARY......................................................................26
RISK FACTORS
An investment in the shares offered by this prospectus involves a high
degree of risk. In addition to the other information contained in this
prospectus, the following risk factors should be considered carefully in
evaluating our business before purchasing the shares.
There is no assurance that we will successfully develop a commercially viable
product; our most advanced product candidate is in Phase III human clinical
trials.
We are in various stages of human clinical trials, and in some cases
preclinical, development activities required for drug approval and
commercialization. Since our formation in October 1984, we have engaged in
research and development programs, expanding our network of scientists and
scientific advisors, licensing technology agreements and, since obtaining the
rights thereto in 1997, advancing the commercialization of the aromatic cation
technology platform. We have generated no revenue from product sales, do not
have any products currently available for sale, and none are expected to be
commercially available for sale until after March 31, 2006, if at all. There can
be no assurance that the research we fund and manage will lead to commercially
viable products. Our most advanced programs are in Phase III human clinical
testing stage using DB289, our first oral drug candidate, for several
indications including Pneumocystis pneumonia, trypanosomiasis (African sleeping
sickness) and malaria (Phase II) and must undergo substantial additional
regulatory review prior to commercialization.
We have a history of losses and an accumulated deficit; our future profitability
is uncertain.
We have experienced significant operating losses since our inception and
we expect to incur additional operating losses as we continue research and
development, clinical trial and commercialization efforts. As of September 30,
2005, we had an accumulated deficit of approximately $81.3 million. Losses from
operations were approximately $12.9 million and $13.6 million, for the fiscal
years ended March 31, 2004 and March 31, 2005, respectively.
We need substantial additional funds, currently and in future years, to continue
our research and development; if financing is not available, we may be required
to reduce spending for our research programs, cease operations or pursue other
financing alternatives.
Our operations to date have consumed substantial amounts of cash. Negative
cash flow from operations is expected to continue in the foreseeable future.
Without substantial additional financing, we may be required to reduce some or
all of our research programs or cease operations. Our cash requirements may vary
materially from those now planned because of results of research and
development, results of preclinical and clinical testing, responses to our grant
requests, relationships with strategic partners, changes in the focus and
direction of our research and development programs, delays in the enrollment and
completion of our clinical trials, competitive and technological advances, U.S.
Food and Drug Administration ("FDA") and foreign regulatory approval processes
and other factors. In any of these circumstances, we may require substantially
more funds than we currently have available or intend to raise to continue our
business. We may seek to satisfy future funding requirements through public or
private
offerings of equity securities, by collaborative or other arrangements with
pharmaceutical or biotechnology companies, issuance of debt or from other
sources. Additional financing may not be available when needed or may not be
available on acceptable terms. If adequate financing is not available, we may
not be able to continue as a going concern or may be required to delay, scale
back or eliminate certain research and development programs, relinquish rights
to certain technologies or product candidates, forego desired opportunities or
license third parties to commercialize our products or technologies that we
would otherwise seek to develop internally. To the extent we raise additional
capital by issuing equity securities, ownership dilution to existing
stockholders may result.
We receive funding primarily from grants, research and development
programs and from sales of our equity securities. To date we have directed most
of such funds not used for general and administrative overhead toward our
research and development and commercialization programs (including preparation
of submissions to regulatory agencies). Until one or more of our product
candidates is approved for sale, our funding is limited to grants, funds from
testing and research agreements, fees associated with licensing of our
technology and proceeds from sales of equity or debt securities.
We do not have employment contracts with any employees other than our CEO, T.
Stephen Thompson.
We have an employment agreement with our CEO, T. Stephen Thompson, that
renews annually in April of each year unless 30 day prior notice of non-renewal
is given by either party to the other. Mr. Thompson renewed his employment with
us this year and has not expressed any indication that he desires to leave our
employ or retire. All of our other employees are "at will" and may leave at any
time. None of our executive officers has as of this date, expressed any
intention to retire or leave our employ. We do not have "key-man" life insurance
policies on any of our executives.
Most of our business' financial aspects, including investor relations,
intellectual property control and corporate governance, are under the
supervision of T. Stephen Thompson, Cecilia Chan and Gary Parks. Together, Mr.
Thompson, Ms. Chan and Mr. Parks hold institutional knowledge and business savvy
that they utilize to assist us to forge new relationships and exploit new
business opportunities without diminishing or undermining existing programs and
obligations.
A substantial portion of our proprietary intellectual property is developed by
scientists who are not employed by us.
Our business depends to a significant degree on the continuing
contributions of our key management, scientific and technical personnel, as well
as on the continued discoveries of scientists, researchers and specialists at
The University of North Carolina at Chapel Hill ("UNC"), Georgia State
University, Duke University and Auburn University (collectively, the "Scientific
Consortium") and other research groups that assist in the development of our
product candidates. A substantial portion of our proprietary intellectual
property is developed by scientists who are employed by the universities that
comprise the Scientific Consortium and other research groups. We do not have
control over, knowledge of, or access to those
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employment arrangements. We have not been advised by any of the key members of
our company, the scientific research groups or of the Scientific Consortium of
their intention to leave their employ or the program.
There can be no assurance that the loss of certain members of management
or the scientists, researchers and technicians from the Scientific Consortium
universities would not materially adversely affect our business.
Additional research grants needed to fund our operations may not be available
or, if available, not on terms acceptable to us.
We have funded our product development and operations as of September 30,
2005 through a combination of sales of equity instruments and revenue generated
from research agreements and grants. As of September 30, 2005, our accumulated
deficit was approximately $81.3 million net of approximately $19.5 million,
which was funded either directly or indirectly with grant funds and payments
from research and testing agreements.
In November 2000, a philanthropic foundation (the "Foundation") awarded a
$15.1 million grant to UNC to develop new drugs to treat Human Trypanosomiasis
(African sleeping sickness) and leishmaniasis (the "Foundation Grant"). On March
29, 2001, UNC entered into a clinical research subcontract agreement with us,
whereby we would receive up to $9.8 million, subject to certain terms and
conditions, over the succeeding five year period to conduct certain clinical and
research studies related to the Foundation Grant. In April 2003, the Foundation
increased the Foundation Grant by approximately $2.7 million for the expansion
of phase IIB/III clinical trials to treat human Trypanosomiasis and improved
manufacturing processes. We have received, pursuant to the clinical research
subcontract with UNC, inclusive of our portion of the grant increase, a total
amount of funding of approximately $11.7 million. We and our research partners
are working with existing and new funding sources to develop next steps and to
increase funding to advance development of a treatment for human
Trypanosomiasis.
In November 2003, we entered into a Testing Agreement with the Medicines
For Malaria Venture, a foundation established in Switzerland ("MMV") and UNC,
pursuant to which we, with the support of MMV and UNC, conducted a proof of
concept study of DB289 in human clinical trials with the goal of obtaining
marketing approval of a product for the treatment of malaria. Under the terms of
the agreement, MMV advanced to us approximately $4.0 million through September
30, 2005. We and MMV agreed in December 2005 to terminate the current agreement
to refocus our efforts on a combination therapy in collaboration with another
U.S. university laboratory. MMV has committed to the new program and additional
funding. We plan to disclose the terms of the new program and funding upon
completion of documentation.
We will continue to apply for new grants to support continuing research
and development of our proprietary aromatic cation technology platform and other
product candidates. The process of obtaining grants is extremely competitive and
there can be no assurance that any of our grant applications will be acted upon
favorably. Some charitable organizations may request licenses to our proprietary
information or may impose price restrictions on the products we develop with
grant funds. We may not be able to negotiate terms that are acceptable to us
with such organizations. In the event we are unable to raise sufficient funds to
advance our product developments with grant funds we may seek to raise
additional capital with the issuance of debt or equity securities. There can be
no assurance that we will be able to place or sell debt or equity
3
securities on terms acceptable to us and, if we sell equity, existing
stockholders may suffer dilution (see Risk Factors, this section, entitled
"Shares eligible for future sale may adversely affect our ability to sell equity
securities," and "Our outstanding options and warrants may adversely affect our
ability to consummate future equity financings due to the dilution potential to
future investors").
None of our product candidates have been approved for sale by any regulatory
agency; approval is required before we can sell drug products commercially.
Our first oral drug candidate, DB289, requires additional clinical
testing, regulatory approval and development of marketing and distribution
channels, all of which are expected to require substantial additional investment
prior to commercialization. There can be no assurance that any of our product
candidates will be successfully developed, proven to be safe and effective in
human clinical trials, meet applicable regulatory standards, be approved by
regulatory authorities, be capable of being produced in commercial quantities at
acceptable costs, be eligible for third-party reimbursement from governmental or
private insurers, be successfully marketed or achieve market acceptance. If we
are unable to commercialize our product candidates in a timely manner we may be
required to seek additional funding, reduce or cancel some or all of our
development programs, sell or license some of our proprietary information or
cease operations.
There are substantial uncertainties related to clinical trials that may result
in the extension, modification or termination of one or more of our programs.
In order to obtain required regulatory approvals for the commercial sale
of our product candidates, we must demonstrate through human clinical trials
that our product candidates are safe and effective for their intended uses.
Prior to conducting human clinical trials we must obtain governmental approvals
from the host nation, approval from the U.S. to export our product candidate to
the test site and qualify a sufficient number of volunteer patients that meet
our trial criteria. If we do not obtain required governmental consents or if we
do not enroll a sufficient number of patients in a timely manner or at all, our
trial expenses could increase, results may be delayed or the trial may be
cancelled.
We may find, at any stage of our research and development, that product
candidates that appeared promising in earlier clinical trials do not demonstrate
safety or effectiveness in later clinical trials and therefore do not receive
regulatory approvals. Despite the positive results of our preclinical testing
and human clinical trials those results may not be predictive of the results of
later clinical trials and large-scale testing. Companies in the pharmaceutical
and biotechnology industries have suffered significant setbacks in various
stages of clinical trials, even after promising results had been obtained in
early-stage human clinical trials.
Completion of human clinical trials may be delayed by many factors,
including slower than anticipated patient enrollment, participant retention and
follow up, difficulty in securing sufficient supplies of clinical trial
materials or other adverse events occurring during clinical trials. For
instance, once we obtain permission to run a human trial, there are strict
criteria regulating who we can enroll in the trial. In the case of African
sleeping sickness, we are subject to civil unrest in sub-Sahara Africa where
local rebels could close clinics and dramatically
4
reduce enrollment rates, and make it difficult to conduct trials. Political
instability and the minimal infrastructure in the African countries where we
conduct our African sleeping sickness trials may cause delays in enrollment and
difficulty in the completion of trials.
Completion of testing, studies and trials may take several years, and the
length of time varies substantially with the type, complexity, novelty and
intended use of the product. Delays or rejections may be based upon many
factors, including changes in regulatory policy during the period of product
development. No assurance can be given that any of our development programs will
be successfully completed, that any Investigational New Drug ("IND") application
filed with the FDA (or any foreign equivalent filed with the appropriate foreign
authorities) will become effective, that additional clinical trials will be
allowed by the FDA or other regulatory authorities, or that clinical trials will
commence as planned. There have been delays in our testing and development
schedules due to the aforementioned conditions and funding and patient
enrollment difficulties and there can be no assurance that our future testing
and development schedules will be met.
We do not currently have pharmaceutical manufacturing capability, which could
impair our ability to develop commercially viable products at reasonable costs.
Our ability to commercialize product candidates will depend in part upon
our ability to have manufactured or develop the capability to manufacture our
product candidates, either directly or through third parties, at a competitive
cost and in accordance with FDA and other regulatory requirements. We currently
lack facilities and personnel to manufacture our product candidates. There can
be no assurance that we will be able to acquire such resources, either directly
or through third parties, at reasonable costs, if we develop commercially viable
products.
We are dependent on third party relationships for critical aspects of our
business; problems that develop in these relationships may increase costs and/or
diminish our ability to develop our product candidates.
We use the expertise and resources of strategic partners and third parties
in a number of key areas, including (i) discovery research, (ii) preclinical and
human clinical trials, (iii) product development and (iv) manufacture of
pharmaceutical drugs. We have a worldwide license and exclusive
commercialization rights to a proprietary aromatic cation technology platform
and are developing drugs intended for commercial use based on that platform.
This strategy creates risks by placing critical aspects of our business in the
hands of third parties, whom we may not be able to control. If these third
parties do not perform in a timely and satisfactory manner, we may incur costs
and delays as we seek alternate sources of such products and services, if
available. Such costs and delays may have a material adverse effect on our
business if the delays jeopardize our licensing arrangements by causing us to
become non-compliant with certain license agreements.
5
We may seek additional third party relationships in certain areas,
particularly in clinical testing, marketing, manufacturing and other areas where
pharmaceutical and biotechnology company collaborators will enable us to develop
particular products or geographic markets that are otherwise beyond our current
resources and/or capabilities. There is no assurance that we will be able to
obtain any such collaboration or any other research and development,
manufacturing or clinical trial arrangements. Our inability to obtain and
maintain satisfactory relationships with third parties may have a material
adverse effect on our business by slowing our ability to develop new products,
requiring us to expand our internal capabilities, increasing our overhead and
expenses, hampering future growth opportunities or causing us to delay or
terminate affected programs.
We are uncertain about our ability to protect or obtain necessary patents and
protect our proprietary information; our ability to develop and commercialize
product candidates would be compromised without adequate intellectual property
protection.
We have spent and continue to spend considerable funds to develop our
product candidates and we are relying on the potential to exploit commercially
without competition the results of our product development. Much of our
intellectual property is licensed to us under various agreements including the
Consortium Agreement. It is the primary responsibility of the discoverer to
develop his, her or its invention confidentially, insure that the invention is
unique, and to obtain patent protection. In most cases, our role is to reimburse
patent related costs after we decide to develop any such invention. We,
therefore, rely on the inventors to insure that technology licensed to us is
adequately protected. Without adequate protection for our intellectual property
we believe our ability to realize profits on our future commercialized product
would be diminished. Without protection, competitors might be able to copy our
work and compete with our products without having invested in the development.
There can be no assurance that any particular patent will be granted or
that issued patents will provide us, directly or through licenses, with the
intellectual property protection contemplated. Patents and licenses of patents
can be challenged, invalidated or circumvented. Patent litigation is expensive
and time-consuming and the outcome cannot be predicted. It is also possible that
competitors will develop similar products simultaneously. Our breach of any
license agreement or the failure to obtain a license to any technology or
process which may be required to develop or commercialize one or more of our
product candidates may have a material adverse effect on our business including
the need for additional capital to develop alternate technology, the potential
that competitors may gain unfair advantage and lessen our expectation of
potential future revenues.
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings, and a substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Third parties may
have filed applications for, or may have been issued, certain patents and may
obtain additional patents and proprietary rights related to products or
processes competitive with or similar to those that we are attempting to develop
and commercialize. We may not be aware of all of the patents potentially adverse
to our interests that may have been issued to others. No assurance can be given
that patents do not exist, have not been filed or could not be filed or issued,
which contain claims relating to or competitive with our technology, product
candidates, product uses or processes. If patents have
6
been or are issued to others containing preclusive or conflicting claims, then
we may be required to obtain licenses to one or more of such patents or to
develop or obtain alternative technology. There can be no assurance that the
licenses or alternative technology that might be required for such alternative
processes or products would be available on commercially acceptable terms, or at
all.
Because of the substantial length of time and expense associated with
bringing new drug products to market through the development and regulatory
approval process, the pharmaceutical and biotechnology industries place
considerable importance on patent and trade secret protection for new
technologies, products and processes. Since patent applications in the United
States are confidential until patents are issued and since publication of
discoveries in the scientific or patent literature often lag behind actual
discoveries, we cannot be certain that we (or our licensors) were the first to
make the inventions covered by pending patent applications or that we (or our
licensors) were the first to file patent applications for such inventions. The
patent positions of pharmaceutical and biotechnology companies can be highly
uncertain and involve complex legal and factual questions and, therefore, the
breadth of claims allowed in pharmaceutical and biotechnology patents, or their
enforceability, cannot be predicted. There can be no assurance that any patents
under pending patent applications or any further patent applications will be
issued. Furthermore, there can be no assurance that the scope of any patent
protection will exclude competitors or provide us competitive advantages, that
any of our (or our licensors') patents that have been issued or may be issued
will be held valid if subsequently challenged, or that others, including
competitors or current or former employers of our employees, advisors and
consultants, will not claim rights in, or ownership to, our (or our licensors')
patents and other proprietary rights. There can be no assurance that others will
not independently develop substantially equivalent proprietary information or
otherwise obtain access to our proprietary information, or that others may not
be issued patents that may require us to obtain a license for, and pay
significant fees or royalties for, such proprietary information.
We rely on technology developed by others and shared with collaborators to
develop our product candidates which puts our proprietary information at risk of
unauthorized disclosure.
We rely on trade secrets, know-how and technological advancement to
maintain our competitive position. Although we use confidentiality agreements
and employee proprietary information and invention assignment agreements to
protect our trade secrets and other unpatented know-how, these agreements may be
breached by the other party thereto or may otherwise be of limited effectiveness
or enforceability.
We are licensed to commercialize technology from a proprietary aromatic
cation technology platform developed by a Scientific Consortium, comprised
primarily of scientists employed by universities in an academic setting. The
academic world is improved by the sharing of information. As a business,
however, the sharing of information whether through publication of research,
academic lectures or general intellectual discourse among contemporaries is not
conducive to protection of proprietary information. Our proprietary information
may fall into the possession of unintended parties without our knowledge through
customary academic information sharing.
7
At times we may enter into confidentiality agreements with other
companies, allowing them to test our technology for potential future licensing,
in return for milestone and royalty payments should any discoveries result from
the use of our proprietary information. We cannot be assured that such parties
will honor these confidentiality agreements subjecting our intellectual property
to unintended disclosure.
The pharmaceutical and biotechnology industries have experienced extensive
litigation regarding patent and other intellectual property rights. We could
incur substantial costs in defending suits that may be brought against us (or
our licensors) claiming infringement of the rights of others or in asserting our
(or our licensors') patent rights in a suit against another party. We may also
be required to participate in interference proceedings declared by the U.S.
Patent and Trademark Office or similar foreign agency for the purpose of
determining the priority of inventions in connection with our (or our
licensors') patent applications.
Adverse determinations in litigation or interference proceedings could
require us to seek licenses (which may not be available on commercially
reasonable terms) or subject us to significant liabilities to third parties, and
could therefore have a material adverse effect on our business by increasing our
expenses and having an adverse effect on our business. Even if we prevail in an
interference proceeding or a lawsuit, substantial resources, including the time
and attention of our officers, would be required.
Confidentiality agreements may not adequately protect our intellectual property
which could result in unauthorized disclosure or use of our proprietary
information.
We require our employees, consultants and third parties with whom we share
proprietary information to execute confidentiality agreements upon the
commencement of their relationship with us. The agreements generally provide
that trade secrets and all inventions conceived by the individual and all
confidential information developed or made known to the individual during the
term of the relationship will be our exclusive property and will be kept
confidential and not disclosed to third parties except in specified
circumstances. There can be no assurance, however, that these agreements will
provide meaningful protection for our proprietary information in the event of
unauthorized use or disclosure of such information. If our unpatented
proprietary information is publicly disclosed before we have been granted patent
protection, our competitors could be unjustly enriched and we could lose the
ability to profitably develop products from such information.
8
Our industry has significant competition; our product candidates may become
obsolete prior to commercialization due to alternative technologies thereby
rendering our development efforts obsolete or non-competitive.
The pharmaceutical and biotechnology fields are characterized by extensive
research efforts and rapid technological progress. Competition from other
pharmaceutical and biotechnology companies and research and academic
institutions is intense and other companies are engaged in research and product
development to treat the same diseases that we target. New developments in
pharmaceutical and biotechnology fields are expected to continue at a rapid pace
in both industry and academia. There can be no assurance that research and
discoveries by others will not render some or all of our programs or products
non-competitive or obsolete.
We are aware of other companies and institutions dedicated to the
development of therapeutics similar to those we are developing, including
Aventis Pharmaceuticals, Inc., Hoffman-LaRoche Ltd., Sanofi-Synthelabo Inc.,
Pfizer Inc., Novartis, and Bayer Corporation. Many of our existing or potential
competitors have substantially greater financial and technical resources than we
do and therefore may be in a better position to develop, manufacture and market
pharmaceutical products. Many of these competitors are also more experienced
performing preclinical testing and human clinical trials and obtaining
regulatory approvals. The current or future existence of competitive products
may also adversely affect the marketability of our product candidates.
In the event some or all of our programs are rendered non-competitive or
obsolete, we do not currently have alternative strategies to develop new product
lines or the financial resources to pursue such a course of action.
There is no assurance that we will receive FDA or corollary foreign approval for
any of our product candidates for any indication; we are subject to government
regulation for the commercialization of our product candidates.
We have not made application to the FDA or any other regulatory agency to
sell commercially or label any of our product candidates. We or our test
collaborators have received licenses from the FDA to export DB289 for testing
purposes and have previously been approved to conduct human clinical trials for
various indications in each of the United States, Germany, France, the
Democratic Republic of Congo, Angola, Thailand, Peru and South Africa.
All new pharmaceutical drugs, including our product candidates, are
subject to extensive and rigorous regulation by the federal government,
principally the FDA under the Federal Food, Drug and Cosmetic Act ("FDCA") and
other laws and by state, local and foreign governments. Such regulations govern,
among other things, the development, testing, manufacture, labeling, storage,
pre-market clearance or approval, advertising, promotion, sale and distribution
of pharmaceutical drugs. If drug products are marketed abroad, they are subject
to extensive regulation by foreign governments. Failure to comply with
applicable regulatory requirements may subject us to administrative or
judicially imposed sanctions such as civil penalties, criminal prosecution,
injunctions, product seizure or detention, product recalls, total or partial
suspension of production and FDA refusal to approve pending applications.
9
Each of our product candidates must be approved for each indication for
which we believe it to be viable. We have not yet determined from which
regulatory agencies we will seek approval for our product candidates or
indications for which approval will be sought. Once determined, the approval
process is subject to those agencies' policies and acceptance of those agencies'
approvals, if obtained, in the countries where we intend to market our product
candidates.
We have not received regulatory approval in the United States or any foreign
jurisdiction for the commercial sale of any of our product candidates.
On April 23, 2004 the FDA granted fast-track designation for DB289, our
first oral drug candidate, to treat African sleeping sickness (trypanosomiasis).
Fast-track designation means, among other things, that the FDA may accept
initial late-stage data from us rather than waiting for the entire Phase III
clinical trial data to be submitted together for consideration of approval to
market the drug. There is, however, no guarantee that fast-track designation
will result in faster product development or licensing approval or that our
product candidates will be approved at all.
The process of obtaining FDA or other required regulatory approvals,
including foreign approvals, often takes many years and varies substantially
based upon the type, complexity and novelty of the products involved and the
indications being studied. Furthermore, the approval process is extremely
expensive and uncertain. There can be no assurance that our product candidates
will be approved for commercial sale in the United States by the FDA or
regulatory agencies in foreign countries. The regulatory review process can take
many years and we will need to raise additional funds to complete the regulatory
review process for our current product candidates. The failure to receive FDA or
other governmental approval would have a material adverse effect on our business
by precluding us from marketing and selling such products and negatively
impacting our ability to generate future revenues. Even if regulatory approval
of a product is granted, there can be no assurance that we will be able to
obtain the labeling claims (a labeling claim is a product's description and its
FDA permitted uses) necessary or desirable for the promotion of such product.
FDA regulations prohibit the marketing or promotion of a drug for unapproved
indications. Furthermore, regulatory marketing approval may entail ongoing
requirements for post-marketing studies if regulatory approval is obtained; we
will also be subject to ongoing FDA obligations and continued regulatory review.
In particular, we, or our third party manufacturers, will be required to adhere
to Good Manufacturing Practices ("GMP"), which require us (or our third party
manufacturers) to manufacture products and maintain records in a prescribed
manner with respect to manufacturing, testing and quality control. Further, we
(or our third party manufacturers) must pass a manufacturing facilities
pre-approval inspection by the FDA or corollary agency before obtaining
marketing approval. Failure to comply with applicable regulatory requirements
may result in penalties, such as restrictions on a product's marketing or
withdrawal of the product from the market. In addition, identification of
certain side-effects after a drug is on the market or the occurrence of
manufacturing problems could cause subsequent withdrawal of approval,
reformulation of the drug, additional preclinical testing or clinical trials and
changes in labeling of the product.
Prior to the submission of an application for FDA approval, our
pharmaceutical drugs undergo rigorous preclinical and clinical testing, which
may take several years and the expenditure of substantial financial and other
resources. Before commencing clinical trials in
10
humans in the United States, we must submit to the FDA and receive clearance of
an IND. There can be no assurance that submission of an IND for future clinical
testing of any of our product candidates under development or other future
product candidates would result in FDA permission to commence clinical trials or
that we will be able to obtain the necessary approvals for future clinical
testing in any foreign jurisdiction. Further, there can be no assurance that if
such testing of product candidates under development is completed, any such drug
compounds will be accepted for formal review by the FDA or any foreign
regulatory agency or approved by the FDA for marketing in the United States or
by any such foreign regulatory agencies for marketing in foreign jurisdictions.
Our most advanced programs are developing products intended for sale in
countries that may not have established pharmaceutical regulatory agencies.
Some of the intended markets for our treatment of African sleeping
sickness and malaria are in countries without developed pharmaceutical
regulatory agencies. We plan in such cases to try first to obtain regulatory
approval from a recognized pharmaceutical regulatory agency such as the FDA or
one or more European agencies and then to apply to the targeted country for
recognition of the foreign approval. Because the countries where we intend to
market treatments for African sleeping sickness and malaria are not obligated to
accept foreign regulatory approvals and because those countries do not have
standards of their own for us to rely upon, we may be required to provide
additional documentation or complete additional testing prior to distributing
our products in those countries.
There is uncertainty regarding the availability of health care reimbursement to
prospective purchasers of our anticipated products; health care reform may
negatively impact the ability of prospective purchasers of our anticipated
products to pay for such products.
Our ability to commercialize any of our product candidates will depend in
part on the extent to which reimbursement for the costs of the resulting drug
will be available from government health administration authorities, private
health insurers, non-governmental organizations and others. Many of our product
candidates, including treatments for trypanosomiasis, malaria and tuberculosis,
would be in the greatest demand in developing nations, many of which do not
maintain comprehensive health care systems with the financial resources to pay
for such drugs. We do not know to what extent governments, private charities,
international organizations and others would contribute toward bringing newly
developed drugs to developing nations. Even among drugs sold in developed
countries, significant uncertainty exists as to the reimbursement status of
newly approved health care products. There can be no assurance of the
availability of third party insurance reimbursement coverage enabling us to
establish and maintain price levels sufficient for realization of a profit on
our investment in developing pharmaceutical drugs. Government and other
third-party payers are increasingly attempting to contain health care costs by
limiting both coverage and the level of reimbursement for new drug products
approved for marketing by the FDA and by refusing, in some cases, to provide any
coverage for uses of approved products for disease indications for which the FDA
has not granted marketing approval. If adequate coverage and reimbursement
levels are not provided by government and third-party payers for uses of our
anticipated products, the market acceptance of these products would be adversely
affected.
11
Health care reform proposals are regularly introduced in the United States
Congress and in various state legislatures and there is no guarantee that such
proposals will not be introduced in the future. We cannot predict when any
proposed reforms will be implemented, if ever, or the effect of any implemented
reforms on our business. Implemented reforms may have a material adverse effect
on our business by reducing or eliminating the availability of third-party
reimbursement for our anticipated products or by limiting price levels at which
we are able to sell such products. If reimbursement is not available for our
products, health care providers may prescribe alternative remedies if available.
Patients, if they cannot afford our products, may do without. In addition, if we
are able to commercialize products in overseas markets, then our ability to
achieve success in such markets may depend, in part, on the health care
financing and reimbursement policies of such countries. We cannot predict
changes in health care systems in foreign countries, and therefore, do not know
the effects on our business of possible changes.
Shares eligible for future sale may adversely affect our ability to sell equity
securities.
Sales of our common stock (including the issuance of shares upon
conversion of preferred stock) in the public market could materially and
adversely affect the market price of shares because prior sales have been
executed at or below our current market price. We have outstanding five series
of preferred stock that convert to common stock at prices equivalent to $4.42,
$4.00, $4.42, $9.00 and $7.04, respectively, for our series A, series B, series
C, series D and series E convertible preferred stock (subject to adjustment for
certain dilutive events). Our obligation to convert the preferred stock upon
demand by the holders may depress the price of our common stock and also make it
more difficult for us to sell equity securities or equity-related securities in
the future at a time and price that we deem appropriate.
As of January 3, 2006 we had 11,738,056 shares of common stock
outstanding, plus (1) 58,400 shares of series A convertible preferred stock,
convertible into approximately 330,316 shares of common stock at the conversion
rate of 1:5.656, (2) 13,464 shares of series B Convertible Preferred stock
convertible into approximately 84,150 shares of common stock at the conversion
rate of 1:6.25, (3) 46,536 shares of series C convertible preferred stock
convertible into approximately 263,212 shares of common stock at the conversion
rate of 1:5.656, (4) 117,200 shares of series D convertible preferred stock
convertible into approximately 325,558 shares of common stock at the conversion
rate of 1:2.778, (5) 133,600 shares of series E convertible preferred stock
convertible into approximately 474,434 shares of common stock at the conversion
rate of 1:3.551, (6) 1,274,179 options to purchase shares of common stock with a
weighted-average exercise price of $9.63 per share, (7) options to purchase
33,400 shares of series E convertible preferred stock which, if exercised, would
convert into approximately 118,606 shares of common stock at the conversion rate
of 1:3.551 and (8) 2,850,112 warrants to purchase shares of common stock with a
weighted-average exercise price of $7.52. Of the shares outstanding, 9,926,825
shares of common stock are freely tradable without restriction. All of the
remaining 1,811,231 shares are restricted from resale, except pursuant to
certain exceptions under the Securities Act of 1933, as amended (the "Securities
Act").
Our outstanding options and warrants may adversely affect our ability to
consummate future equity financings due to the dilution potential to future
investors.
12
We have outstanding options and warrants for the purchase of shares of our
common stock with exercise prices currently below market which may adversely
affect our ability to consummate future equity financings. The holders of such
warrants and options may exercise them at a time when we would otherwise be able
to obtain additional equity capital on more favorable terms. To the extent any
such options and warrants are exercised, the value of our outstanding shares of
our common stock may be diluted.
As of January 3, 2006, we have outstanding vested options to purchase
1,039,340 shares of common stock at a weighted-average exercise price of $9.54,
and vested warrants to purchase 2,740,000 shares of common stock with a
weighted-average price of $8.22.
Due to the number of shares of common stock we are obligated to sell
pursuant to outstanding options and warrants described above, potential
investors may not purchase our future equity offerings at market price because
of the potential dilution such investors may suffer as a result of the exercise
of the outstanding options and warrants.
The market price of our common stock has experienced significant volatility.
The securities markets from time to time experience significant price and
volume fluctuations unrelated to the operating performance of particular
companies. In addition, the market prices of the common stock of many publicly
traded pharmaceutical and biotechnology companies have been and can be expected
to be especially volatile. Our common stock price in the 52-week period ended
December 30, 2005 had a high of $16.25 and a low of $6.30. Announcements of
technological innovations or new products by us or our competitors, developments
or disputes concerning patents or proprietary rights, publicity regarding actual
or potential clinical trial results relating to products under development by us
or our competitors, regulatory developments in both the United States and
foreign countries, delays in our testing and development schedules, public
concern as to the safety of pharmaceutical drugs and economic and other external
factors, as well as period-to-period fluctuations in our financial results, may
have a significant impact on the market price of our common stock. The
realization of any of the risks described in these "Risk Factors" may have a
significant adverse impact on such market prices.
We may pay vendors in stock as consideration for their services; this may result
in stockholder dilution, additional costs and difficulty retaining certain
vendors.
In order for us to preserve our cash resources, we have previously paid
and may in the future pay vendors in shares, warrants or options to purchase
shares of our common stock rather than cash. Payments for services in stock may
materially and adversely affect our stockholders by diluting the value of
outstanding shares of our common stock. In addition, in situations where we have
agreed to register the shares issued to a vendor, this will generally cause us
to incur additional expenses associated with such registration. Paying vendors
in shares, warrants or options to purchase shares of common stock may also limit
our ability to contract with the vendor of our choice should that vendor decline
payment in stock.
We do not intend to pay dividends on our common stock. Until such time as we pay
cash dividends our stockholders must rely on increases in our stock price for
appreciation.
13
We have never declared or paid dividends on our common stock. We intend to
retain future earnings to develop and commercialize our products and therefor we
do not intend to pay cash dividends in the foreseeable future. Until such time
as we determine to pay cash dividends on our common stock, our stockholders must
rely on increases in our common stock's market price for appreciation.
If we do not effectively manage our growth, our resources, systems and controls
may be strained and our operating results may suffer.
We have recently added to our workforce and we plan to continue to
increase the size of our workforce and scope of our operations as we continue
our drug development programs and clinical trials and move towards
commercialization of our products. This growth of our operations will place a
significant strain on our management personnel, systems and resources. We may
need to implement new and upgraded operational and financial systems, procedures
and controls, including the improvement of our accounting and other internal
management systems. These endeavors will require substantial management effort
and skill, and we may require additional personnel and internal processes to
manage these efforts. If we are unable to effectively manage our expanding
operations, our revenue and operating results could be materially and adversely
affected.
Our continuing obligations as a public company under the laws, regulations
and standards relating to corporate governance and public disclosure, including
the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act") and related regulations,
are likely to increase our expenses and administrative burden. Changes in the
laws, regulations and standards relating to corporate governance and public
disclosure, including the Sarbanes-Oxley Act and related regulations implemented
by the Securities and Exchange Commission and the National Association of
Securities Dealers, are creating uncertainty for public companies, increasing
legal and financial compliance costs and making some activities more time
consuming. These laws, regulations and standards are subject to varying
interpretations, and, as a result, their application in practice may evolve over
time as new guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices. We
have and will continue to invest resources to comply with evolving laws,
regulations and standards, and this investment may result in increased general
and administrative expenses and a diversion of management's time and attention
from the business of the Company to compliance activities. If our efforts to
comply with new laws, regulations and standards differ from the activities
intended by regulatory or governing bodies regulatory authorities may initiate
legal proceedings against us and our business may be harmed.
There are limitations on the liability of our directors, and we may have to
indemnify our officers and directors in certain instances.
Our certificate of incorporation limits, to the maximum extent permitted
under Delaware law, the personal liability of our directors for monetary damages
for breach of their fiduciary duties as directors. Our bylaws provide that we
will indemnify our officers and directors and may indemnify our employees and
other agents to the fullest extent permitted by law. These provisions may be in
some respects broader than the specific indemnification provisions under
14
Delaware law. The indemnification provisions may require us, among other things,
to indemnify such officers and directors against certain liabilities that may
arise by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified and to obtain directors' and officers' insurance.
Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify a director, officer, employee or agent made or threatened to be
made a party to an action by reason of the fact that he or she was a director,
officer, employee or agent of the corporation or was serving at the request of
the corporation, against expenses actually and reasonably incurred in connection
with such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Delaware law does
not permit a corporation to eliminate a director's duty of care and the
provisions of our certificate of incorporation have no effect on the
availability of equitable remedies, such as injunction or rescission, for a
director's breach of the duty of care.
We believe that our limitation of officer and director liability assists
us to attract and retain qualified officers and directors. However, in the event
an officer, a director or the board of directors commits an act that may legally
be indemnified under Delaware law, we will be responsible to pay for such
officer(s) or director(s) legal defense and potentially any damages resulting
therefrom. Furthermore, the limitation on director liability may reduce the
likelihood of derivative litigation against directors, and may discourage or
deter stockholders from instituting litigation against directors for breach of
their fiduciary duties, even though such an action, if successful, might benefit
us and our stockholders. Given the difficult environment and potential for
incurring liabilities currently facing directors of publicly-held corporations,
we believe that director indemnification is in our and our stockholders' best
interests because it enhances our ability to attract and retain highly qualified
directors and reduce a possible deterrent to entrepreneurial decision-making.
Nevertheless, limitations of director liability may be viewed as limiting
the rights of stockholders, and the broad scope of the indemnification
provisions contained in our certificate of incorporation and bylaws could result
in increased expenses. Our board of directors believes, however, that these
provisions will provide a better balancing of the legal obligations of, and
protections for, directors and will contribute positively to the quality and
stability of our corporate governance. Our board of directors has concluded that
the benefit to stockholders of improved corporate governance outweighs any
possible adverse effects on stockholders of reducing the exposure of directors
to liability and broadened indemnification rights.
We are exposed to potential risks from recent legislation requiring companies to
evaluate controls under Section 404 of the Sarbanes-Oxley Act.
The Sarbanes-Oxley Act requires that we maintain effective internal
controls over financial reporting and disclosure controls and procedures. Among
other things, we must perform system and process evaluation and testing of our
internal controls over financial reporting to allow management to report on, and
our independent registered public accounting firm to attest to, our internal
controls over financial reporting, as required by Section 404 of the
Sarbanes-Oxley Act. Compliance with Section 404 requires substantial accounting
expense and
15
significant management efforts. Our testing, or the subsequent review by our
independent registered public accounting firm, may reveal deficiencies in our
internal controls that would require us to remediate in a timely manner so as to
be able to comply with the requirements of Section 404 each year. If we are not
able to comply with the requirements of Section 404 in a timely manner each
year, we could be subject to sanctions or investigations by the United States
Securities Exchange Commission ("SEC"), the AMEX or other regulatory authorities
that would require additional financial and management resources and could
adversely affect the market price of our common stock.
Product liability exposure may expose us to significant liability.
We do not have pharmaceutical products for sale and we therefor do not
carry product liability insurance. However, if we do commercialize drug products
we will face risk of exposure to product liability and other claims and lawsuits
in the event that the development or use of our technology or prospective
products is alleged to have resulted in adverse effects. We may not be able to
avoid significant liability exposure. We may not have sufficient insurance
coverage and we may not be able to obtain sufficient coverage at a reasonable
cost. An inability to obtain product liability insurance at acceptable cost or
to otherwise protect against potential product liability claims could prevent or
inhibit the commercialization of our products. A product liability claim could
hurt our financial performance. Even if we avoid liability exposure, significant
costs could be incurred, potentially damaging our financial performance. We do
carry commercial general liability insurance and clinical trial insurance which
covers our human clinical trial activities.
ABOUT THIS PROSPECTUS
This document is called a prospectus and is part of a registration
statement on Form S-3 that we filed with the SEC. Under this prospectus, we may
from time to time sell any combination of the securities described in this
prospectus in one or more offerings. The company's offerings may total up to
3,000,000 shares. In addition, the Selling Stockholders also may from time to
time collectively offer up to 744,540 shares of our common stock plus any
additional shares paid to Selling Stockholders as dividends on the preferred
shares that are convertible into the common stock registered hereunder or to
prevent dilution resulting from stock splits, stock dividends or similar
transactions.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not making, nor will
we make, an offer to sell the common stock in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in
this prospectus is current only as of the date on its cover. Our business,
financial condition, results of operations and prospects may have changed since
that date. You should read this prospectus together with the additional
information described under the heading "Where You Can Find More Information"
below.
16
WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION OF DOCUMENTS BY REFERENCE
We file annual, quarterly and current reports, proxy statements and other
documents with the SEC, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). You may read and copy any materials that we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549, at 233 Broadway, 16th Floor, New York, New York 10279 and at
Northwest Atrium Center, 5000 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Our reports, proxy statements and
other documents filed electronically with the SEC are available at the website
maintained by the SEC at http://www.sec.gov. We also make available free of
charge on or through our Internet website, http://www.immtech.biz, our annual,
quarterly and current reports, and, if applicable, amendments to those reports,
filed or furnished pursuant to Section 13(a) of the Exchange Act, as soon as
reasonably practicable after we electronically file such reports with the SEC.
Information on our website is not a part of this report.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the shares. This prospectus, which constitutes a
part of that registration statement, does not contain all the information
contained in that registration statement and its exhibits. For further
information with respect to the company and the shares, you should consult the
registration statement and its exhibits. The registration statement and any of
its amendments, including exhibits filed as a part of the registration statement
or an amendment to the registration statement, are available for inspection and
copying through the SEC's public reference rooms listed above.
The SEC allows us to "incorporate by reference" in this prospectus the
information that we file with them, which means we can disclose important
information to you by referring you to other documents that contain that
information. The information we incorporate by reference is considered to be
part of this prospectus and information we later file with the SEC will
automatically update and supersede the information in this prospectus. The
following documents filed by us with the SEC pursuant to Section 13 of the
Exchange Act (File No. 000-25669) and any future filings under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act made before the termination of the
offering are incorporated by reference herein:
(i) our Annual Report on Form 10-K for the fiscal year ended
March 31, 2005, filed with the SEC on June 14, 2005;
(ii) our Quarterly Reports on Form 10-Q for the fiscal quarters
ended June 30, 2005 (filed with the SEC on August 5, 2005) and September
30, 2005 (filed with the SEC on November 9, 2005);
(iii) the description of our common stock set forth in our
registration statement on Form SB-2 (Registration No. 333-64393) filed
with the SEC under Section 12 of the Exchange Act on September 28, 1998,
including any amendments or reports filed for the purpose of updating such
description;
17
(iv) our definitive proxy statement pursuant to Section 14(A) of the
Exchange Act for our 2005 Annual Meeting of the Stockholders filed with
the SEC on November 16, 2005;
(v) all other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the Annual
Report referenced in (i) above;
(vi) our Form 8-A pursuant to Section 12(b) of the Exchange Act
filed with the SEC on August 6, 2003;
(vii) our registration statement on Form SB-2/A filed with the SEC
on February 11, 1999; and
(viii) our certificate of incorporation, as amended and restated and
filed as Exhibit 4.2 to our Form 8-K filed with the SEC on December 14,
2005.
All documents filed by the company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this registration
statement and prior to the filing of a post-effective amendment indicating that
all securities offered hereby have been sold or deregistering all securities
then remaining unsold are expressly incorporated by reference into this
prospectus and to be a part of this prospectus from the date of filing of such
documents.
Statements made in this prospectus, or in any documents incorporated by
reference in this prospectus as to the contents of any contract or other
document are materially complete. For additional information we refer you to the
copy of the contract or other document filed as an exhibit to the registration
statement of which this prospectus is a part or as an exhibit to the documents
incorporated by reference.
We will provide to you a copy of any document incorporated by reference in
this prospectus and any exhibits specifically incorporated by reference in those
documents at no cost. You may request copies by contacting us at the following
address or telephone numbers: Corporate Secretary, Immtech International, Inc.,
150 Fairway Drive, Suite 150, Vernon Hills, Illinois, 60061, Telephone No.:
(847) 573-0033 or toll free (877) 898-8038.
Any statement incorporated or deemed incorporated herein by reference will
be deemed to be modified or superseded for the purpose of the registration
statement and this prospectus to the extent that a statement contained in this
prospectus or in any subsequently filed document modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of the registration
statement or this prospectus.
18
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and in the documents
incorporated by reference herein constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements frequently, but not
always, use the words "may", "intends", "plans", "believes", "anticipates" or
"expects" or similar words and may include statements concerning our strategies,
goals and plans. Forward-looking statements involve a number of significant
risks and uncertainties that could cause our actual results or achievements or
other events to differ materially from those reflected in such forward-looking
statements. Such factors include, among others described in this prospectus, the
following (i) we are in an early stage of product development, (ii) the
possibility that favorable relationships with collaborators cannot be
established or, if established, will be abandoned by the collaborators before
completion of product development, (iii) the possibility that we or our
collaborators will not successfully develop any marketable products, (iv) the
possibility that advances by competitors will cause our product candidates not
to be viable, (v) uncertainties as to the requirement that a drug product be
found to be safe and effective after extensive clinical trials and the
possibility that the results of such trials, if completed, will not establish
the safety or efficacy of our drug product candidates, (vi) risks relating to
requirements for approvals by governmental agencies, such as the Food and Drug
Administration, before products can be marketed and the possibility that such
approvals will not be obtained in a timely manner or at all or will be
conditioned in a manner that would impair our ability to market our product
candidates successfully, (vii) the risk that our patents could be invalidated or
narrowed in scope by judicial actions or that our technology could infringe upon
the patent or other intellectual property rights of third parties, (viii) the
possibility that we will not be able to raise adequate capital to fund our
operations through the process of commercializing a successful product or that
future financing will be completed on unfavorable terms, (ix) the possibility
that any products successfully developed by us will not achieve market
acceptance and (x) other risks and uncertainties that may not be described
herein. We undertake no obligation except as required by law to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
THE COMPANY
AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION
PROVIDED UNDER "RISK FACTORS" BEGINNING ON PAGE 1. A GLOSSARY WHICH DEFINES
VARIOUS TERMS USED IN THIS PROSPECTUS BEGINS ON PAGE 26.
We are a pharmaceutical company working to commercialize oral drugs to
treat infectious diseases. Using our proprietary aromatic cation technology
platform, we are expanding our targeted markets to the treatment of cancer,
diabetes and other disorders. Immtech has advanced clinical programs that
include new treatments for malaria, Pneumocystis pneumonia ("PCP") and African
sleeping sickness (trypanosomiasis), and drug development
19
programs for fungal infections and tuberculosis. The Company has worldwide
licensing and exclusive commercialization rights to an aromatic cationic
pharmaceutical technology platform and is developing drugs intended for
commercial use based on that technology.
Since our formation in October 1984, we have engaged in pharmaceutical
research and drug development, expanding our scientific capabilities and
collaborative network, developing technology licensing agreements, and advancing
the commercialization of our proprietary technologies, including the development
of aromatic cations (which include dications) commencing in 1997. In addition to
our internal resources, we use the expertise and resources of strategic partners
and third parties in a number of areas, including (i) discovery research, (ii)
pre-clinical and human clinical trials and (iii) manufacture of pharmaceutical
drugs.
USE OF PROCEEDS
We intend to use the proceeds of the sale of shares of common stock
offered by us under this prospectus for general corporate purposes, including
research and development and commercialization efforts. We will not receive any
proceeds from the sale of the shares of common stock offered by the Selling
Stockholders under this prospectus. However, we will receive proceeds, in the
event they are exercised, from (i) the exercise of Series E Stock Purchase
Options by the holders of Series E Stock and (ii) the exercise of Common Stock
Purchase Warrants by the Selling Stockholders.
The maximum amount that we will receive if the holders of Series E Stock
exercise all of their Series E Stock Purchase Options is $835,000. The maximum
amount that we will receive if the Selling Stockholders exercise all of their
Common Stock Purchase Warrants is $1,515,000. Any funds received from the
exercise of the Series E Stock Purchase Options and/or the Common Stock Purchase
Warrants will be used for general corporate purposes.
SELLING STOCKHOLDERS
All of the Selling Stockholders listed below, other than Ableguard
Investment Limited ("Ableguard"), acquired our Series E stock in a private
placement, which closed on December 13, 2005; Ableguard was granted a three year
warrant to purchase 68,000 shares of our common stock, at $10.00 per share, for
its services assisting the Company to consummate the December 13, 2005 private
placement. The Selling Stockholders (other than Ableguard except with respect to
(iii) below) have the right to acquire shares of common stock (i) upon
conversion of the Series E Stock, (ii) upon issuance of common stock as stock
dividends to holders of Series E Stock and (iii) upon exercise of the Common
Stock Purchase Warrants. No period of time has been fixed within which the
shares registered under this prospectus may be offered or sold. Our obligation
to keep the registration statement of which this prospectus is a part effective
expires on December 12, 2006, or sooner if all Selling Stockholders' shares are
sold.
On December 13, 2005, the Selling Stockholders other than Ableguard
purchased in the aggregate 133,600 shares of our series E stock for gross
proceeds to us of $3,340,000. Each purchaser of Series E Stock was granted (i) a
Series E Stock Purchase Option to purchase one additional share of Series E
Stock for each four shares purchased on December 13, 2005 and (ii) a Common
Stock Purchase Warrant to purchase one share of common stock for each $40
20
invested. The above-mentioned option expires 30 days after the effective date of
the registration statement of which this prospectus is part. Subject to
adjustment for dilution protection, each share of series E stock is convertible
into 3.551 shares of common stock. The Series E Stock earns a 6% per annum
dividend payable semi-annually each April 15th and October 15th, in cash or
common stock at the company's option, for so long as the Series E Stock remains
outstanding. If common stock is to be used to pay the Series E Stock dividend,
such common stock is to be valued at the 10-day volume-weighted average
closing-bid price immediately prior to the date of payment. We agreed to use
reasonable efforts to register the resale by the Selling Stockholders of the
shares of common stock issuable upon conversion of the series E stock within 30
days after the date of purchase of the Series E Stock, and to keep such
registration effective for the lesser of one year from the date of issuance or
until all of such shares are sold.
The Common Stock Purchase Warrants are exercisable for three years from
the date of grant at $10.00 per share of common stock. The Company may redeem
all or a portion of the Common Stock Purchase Warrants, at $0.10 per share
underling such warrants, at any time after the first anniversary of the award
date if the Company's common stock closes above $15.00 for 20 out of any 30
consecutive "trading days" prior to the date of redemption.
On December 10, 2005, we entered into an agreement with Ableguard to
assist us to identify qualified investors for our Series E Stock private
placement. For its services, we issued to Ableguard a Common Stock Purchase
Warrant to purchase 68,000 shares of our common stock exercisable at $10.00 per
share for the three year period commencing December 13, 2005.
The following table sets forth for each Selling Stockholder (i) the number
of shares being registered by this prospectus, (ii) the number of shares and
percent of class beneficially owned at the date of filing, and (iii) the number
of shares and percent of class that the Selling Stockholder would beneficially
own if all shares registered hereunder were sold, assuming no other shares were
purchased. Except as described herein, no Selling Stockholder has been an
officer, director or employee of Immtech for the past three years. Because the
Selling Stockholders may offer all, some or none of their shares, we cannot
provide a definitive estimate of the number of shares each will hold after such
registration. This prospectus is filed at our expense.
Common Shares of Percent of
Stock Common Total Class of
Series E Series E Underlying Stock Shares Shares
Stock Stock Series E Underlying Beneficially Shares Beneficially
Name Purchased Option Stock Warrants Owned Registered Owned(1)
---- --------- ------ ----- -------- ----- ---------- --------
Ableguard Investment
Limited 0 0 0 68,000 68,000 68,000 *
Lee Chung Shing Javan 26,000 6,500 115,412 16,250 461,436 131,662 3.89
Ma Fa On 12,000 3,000 53,267 7,500 90,542 60,767 *
Eric (Rick) Sorkin(2) 12,000 3,000 53,267 7,500 412,580 60,767 3.41
Lau Chu 10,000 2,500 44,389 6,250 158,684 50,639 1.33
Dennis J. Fisher 10,000 2,500 44,389 6,250 50,639 50,639 *
Michael Keiser 10,000 2,500 44,389 6,250 50,639 50,639 *
Donald F. Sinex 6,000 1,500 26,634 3,750 50,784 30,384 *
Tsang Wai Ping Alfred 4,800 1,200 21,306 3,000 46,470 24,306 *
Jerry Sorkin 4,000 1,000 17,756 2,500 38,930 20,256 *
Li Kwo Yuk 4,000 1,000 17,756 2,500 53,169 20,256 *
Elefanti Limited 4,000 1,000 17,756 2,500 102,356 20,256 *
Cheung Yuk Chor Dickie 4,000 1,000 17,756 2,500 161,982 20,256 1.37
Shares
Remaining Percent of
if all Class if
Shares all Shares
Registered Registered
Name are Sold are Sold
---- -------- --------
Ableguard Investment
Limited 0 *
Lee Chung Shing Javan 329,774 2.81
Ma Fa On 29,775 *
Eric (Rick) Sorkin(2) 351,813 2.92
Lau Chu 108,045 *
Dennis J. Fisher 0 *
Michael Keiser 0 *
Donald F. Sinex 20,400 *
Tsang Wai Ping Alfred 22,164 *
Jerry Sorkin 18,674 *
Li Kwo Yuk 32,913 *
Elefanti Limited 82,100 *
Cheung Yuk Chor Dickie 141,726 1.20
21
Common Shares of Percent of
Stock Common Total Class of
Series E Series E Underlying Stock Shares Shares
Stock Stock Series E Underlying Beneficially Shares Beneficially
Name Purchased Option Stock Warrants Owned Registered Owned(1)
---- --------- ------ ----- -------- ----- ---------- --------
Fang Zheng Jie Zhang 4,000 1,000 17,756 2,500 20,256 20,256 *
Lau Shun Shing 4,000 1,000 17,756 2,500 25,667 20,256 *
Lau Mei Yin Amy 3,200 800 14,205 2,000 37,378 16,205 *
Lau Man Fai 3,200 800 14,205 2,000 46,806 16,205 *
Tao Wai Ling 2,400 600 10,654 1,500 12,153 12,154 *
Frederick Wackerle(2) 2,000 500 8,878 1,250 124,067 10,128 1.05
R2C2 LLC 2,000 500 8,878 1,250 16,378 10,128 *
Cheung Wai Fong 1,600 400 7,102 1,000 8,101 8,102 *
Lau Kin Yip 1,200 300 5,326 750 6,287 6,076 *
Low Kit Yong 1,200 300 5,326 750 6,077 6,076 *
Lo Mo On 800 200 3,551 500 5,651 4,051 *
T. Stephen Thompson(3) 800 200 3,551 500 530,739 4,051 4.43
Wong Man Ying 400 100 1,775 250 3,852 2,025 *
Totals 133,600 33,400 593,040 151,500 2,589,623 744,540
Shares
Remaining Percent of
if all Class if
Shares all Shares
Registered Registered
Name are Sold are Sold
---- -------- --------
Fang Zheng Jie Zhang 0 *
Lau Shun Shing 5,411 *
Lau Mei Yin Amy 21,173 *
Lau Man Fai 30,600 *
Tao Wai Ling 0 *
Frederick Wackerle(2) 113,939 *
R2C2 LLC 6,250 *
Cheung Wai Fong 0 *
Lau Kin Yip 211 *
Low Kit Yong 0 *
Lo Mo On 1,600 *
T. Stephen Thompson(3) 526,688 4.40
Wong Man Ying 1,827 *
Totals 1,845,083
* Less than 1.00%
(1) The corresponding percentages are the quotient of (x) the number of
shares beneficially owned and (y) the sum of the 11,738,056 shares
of common stock outstanding, the number shares of common stock
issuable upon conversion of series A stock, series B stock, series C
stock, series D stock and Series E stock and such holder's options
and warrants exercisable within 60 days of the date of December 31,
2005.
(2) Eric L. (Rick) Sorkin and Frederick Wackerle are directors of the
Company.
(3) T. Stephen Thompson is the president and chief executive officer and
a director of the Company.
DESCRIPTION OF CAPITAL STOCK
General
The following are the material terms of our common stock. You should refer
to the applicable provisions of Delaware law, our certificate of incorporation
as amended and our bylaws for additional information. See "Where You Can Find
More Information."
Under our amended and restated certificate of incorporation our authorized
capital stock consists of:
100,000,000 shares of common stock, par value $0.01 per share; and
5,000,000 shares of preferred stock, par value $0.01 per share.
As of January 3, 2006, we had 11,738,056 shares of common stock
outstanding (not including 330,316 shares of common stock reserved for
conversion of series A stock, 84,150 shares of common stock reserved for
conversion of series B stock, 263,212 shares of common stock reserved for
conversion of series C stock, 325,558 shares of common stock reserved for the
conversion of series D stock, 474,434 shares of common stock reserved for the
conversion of Series E Stock, 1,274,179 shares of common stock reserved for
exercise of outstanding options, 118,606 shares of common stock reserved for
conversion (after exercise into Series E Stock) of the Series E Stock Purchase
Options and 2,850,112 shares of common stock reserved for exercise of
outstanding warrants held by certain investors). Of the shares of common stock
22
outstanding, 9,926,825 shares of common stock are freely tradable without
restriction. All of the remaining 1,811,231 shares are restricted from resale
except pursuant to certain exceptions under the Securities Act. All of the
common stock underlying the Series E Stock, including he Series E Stock
receivable upon exercise of the Series E Stock Purchase Options, is registered
by this prospectus.
Common Stock
Our common stock is traded on the AMEX under the symbol "IMM." Each share
of our common stock entitles the holder to one vote on all matters on which
holders are permitted to vote. There is no cumulative voting for election of
directors. Accordingly, the holders of a majority of the shares voted can elect
all of the nominees for director.
Subject to preferences that may be applicable to any outstanding series of
preferred stock, the holders of our common stock are entitled to dividends when,
and if, declared by the board of directors out of funds legally available for
that purpose. Upon liquidation, dissolution or winding up, subject to
preferences that may be applicable to any outstanding series of preferred stock,
the holders of our common stock are entitled to a pro rata share in any
distribution to stockholders. Our common stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to our common stock. All outstanding shares of our common
stock are fully paid and non-assessable.
PLAN OF DISTRIBUTION
The distribution of the shares described in this prospectus may be
effected from time to time in one or more transactions either (a) at a fixed
price or prices which may be changed, (b) at market prices prevailing at the
time of sale, (c) at prices relating to the prevailing market prices or (d) at
negotiated prices. We (subject to AMEX rules) and the Selling Stockholders may
offer and sell the shares described in this prospectus (i) through agents, (ii)
through one or more underwriters or dealers, (iii) through a block trade in
which the broker or dealer engaged to handle the block trade will attempt to
sell the securities as agent, but may position and resell a portion of the block
as principal to facilitate the transaction, (iv) directly to one or more
purchasers (through a specific bidding or auction process or otherwise) or (v)
through a combination of any of these methods of sale.
To our knowledge, the Selling Stockholders have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares, nor is there an underwriter or
coordinating broker acting in connection with the proposed sales of shares by
the Selling Stockholders. Any shares covered by this prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus. We will pay all costs and expenses
incurred in connection with the registration of the shares offered by this
prospectus. Any brokerage commissions and similar selling expenses attributable
to the sale of shares by the Selling Stockholders will be borne by the Selling
Stockholders.
We have agreed to indemnify the Selling Stockholders and the Selling
Stockholders' respective officers, directors, employees and agents, and each
person who controls such Selling
23
Stockholders, in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act, and the Selling Stockholders have
agreed to indemnify us and our directors and officers in certain circumstances
against certain liabilities, including liabilities arising under the Securities
Act, in each case in connection with this offering.
We or the Selling Stockholders may solicit offers to purchase the shares
directly and we or the Selling Stockholders may sell the shares directly to
institutional or other investors. We or the Selling Stockholders may enter into
agreements with agents, underwriters and dealers under which we or the Selling
Stockholders may agree to indemnify the agents, underwriters and dealers against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments they may be required to make with respect to these
liabilities. Some of the agents, underwriters or dealers, or their affiliates
may be customers of, engage in transactions with or perform services for us or
the Selling Stockholders in the ordinary course of business.
If we or any Selling Stockholders offer and sell shares through an
underwriter or underwriters, then we or the Selling Stockholders will execute an
underwriting agreement with the underwriter or underwriters. The names of the
specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transactions, including compensation of the
underwriters and dealers, which may be in the form of discounts, concessions or
commissions, if any, will be described in a prospectus supplement, if
applicable, which will be used by the underwriters to make resales of the
shares. If the Selling Stockholders offer and sell the shares through a dealer,
then the Selling Stockholders or an underwriter will sell the shares to the
dealer, as principal. The dealer may then resell the shares to the public at
varying prices to be determined by the dealer at the time of resale.
We may grant underwriters who participate in the distribution of the
shares an option to purchase additional shares to cover over-allotments, if any,
in connection with the distribution.
The Selling Stockholders, dealers acting in connection with the offering
and brokers executing sell orders on behalf of one or more Selling Stockholders
may be deemed to be "underwriters" within the meaning of the Securities Act. In
addition, any such broker or dealer may be required to deliver a copy of this
prospectus to any person who purchases any of the shares from or through such
broker or dealer.
LEGAL MATTERS
Legal matters in connection with the validity of the shares offered by
this prospectus will be passed upon for the company by Cadwalader, Wickersham &
Taft LLP, New York, New York.
EXPERTS
The financial statements and management's report on the effectiveness of
internal control over financial reporting incorporated in this prospectus by
reference from the company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their reports, which are incorporated herein by reference, and
24
have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions, the company has been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
You should rely only on the information contained in this prospectus,
incorporated by reference herein or provided by supplement. We have not
authorized anyone else to provide you with different information. The
information contained in this prospectus is correct only as of the date of this
prospectus, regardless of the time of the delivery of this prospectus or any
sale of these securities.
25
GLOSSARY
As used in this prospectus, the following terms have the meanings set
forth below.
AIDS Acquired immune deficiency syndrome, a disease caused by
a virus.
DB289 The designation given to our lead dication.
Dication A chemical molecule with two positively charged ends
that are held together by a chemical linker.
IND Investigational New Drug Application, or IND, is a
document required to be filed with the FDA prior to
performing clinical studies on human subjects in the
United States.
Leishmaniasis An infection caused by a protozoal parasite that affects
the skin and abdominal organs, causing ulcers or skin
disorders that resemble leprosy.
PCP Pneumocystis carinii pneumonia ("PCP") is a protozoal
infection of the lungs, and most common of the
AIDS-associated diseases.
Phase I Clinical testing in which the safety and pharmacological
profile of a new drug is established in humans.
Phase II Clinical testing in which the effectiveness of a new
drug is established in humans. This includes
establishing the dose amount and frequency required to
achieve a therapeutic effect, the metabolic rate of the
administered drug and the toxicity profile in specific
patient populations.
Phase III Commonly referred to as pivotal studies (however, in
certain circumstances, Phase II trials can serve as
pivotal). When Phase II evaluations demonstrate that a
dose range of the drug has a therapeutic effect and an
acceptable safety profile, Phase III trials are
undertaken in large patient populations to further
evaluate dosage, to provide substantial evidence of
clinical efficacy and to further test for safety in an
expanded and diverse patient population at multiple,
geographically-dispersed clinical trial sites.
Trypanosomiasis An infection caused by a protozoal parasite and
transmitted usually by insect bites. Also known as
African sleeping sickness.
26
TABLE OF CONTENTS
RISK FACTORS..................................1
ABOUT THIS PROSPECTUS........................16 IMMTECH INTERNATIONAL,
WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION OF DOCUMENTS BY REFERENCE...17 INC.
FORWARD-LOOKING STATEMENTS...................19
THE COMPANY..................................19
USE OF PROCEEDS..............................20 3,744,540 Shares
SELLING STOCKHOLDERS.........................20 Common Stock
DESCRIPTION OF CAPITAL STOCK.................22
PLAN OF DISTRIBUTION.........................23 ----------------------
LEGAL MATTERS................................24 PROSPECTUS
EXPERTS......................................24 ----------------------
INTERESTS OF NAMED EXPERTS AND COUNSEL.......25
DISCLOSURE OF COMMISSION POSITION ON January 11, 2006
INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES...............................25
GLOSSARY.....................................26
ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS UNTIL
THE LATER OF [ ], 2006 OR 40 DAYS AFTER THE EFFECTIVE
DATE OF THIS PROSPECTUS OR ANY POST-EFFECTIVE AMENDMENT
TO THIS PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS'
OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
================================================================================
27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth our estimates of the expenses to be
incurred in connection with the offering of the shares of common stock being
offered hereby:
SEC registration fee: $ 2,924.86
Printing expenses: $ 2,000.00(1)
Legal fees and expenses: $ 20,000.00(1)
Accounting fees and expenses: $ 10,000.00(1)
Miscellaneous expenses: $ 5,000.00(1)
-----------------
TOTAL: $ 39,924.86(1)
=================
------------------
(1) Estimated.
We will pay all costs and expenses incurred in connection with the
registration of the shares. Any brokerage commissions and similar selling
expenses attributable to the sale of shares by the Selling Stockholders will be
borne by the Selling Stockholders.
Item 15. Indemnification of Directors and Officers.
Limitation of Director's Liability
Our amended and restated certificate of incorporation and bylaws reduce
the liability of directors to the fullest extent permissible under Delaware law.
Delaware law permits a corporation to limit the personal liability of a director
to the corporation or its stockholders for monetary damages for breach of
certain fiduciary duties as a director, provided that the director's liability
may not be eliminated or limited for: (a) breaches of the director's duty of
loyalty to the corporation or its stockholders; (b) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law; (c)
the payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) transactions in which the director received an improper personal benefit.
A director's liability may also not be limited for violation of, or otherwise
relieve the corporation or its directors from the necessity of complying with,
federal or state securities laws or affect the availability of non-monetary
remedies such as injunctive relief or rescission.
Indemnification of Officers and Directors
The provisions of our bylaws relating to indemnification require that we
indemnify our directors and executive officers to the fullest extent permitted
under Delaware law, provided that we may modify the extent of such
indemnification by individual contracts with our directors and
II-1
executive officers, and provided, further, that we will not be required to
indemnify any director or executive officer in connection with a proceeding
initiated by such person, with certain exceptions. Delaware law, our bylaws, and
any indemnity agreements may also permit indemnification for liabilities arising
under the Securities Act or the Exchange Act.
Item 16. Exhibits and Financial Statement Schedules.
See the Exhibit Index immediately following the Signature Page to this
registration statement.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
company pursuant to the provisions described in Item 15 above, or otherwise, the
company has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the company of expenses incurred or paid
by a director, officer or controlling person of the company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned 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:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering price
may be reflected in the form of prospectus filed with the SEC under Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement.
II-2
Provided however, That:
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do
not apply if the registration statement is on Form S-3 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered by this registration
statement, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's Annual Report under Section 13(a) or 15(d) of the Exchange Act that
is incorporated by reference into this registration statement shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B (ss.230.430B of this
chapter):
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the date the
filed prospectus was deemed part of and included in the registration statement;
and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement
II-3
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date.
(6) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
II-4
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the company certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, hereunto
duly authorized, in the City of Vernon Hills, State of Illinois, on January 11,
2006.
IMMTECH INTERNATIONAL, INC.
By: /s/ T. Stephen Thompson
-----------------------------------------------
T. Stephen Thompson
President, Chief Executive Officer and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints T. Stephen Thompson his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement was signed by the following persons in the
capacities and on the dates stated.
Signatures Title Date
---------- ----- ----
/s/ T. Stephen Thompson
-------------------------- President, Chief Executive Officer and Director
T. Stephen Thompson (Principal Executive Officer) January 11, 2006
/s/ Gary C. Parks
-------------------------- Chief Financial Officer, Treasurer and Secretary
Gary C. Parks (Principal Financial and Accounting Officer) January 11, 2006
/s/ Cecilia Chan
--------------------------
Cecilia Chan Executive Vice President and Director January 11, 2006
/s/ Harvey R. Colten, M.D.
--------------------------
Harvey R. Colten, M.D. Director January 11, 2006
/s/ Judy Lau
--------------------------
Judy Lau Director January 11, 2006
/s/ Levi H.K. Lee
--------------------------
Levi H.K. Lee, M.D. Director January 11, 2006
/s/ Eric L. Sorkin
--------------------------
Eric L. Sorkin Director January 11, 2006
/s/ Frederick W. Wackerle
--------------------------
Frederick W. Wackerle Director January 11, 2006
By: /s/ T. Stephen Thompson
--------------------------
T. Stephen Thompson
Attorney-In-Fact
Index to Exhibits
-----------------
Exhibit Description
------- -----------
4.1(1) Form of Common Stock Certificate
4.2(2) Certificate of Designation, Series A Convertible Preferred Stock
4.3(3) Certificate of Designation, Series B Convertible Preferred Stock
4.4(4) Certificate of Designation, Series C Convertible Preferred Stock
4.5(5) Certificate of Designation, Series D Convertible Preferred Stock
4.6(6) Certificate of Designation, Series E Convertible Preferred Stock
4.7(6) Form of Subscription Agreement for December 13, 2005 Private
Placement
5.1(7) Opinion of Cadwalader, Wickersham & Taft LLP dated January 11, 2006
23.1(7) Consent of Deloitte & Touche LLP dated January 11, 2006
23.2(7) Consent of Cadwalader, Wickersham & Taft LLP (included in Exhibit
5.1)
24.1(7) Powers of Attorney (included on Signature Page to this Registration
Statement)
(1) Incorporated by reference to Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (Registration Statement No. 333-64393), as filed
with the Securities and Exchange Commission on March 30, 1999.
(2) Incorporated by reference to the Company's Current Report on Form 8-K, as
filed with the Securities and Exchange Commission on February 14, 2002.
(3) Incorporated by reference to the Company's Current Report on Form 8-K, as
filed with the Securities and Exchange Commission on September 25, 2002.
(4) Incorporated by reference to the Company's Current Report on Form 8-K, as
filed with the Securities and Exchange Commission on June 10, 2003.
(5) Incorporated by reference to the Company's Current Report on Form 8-K, as
filed with the Securities and Exchange Commission on January 21, 2004.
(6) Incorporated by reference to the Company's Current Report on Form 8-K, as
filed with the Securities and Exchange Commission on December 14, 2005.
(7) Filed herewith.