As filed with the Securities and Exchange Commission on April 15, 2003
Registration No. 333-103231
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIGA Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of 13-3864870
Incorporation or Organization) (I.R.S. Employer Identification No.)
420 Lexington Avenue
Suite 601
New York, New York 10170
(212) 672-9100
(Address, including zip code, and
telephone number, including area code, of
Registrant's principal executive office)
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Thomas N. Konatich
Acting Chief Executive Officer
SIGA Technologies, Inc.
420 Lexington Avenue
Suite 601
New York, New York 10170
(212) 672-9100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
Thomas E. Constance, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
Approximate date of commencement of proposed sale to the public: From time
to time as determined by the Selling Stockholders.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
Number of Shares Proposed Maximum Amount of
to be Maximum Offering Aggregate Registration
Title of Shares to be Registered Registered(1) Price Per Share(2) Offering Price(2) Fee(3)
- ----------------------------------------------------------------------------------------------------------------
Common Stock, par value $.0001 per
share............................. 3,913,966 $1.285 $5,029,446.31 $462.71
- ----------------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
registration statement also covers such indeterminate number of shares of
common stock as may be required to prevent dilution resulting from stock
splits, stock dividends or similar events.
(2) Estimated solely for the purpose of computing the amount of the
registration fee, based on the average of the high and low prices for SIGA
Technologies, Inc.'s common stock as reported on the Nasdaq SmallCap
Market on February 7, 2003 in accordance with Rule 457(c) under the
Securities Act of 1933, as amended.
(3) The registration fee of $462.71 was submitted on February 14, 2003 with
the original filing of this registration statement.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
3,913,966 SHARES
SIGA TECHNOLOGIES, INC.
COMMON STOCK
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Shares of common stock of SIGA Technologies, Inc. are being offered by
this prospectus. The shares will be sold from time to time by the selling
stockholders named in this prospectus. The prices at which such selling
stockholders may sell the shares will be determined by the prevailing market
price for the shares or in negotiated transactions. We will not receive any
proceeds from the sale of shares of common stock by the selling stockholders but
we will receive proceeds from the exercise of warrants held by the selling
stockholders. Our shares are traded on the Nasdaq SmallCap Market under the
symbol "SIGA." Our principal executive offices are located at 420 Lexington
Avenue, Suite 601, New York, New York 10170. Our telephone number is (212)
672-9100.
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Investing in the shares involves a high degree of risk. For more
information, please see "Risk Factors" beginning on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the SEC is effective. This preliminary prospectus is not an offer to sell
not does it seek an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
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The date of this prospectus is April 15, 2003
TABLE OF CONTENTS
Page
----
ABOUT SIGA TECHNOLOGIES, INC...................................................1
RECENT DEVELOPMENTS............................................................3
RISK FACTORS...................................................................3
ABOUT THIS PROSPECTUS.........................................................12
FORWARD-LOOKING STATEMENTS....................................................12
USE OF PROCEEDS...............................................................13
SELLING STOCKHOLDERS..........................................................13
PLAN OF DISTRIBUTION..........................................................16
LEGAL MATTERS.................................................................17
EXPERTS.......................................................................17
COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.......17
ADDITIONAL INFORMATION........................................................18
INCORPORATION BY REFERENCE....................................................18
PART II INFORMATION NOT REQUIRED IN PROSPECTUS.............................II-1
SIGNATURES..................................................................II-4
EXHIBIT INDEX...............................................................II-5
ABOUT SIGA TECHNOLOGIES, INC.
We are a development stage technology company, whose primary focus is on
biopharmaceutical product development. Our focus is on mucosal vaccines for
strep throat and sexually transmitted diseases, commensal bacteria for the
delivery of vaccines, novel antibiotics for gram positive and gram negative
bacteria and biological warfare defense. As of the date of this prospectus, none
of our products have been approved for commercial sale and, therefore, we have
not generated any revenues from the commercial sale of our products. To date, we
have relied on a combination of private financings, grants and collaboration
agreements to fund our operations.
Mucosal Vaccines
We are developing vaccines and a delivery system for these vaccines. We
are currently developing mucosal vaccines for strep throat and for sexually
transmitted diseases, or "STDs." A mucosal vaccine is a vaccine that activates
the immune system at the mucus-lined surfaces of the body--the mouth, the nose,
the lungs and the gastrointestinal and urogenital tracts--the sites of entry for
most infectious agents. The system we are developing to deliver these mucosal
vaccines uses genetically engineered commensal bacteria. Commensal bacteria are
harmless bacteria that naturally inhabit the body's surfaces, particularly the
mucus-lined areas.
Strep Throat Vaccine Candidate
We are developing with technology we licensed from The Rockefeller
University, or "Rockefeller," a mucosal vaccine for strep throat. This vaccine
has demonstrated an ability to colonize and induce both a local and systemic
immune response in mice and rabbits. We are collaborating with the National
Institute of Health, or "NIH," and the University of Maryland Center for Vaccine
Development on the clinical development of this vaccine candidate. In December
1997, we, in cooperation with the NIH, filed an Investigational New Drug
Application with the United States Food and Drug Administration, or "FDA." In
September 1999, the NIH awarded us a research grant to help support the research
cost of our strep program.
The first stage of clinical trials was completed at the University of
Maryland in 2000. The study showed the delivery system to be well-tolerated and
that the commensal bacteria was spontaneously or easily eradicated. A second
clinical trial of the commensal delivery system without the strep throat vaccine
technology was initiated in 2000 at the University of Maryland. This trial was
completed in January 2002 and the results corroborated the conclusions of the
earlier study regarding tolerance and eradication. We are currently performing
experiments to test the vaccine formulation prior to initiating Phase I human
trials with the vaccine.
Sexually Transmitted Disease Vaccine Candidates
We are developing a mucosal vaccine for STDs utilizing technology we
licensed from Oregon State University and Washington University. We are
primarily focused on developing a vaccine for chlamydia, the most common form of
STD, and Neisseria, the agent which causes gonorrhea. As both of these STDs
enter people via mucus-lined surfaces of the body, we believe that a mucosal
vaccine will be a more effective delivery method than a traditional vaccine. In
February 2000, we entered into an agreement with the Ross Products Division of
Abbott Laboratories under which Ross provided us with funding for development of
an STD vaccine. The research program was completed in late 2001. The agreement
was extended through the first quarter of 2003 to permit an additional set of
experiments to be conducted.
Anti-Infectives
Our anti-infectives research targets infections that are acquired in
hospitals and drug-resistant bacteria. Our aim is to block the ability of
bacteria to attach and colonize human tissue and to cut off infection at the
first stage in the process. We are developing technologies to treat both major
classes of bacteria--gram-positive and gram-negative.
1
Gram-Positive Antibiotic Technology
We are developing an antibiotic technology based on the research of our
founding scientists which makes it more difficult for gram-positive bacteria to
attach to human tissue. Our scientists found that most gram-positive bacteria
utilize a particular enzyme, a protease, to attach to and colonize human tissue.
Our strategy is to develop antibiotics that inhibit the generation of protease.
In 1997, we entered into a collaborative research and license agreement with the
Wyeth-Ayerst Laboratories Division of American Home Products Corporation to
identify and develop protease inhibitors. Wyeth has completed high throughput
screening of compound libraries and is currently evaluating lead compounds. In
the first quarter of 2001, we received a milestone payment from Wyeth at the
beginning of screening for protease inhibitors. We also licensed technology from
the University of California at Los Angeles which may be incorporated into our
development of products for Wyeth.
Gram-Negative Antibiotic Technology
We are developing a technology to inhibit the ability of gram-negative
bacteria to attach to human tissue. Gram-negative bacteria utilize structures
called pili to adhere to human tissue. We believe that inhibiting the assembly
of pili should effectively inhibit diseases caused by these structures. In July
1999 and August 2000 we were awarded research grants from the NIH to support our
development efforts in this area. We entered into agreements with Med Immune
Inc., Astra AB and Washington University, pursuant to which we acquired rights
to certain gram-negative antibiotic targets, products, screens and services
developed at Washington University. In February 2000, we ended our collaborative
relationship with Washington University on this technology, but we are still
developing the technology which we acquired in the initial agreements.
Broad-Spectrum Antibiotic Technology.
We have identified a stress response enzyme, DegP, that is conserved in
both gram-positive and gram-negative bacteria. It appears to enable bacteria to
deal with external stress factors such as temperature or oxygen radicals. Our
scientists have found that organisms lacking a functional DegP proteinase have a
decreased ability to cause disease. We believe that DegP represents a true
broad-spectrum anti-infective development target. This line of research is still
to early to make accurate assessments of its development.
Biological Warfare Defense
We are developing a host of technologies to aid in biological warfare
defense. These technologies include anti-smallpox drugs, and treatments for
toxins and infections that may be used in an act of terrorism.
The FDA has amended its regulations to make it easier to approve
biological warfare defense products. In addition, the U.S. federal government
increased the amount of money committed to support research in this area.
We believe that we are particularly well-suited to contribute to this area
as our Chief Scientific Officer, Dr. Dennis Hruby, has over 20 years experience
working on smallpox-related research and has been leading a SIGA/Oregon State
University consortium working on an anti-viral drug development program since
September 2000.
Veterinary Vaccines
We believe that we may be able to adapt our vaccine technology to the
field of veterinary medicine. We are in discussions with a number of potential
strategic partners to undertake collaborative development agreements in the
field. To date, we have not concluded any agreements with these potential
strategic partners. In April 2002, we executed a proof-of-concept research
agreement with one of the major vaccine providers to test our commensal vector
technology for veterinary application. This project has been completed and the
partner company is currently evaluating the data.
2
Surface Protein Expression System
We are developing a technology to overproduce many bacterial and human
proteins. The current methods of overproducing such proteins have faced
difficulties in purifying the proteins. By applying their knowledge of
gram-positive bacterial protein expression, our scientists have developed our
surface protein expression system, or "SPEX." Our scientists believe that SPEX
eases the protein purification, as well as increasing the likelihood that the
secreted proteins will be folded properly. We have recently used the SPEX system
to obtain large quantities of a pure protein antigen in preclinical studies. We
have commenced a program to transfer the method from a laboratory scale
environment to a commercial production facility. Our business strategy is to
license this technology on a non-exclusive basis for a broad range of
applications.
RECENT DEVELOPMENTS
In December 2002, we entered into a contract with the U.S. Army to develop
a drug to treat Smallpox. The effective date of the contract is January 1, 2003.
The contract is for a period of four years for a total of approximately $1.6
million. Payment over the term of the agreement will be approximately $400,000
per year.
In February 2003, we entered into a marketing contract with the Four Star
Group. Four Star will work on our behalf to obtain additional government
contracts and grants. Under the contract, we make certain cash payments for
their services and, if they are successful in obtaining new government funding,
they will receive warrants to purchase shares of our stock. The number of
warrants they can receive will depend on the amount of any contract and grant
funding they obtain. We have the right to cancel the agreement after six months.
In March 2003, we entered into a non-binding letter of intent to acquire
substantially all of the assets of Plexus Vaccines, Inc. The transaction is
subject to certain conditions, including, without limitation, the completion of
due diligence and the negotiation and execution of definitive agreements. As
part of the agreement, we have pursuant to a promissory note made a loan to
Plexus in the amount of $50,000, at an interest rate of 6% per annum. If the
transaction is not completed by November 30, 2003 or if certain other events
occur the loan plus accrued interest is to be repaid to SIGA.
RISK FACTORS
Investing in our common stock involves a high degree of risk, and you
should be able to bear losing your entire investment. You should carefully
consider the risks presented by the following factors.
We have incurred operating losses since our inception and expect to incur
net losses and negative cash flow for the foreseeable future. We incurred net
losses of approximately $3.3 million and approximately $3.7 million for the
years ended December 31, 2002 and 2001, respectively. As of December 31, 2002
and December 31, 2001, our accumulated deficit was approximately $29.5 million
and approximately $26.2 million, respectively. We expect to continue to incur
significant operating expenditures. However we do not foresee significant
capital expenditures in the near future, other than as discussed herein. We will
need to generate significant revenues to achieve and maintain profitability.
We cannot guarantee that we will achieve sufficient revenues for
profitability. Even if we do achieve profitability, we cannot guarantee that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, then our business,
results of operations and financial condition will be materially and adversely
affected. Because our strategy includes acquisitions of other businesses,
acquisition expenses and any cash used to make these acquisitions will reduce
our available cash.
Our business will suffer if we are unable to raise additional funding. We
continue to be dependent on our ability to raise money in the equity markets.
There is no guarantee that we will continue to be successful in raising such
funds. If we are unable to raise additional equity funds, we may be forced to
discontinue or cease certain operations. We currently have sufficient operation
capital to finance our operations through approximately the first quarter of
2004. We consume cash at a rate equal to approximately $165,000 per month. Our
annual
3
operating needs vary from year to year depending upon the amount of revenue
generated through grants and licenses and the amount of projects we undertake,
as well as the amount of resources we expend, in connection with acquisitions
all of which may materially differ from year to year and may adversely affect
our business. We anticipate an increase in selling, general and administrative
expenses in the first and second quarters of 2003 in connection with the
preparation and negotiation of definitive documents for our purchase of
substantially all of the assets of Plexus Vaccines, Inc.
Our stock price is, and we expect it to remain, volatile, which could
limit investors' ability to sell stock at a profit. The volatile price of our
stock makes it difficult for investors to predict the value of their investment,
to sell shares at a profit at any given time, or to plan purchases and sales in
advance. A variety of factors may affect the market price of our common stock.
These include, but are not limited to:
o publicity regarding actual or potential clinical results relating to
products under development by our competitors or us;
o delay or failure in initiating, completing or analyzing pre-clinical
or clinical trials or the unsatisfactory design or results of these
trials;
o achievement or rejection of regulatory approvals by our competitors
or us;
o announcements of technological innovations or new commercial
products by our competitors or us;
o developments concerning proprietary rights, including patents;
o developments concerning our collaborations;
o regulatory developments in the United States and foreign countries;
o economic or other crises and other external factors;
o period-to-period fluctuations in our revenues and other results of
operations;
o changes in financial estimates by securities analysts; and
o sales of our common stock.
Additionally, because there is not a high volume of trading in our stock,
any information about SIGA in the media may result in significant volatility in
our stock price.
We will not be able to control many of these factors, and we believe that
period-to-period comparisons of our financial results will not necessarily be
indicative of our future performance.
In addition, the stock market in general, and the market for biotechnology
companies in particular, has experienced extreme price and volume fluctuations
that may have been unrelated or disproportionate to the operating performance of
individual companies. These broad market and industry factors may seriously harm
the market price of our common stock, regardless of our operating performance.
4
The following table presents the high and low bid range of our stock for
the past eight quarters.
Bid Range
2001 High Low
------ -----
First Quarter...................................... $4.88 $1.62
Second Quarter..................................... $4.50 $1.62
Third Quarter...................................... $4.05 $2.24
Fourth Quarter..................................... $5.21 $1.91
2002 High Low
First Quarter...................................... $2.91 $2.01
Second Quarter..................................... $2.63 $0.81
Third Quarter...................................... $1.39 $0.65
Fourth Quarter..................................... $2.15 $0.65
We are in various stages of product development and there can be no
assurance of successful commercialization. Our research and development programs
are at an early stage of development. The strep vaccine program is in Phase I
clinical trials. All other programs are in the pre-clinical stage of
development. Our biological warfare defense products do not need human clinical
trials for approval by the FDA. We will need to perform two animal models and
provide safety data for a product to be approved. Our other products will be
subject to the approval guidelines under FDA regulatory requirements which
include a number of phases of testing in humans.
The FDA has not approved any of our biopharmaceutical product candidates.
Any drug candidates developed by us will require significant additional research
and development efforts, including extensive pre-clinical and clinical testing
and regulatory approval, prior to commercial sale. We cannot be sure our
approach to drug discovery will be effective or will result in the development
of any drug. We cannot expect that any drugs resulting from our research and
development efforts will be commercially available for many years, if at all.
We have limited experience in conducting pre-clinical testing and clinical
trials. Even if we receive initially positive pre-clinical or clinical results,
such results do not mean that similar results will be obtained in the later
stages of drug development, such as additional pre-clinical testing or human
clinical trials. All of our potential drug candidates are prone to the risks of
failure inherent in pharmaceutical product development, including the
possibility that none of our drug candidates will or can:
o be safe, non-toxic and effective;
o otherwise meet applicable regulatory standards;
o receive the necessary regulatory approvals;
o develop into commercially viable drugs;
o be manufactured or produced economically and on a large scale;
o be successfully marketed;
o be reimbursed by government and private insurers; and
o achieve customer acceptance.
5
In addition, third parties may preclude us from marketing our drugs
through enforcement of their proprietary rights, or third parties may succeed in
marketing equivalent or superior drug products. Our failure to develop safe,
commercially viable drugs would have a material adverse effect on our business,
financial condition and results of operations.
Most of our immediately foreseeable future revenues are contingent upon
collaborative and license agreements and we may not achieve sufficient revenues
from these agreements to attain profitability. Until and unless we successfully
make a product, our ability to generate revenues will largely depend on our
ability to enter into additional collaborative and license agreements with third
parties and maintain the agreements we currently have in place. Substanially all
of our revenues for the years ended December 31, 2002 and 2001, respectively,
were derived from revenues related to collaborative and license agreements. We
will receive little or no revenues under our collaborative agreements if our
collaborators' research, development or marketing efforts are unsuccessful, or
if our agreements are terminated early. Additionally, if we do not enter into
new collaborative agreements, we will not receive future revenues from new
sources. Our future revenue is substantially dependent on the continuing grant
and contract work being performed for the NIH which expires in May 2004 and the
U.S. Army which expires at the end of December 2007. These agreements are for
specific work to be performed under the agreements and could only be canceled by
the other party thereto for non-performance by the other party thereto.
Several factors will affect our future receipt of revenues from
collaborative arrangements, including the amount of time and effort expended by
our collaborators, the timing of the identification of useful drug targets and
the timing of the discovery and development of drug candidates. Under our
existing agreements, we may not earn significant milestone payments until our
collaborators have advanced products into clinical testing, which may not occur
for many years, if at all.
We have material agreements with the following collaborators:
o The Rockefeller University. The term of our agreement with
Rockefeller is for the duration of the patents and a number of
pending patents. As we do not currently know when any patents
pending or future patents will expire, we cannot at this time
definitively determine the term of this agreement. The agreement can
be terminated earlier if we are in breach of the provisions of the
agreement and do not cure the breach in the allowed cure period. We
are current in all obligations under the contract.
o Oregon State University ("OSU"). We have two agreements with OSU.
OSU is a signatory of our agreement with Rockefeller. The term of
this agreement is for the duration of the patents and a number of
pending patents. As we do not currently know when any patents
pending or future patents will expire, we cannot at this time
definitively determine the term of this agreement. The agreement can
be terminated earlier if we are in breach of the provisions of the
agreement and do not cure the breach in the allowed cure period. We
are current in all obligations under the contract. We have also
entered into a sub-contract agreement with OSU for us to perform
work under a grant OSU has from the NIH. The sub-contract agreement
is renewable annually and the current terms expire on August 31,
2003. The agreement can be terminated earlier if we are in breach of
the provisions of the agreement and do not cure the breach in the
allowed cure period. We are current in all our obligations under the
sub-contract agreement.
o Wyeth. Our license agreement expires on the earlier of June 30, 2007
or the last to expire patent that we have sub-licensed to them.
Wyeth has the right to terminate the agreement on 90 days written
notice. If terminated, all rights granted to Wyeth will revert to
us, except for any compound identified by Wyeth prior to the date of
termination and subject to the milestones and royalty obligations of
the agreement.
o National Institutes of Health. Under our collaborative agreement
with the NIH, it is required to conduct and pay for the clinical
trials of our strep vaccine product through phase II human trails.
The NIH can terminate the agreement on 60 days written notice. If
terminated, we receive copies of all data, reports and other
information related to the trials. If terminated, we would have to
find another source of funds to continue to conduct the trials. We
are party to another collaborative agreement with
6
the NIH under which we received a grant for approximately $865,000.
The term of this agreement expires in May 2004. We are paid as the
work is performed and the agreement can be cancelled for
non-performance. We are current in all our obligations under this
agreement.
o Washington University. We have licensed certain technology from
Washington under a non-exclusive license agreement. The term of our
agreement with Washington is for the duration of the patents and a
number of pending patents. As we do not currently know when any
patents pending or future patents will expire, we cannot at this
time definitively determine the term of this agreement. The
agreement cannot be terminated unless we fail to pay our share of
the joint patent costs for the technology licensed. We have
currently made all necessary payments under the agreement.
o Regents of the University of California. We have licensed certain
technology from Regents under an exclusive license agreement. We are
required to pay minimum royalties under this agreement. This
agreement is related to our agreement with Wyeth and expires at the
same time as that agreement. It can be cancelled earlier if we
default on our obligations or if Wyeth cancels its agreement with
SIGA and we are not able to find a replacement for Wyeth. We have
currently met all our obligations under this agreement.
We may face limitations on our ability to attract suitable acquisition
opportunities or to integrate additional acquired businesses and the failure to
consummate an acquisition may significantly drain our resources. As part of our
business strategy we expect to enter into business combinations and
acquisitions. Some of these transactions could be material in size and scope.
While we will continually be searching for additional acquisition opportunities,
we may not be successful in identifying suitable acquisitions. We compete for
acquisition candidates with other entities, some of which have greater financial
and other resources than we have. Increased competition for acquisition
candidates may make fewer acquisition candidates available to us and may cause
acquisitions to be made on less attractive terms, such as higher purchase
prices. Acquisition costs may increase to levels that are beyond our financial
capability or that would adversely affect our results of operations and
financial condition.
Our ability to make acquisitions will depend in part on the relative
attractiveness of shares of our common stock as consideration for potential
acquisition candidates. This attractiveness may depend largely on the relative
market price, our ability to register common stock and capital appreciation
prospects of our common stock. If the market price of our common stock were to
decline materially over a prolonged period of time, our acquisition program
could be materially adversely affected. Failure to making an acquisition will
limit our ability to grow, but will not be central to our continued existence.
Costs associated with failed acquisitions, such as our plans to merge with
Allergy Therapeutics and Hypernix, may result in significant operating costs
that may need to be financed from operations or from additional equity capital.
The total costs associated with the failed acquisition of Allergy Therapeutics
were approximately $625,000, of which approximately $200,000 remain unpaid.
These costs were associated with professional fees for attorneys and
accountants. Additionally, there was significant time spent by our management in
the contemplated transaction. The proposed Hypernix transaction resulted in
expenses of $511,000 for advances made to them. We recovered approximately
$85,000 from them.
Additionally, we have recently signed a non-binding term sheet to acquire
substantially all of the assets of Plexus Vaccines, Inc. We will expend money
and other resources in connection with the negotiation and execution of the
definitive documentation. We will be materially adversely effected if we do not
consummate this transaction and no assurance can be given that we will
consummate this transaction.
We may have difficulty managing our growth. We expect to experience growth
in the number of our employees and the scope of our operations. This growth has
placed, and may continue to place, a significant strain on our management and
operations. Our ability to manage this growth will depend upon our ability to
broaden our management team and our ability to attract, hire and retain skilled
employees. Our success will also depend on the ability of our officers and key
employees to continue to implement and improve our operational and other systems
and to hire, train and manage our employees.
7
We may not be able to consummate potential acquisitions or an acquisition
may not enhance our business or may decrease rather than increase our earnings.
In the future, we may issue additional securities in connection with one or more
acquisitions, which may dilute our existing shareholders. Future acquisitions
could also divert substantial management time and result in short term
reductions in earnings or special transaction or other charges. In addition, we
cannot guarantee that we will be able to successfully integrate the businesses
that we may acquire into our existing business. Our shareholders may not have
the opportunity to review, vote on or evaluate future acquisitions.
The biopharmaceutical market in which we compete and will compete is
highly competitive. The biopharmaceutical industry is characterized by rapid and
significant technological change. Our success will depend on our ability to
develop and apply our technologies in the design and development of our product
candidates and to establish and maintain a market for our product candidates.
There also are many companies, both public and private, including major
pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions engaged in developing
pharmaceutical and biotechnology products. Many of these companies have
substantially greater financial, technical, research and development, and human
resources than us. Competitors may develop products or other technologies that
are more effective than any that are being developed by us or may obtain FDA
approval for products more rapidly than us. If we commence commercial sales of
products, we still must compete in the manufacturing and marketing of such
products, areas in which we have no experience. Many of these companies also
have manufacturing facilities and established marketing capabilities that would
enable such companies to market competing products through existing channels of
distribution. Two companies with similar profiles are VaxGen, Inc. which is
developing vaccines against anthrax, Smallpox and HIV/AIDS; and Avant
Immunotherapeutics, Inc. which has vaccine programs for agents of biological
warfare.
Because we must obtain regulatory clearance to test and market our
products in the United States, we cannot predict whether or when we will be
permitted to commercialize our products. A pharmaceutical product cannot be
marketed in the U.S. until it has completed rigorous pre-clinical testing and
clinical trials and an extensive regulatory clearance process implemented by the
FDA. Pharmaceutical products typically take many years to satisfy regulatory
requirements and require the expenditure of substantial resources depending on
the type, complexity and novelty of the product.
Before commencing clinical trials in humans, we must submit and receive
clearance from the FDA by means of an Investigational New Drug ("IND")
application. Institutional review boards and the FDA oversee clinical trials and
such trials:
o must be conducted in conformance with the FDA's good laboratory
practice regulations;
o must meet requirements for institutional review board oversight;
o must meet requirements for informed consent;
o must meet requirements for good clinical and manufacturing
practices;
o are subject to continuing FDA oversight;
o may require large numbers of test subjects; and
o may be suspended by us or the FDA at any time if it is believed that
the subjects participating in these trials are being exposed to
unacceptable health risks or if the FDA finds deficiencies in the
IND application or the conduct of these trials.
Before receiving FDA clearance to market a product, we must demonstrate
that the product is safe and effective on the patient population that will be
treated. Data we obtain from preclinical and clinical activities are susceptible
to varying interpretations that could delay, limit or prevent regulatory
clearances. Additionally, we have limited experience in conducting and managing
the clinical trials and manufacturing processes necessary to obtain regulatory
clearance.
8
If regulatory clearance of a product is granted, this clearance will be
limited only to those states and conditions for which the product is
demonstrated through clinical trials to be safe and efficacious. We cannot
ensure that any compound developed by us, alone or with others, will prove to be
safe and efficacious in clinical trials and will meet all of the applicable
regulatory requirements needed to receive marketing clearance.
If our technologies or those of our collaborators are alleged or found to
infringe the patents or proprietary rights of others, we may be sued or have to
license those rights from others on unfavorable terms. Our commercial success
will depend significantly on our ability to operate without infringing the
patents and proprietary rights of third parties. Our technologies, along with
our licensors' and our collaborators' technologies, may infringe the patents or
proprietary rights of others. If there is an adverse outcome in litigation or an
interference to determine priority or other proceeding in a court or patent
office, then we, or our collaborators an licensors, could be subjected to
significant liabilities, required to license the disputed rights from or to
other parties and/or required to cease using a technology necessary to carry out
research, development and commercialization. At present we are unaware of any or
potential infringement claims against our or our licensors' or collaborators'
patent portfolios.
The costs to establish the validity of patents, to defend against patent
infringement claims of others and to assert infringement claims against others
can be expensive and time consuming, even if the outcome is favorable. An
outcome of any patent prosecution or litigation that is unfavorable to us or one
of our licensors or collaborators may have a material adverse effect on us. We
could incur substantial costs if we are required to defend ourselves in patent
suits brought by third parties, if we participate in patent suits brought
against or initiated by our licensors or collaborators or if we initiate such
suits. We may not have sufficient funds or resources in the event of litigation.
Additionally, we may not prevail in any such action.
Any conflicts resulting from third-party patent applications and patents
could significantly reduce the coverage of the patents owned, optioned by or
licensed to us or our collaborators and limit our ability or that of our
collaborators to obtain meaningful patent protection. If patents are issued to
third parties that contain competitive or conflicting claims, we, our licensors
or our collaborators may be legally prohibited from researching, developing or
commercializing of potential products or be required to obtain licenses to these
patents or to develop or obtain alternative technology. We, our licensors and/or
our collaborators may be legally prohibited from using patented technology, may
not be able to obtain any license to the patents and technologies of third
parties on acceptable terms, if at all, or may not be able to obtain or develop
alternative technologies.
In addition, like many biopharmaceutical companies, we may from time to
time hire scientific personnel formerly employed by other companies involved in
one or more areas similar to the activities conducted by us. We and/or these
individuals may be subject to allegations of trade secret misappropriation or
other similar claims as a result of their prior affiliations.
Our ability to compete may decrease if we do not adequately protect our
intellectual property rights. Our commercial success will depend in part on our
and our collaborators' ability to obtain and maintain patent protection for our
proprietary technologies, drug targets and potential products and to effectively
preserve our trade secrets. Because of the substantial length of time and
expense associated with bringing potential products through the development and
regulatory clearance processes to reach the marketplace, the pharmaceutical
industry places considerable importance on obtaining patent and trade secret
protection. The patent positions of pharmaceutical and biotechnology companies
can be highly uncertain and involve complex legal and factual questions. No
consistent policy regarding the breadth of claims allowed in biotechnology
patents has emerged to date. Accordingly, we cannot predict the type and breadth
of claims allowed in these patents.
We have licensed the rights to seven issued United States patents and two
issued European patents. These patents have varying lives and they are related
to the technology licensed from Rockefeller University for the strep and gram
positive products. We have three additional patent applications in the U.S. and
three applications in Europe relating to this technology. We are joint owner
with Washington University of four issued patents in the U.S. and one in Europe.
In addition, there are seven co-owned patent applications in the U.S. and one in
Europe. These patents are for the technology used for the gram-negative product
opportunities. We are also exclusive owner of two U.S. patents and three U.S.
patent applications. Furthermore, there are three U.S. patent applications and
two European applications. These patents relate to our DegP product
opportunities.
9
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Licensed from Co-owned with
Rockefeller Washington Owned by
PATENTS Univ. Univ. SIGA
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U.S. 7 4 2
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Europe 2 1
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Japan 4
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Australia 6 1
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Canada 3
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Mexico 1
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APPLICATIONS
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U.S. 3 7 3
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Europe 3 2
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Japan 2 1 2
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Canada 5 1 2
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Hungary 1
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China 1
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Korea 1
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New Zealand 1
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Australia 2
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We also rely on copyright protection, trade secrets, know-how, continuing
technological innovation and licensing opportunities. In an effort to maintain
the confidentiality and ownership of trade secrets and proprietary information,
we require our employees, consultants and some collaborators to execute
confidentiality and invention assignment agreements upon commencement of a
relationship with us. These agreements may not provide meaningful protection for
our trade secrets, confidential information or inventions in the event of
unauthorized use or disclosure of such information, and adequate remedies may
not exist in the event of such unauthorized use or disclosure.
We depend on a key employee in a competitive market for skilled personnel.
We are highly dependent on Dr. Dennis Hruby, our Chief Scientific Officer. We
currently have an employment agreement which expires on December 31, 2005 with
Dr. Hruby who we consider to be a "key employee." The loss of his services prior
to the termination of his employment agreement would have a material adverse
effect on our business. We do not maintain a key person life insurance policy on
the life of any employee.
Our future success also will depend in part on the continued service of
our key scientific, software, bioinformatics and management personnel and our
ability to identify, hire and retain additional personnel, including, when we
have a product for commercialization, customer service, marketing and sales
staff. We experience intense competition for qualified personnel. We may not be
able to continue to attract and retain personnel necessary to develop our
business.
Our activities involve hazardous materials and may subject us to
environmental regulatory liabilities. Our biopharmaceutical research and
development involves the controlled use of hazardous and radioactive materials
and biological waste. We are subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
these materials and certain waste products. Although we believe that our safety
procedures for handling and disposing of these materials comply with legally
prescribed standards, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of an accident, we could
be held liable for damages, and this liability could exceed our resources. The
research and development activities of our company do not produce any unusual
hazardous products. We do use small amounts of radioactive substances, including
32P, 35S and 3H, which are stored used and disposed of in accordance with
Nuclear Regulatory Commission regulations. We maintain general liability
insurance in the amount of approximately $3,000,000 and we believe this amount
should be sufficient to cover any contingent losses.
We believe that we are in compliance in all material respects with
applicable environmental laws and regulations and currently do not expect to
make material additional capital expenditures for environmental control
10
facilities in the near term. However, we may have to incur significant costs to
comply with current or future environmental laws and regulations.
Our potential products may not be acceptable in the market or eligible for
third party reimbursement resulting in a negative impact on our future financial
results. Any products successfully developed by us or our collaborative partners
may not achieve market acceptance. The antibiotic products which we are
attempting to develop will compete with a number of well-established traditional
antibiotic drugs manufactured and marketed by major pharmaceutical companies.
The degree of market acceptance of any of our products will depend on a number
of factors, including:
o the establishment and demonstration in the medical community of the
clinical efficacy and safety of such products,
o the potential advantage of such products over existing treatment
methods, and
o reimbursement policies of government and third-party payors.
Physicians, patients or the medical community in general may not accept or
utilize any products that we or our collaborative partners may develop. Our
ability to receive revenues and income with respect to drugs, if any, developed
through the use of our technology will depend, in part, upon the extent to which
reimbursement for the cost of such drugs will be available from third-party
payors, such as government health administration authorities, private health
care insurers, health maintenance organizations, pharmacy benefits management
companies and other organizations. Third-party payors are increasingly disputing
the prices charged for pharmaceutical products. If third-party reimbursement was
not available or sufficient to allow profitable price levels to be maintained
for drugs developed by us or our collaborative partners, it could adversely
affect our business.
If our products harm people, we may experience product liability claims
that may not be covered by insurance. We face an inherent business risk of
exposure to potential product liability claims in the event that drugs we
develop are alleged to cause adverse effects on patients. Such risk exists for
products being tested in human clinical trials, as well as products that receive
regulatory approval for commercial sale. We may seek to obtain product liability
insurance with respect to drugs we and/or or our collaborative partners develop.
However, we may not be able to obtain such insurance. Even if such insurance is
obtainable, it may not be available at a reasonable cost or in a sufficient
amount to protect us against liability.
We may be required to perform additional clinical trials or change the
labeling of our products if we or others identify side effects after our
products are on the market, which could harm sales of the affected products. If
we or others identify side effects after any of our products, if any, after they
are on the market, or if manufacturing problems occur:
o regulatory approval may be withdrawn;
o reformulation of our products, additional clinical trials, changes
in labeling of our products may be required;
o changes to or re-approvals of our manufacturing facilities may be
required;
o sales of the affected products may drop significantly;
o our reputation in the marketplace may suffer; and
o lawsuits, including class action suits, may be brought against us.
Any of the above occurrences could harm or prevent sales of the affected
products or could increase the costs and expenses of commercializing and
marketing these products.
11
Health care reform and controls on health care spending may limit the
price we charge for any products and the amounts thereof that we can sell. The
U.S. federal government and private insurers have considered ways to change, and
have changed, the manner in which health care services are provided in the U.S.
Potential approaches and changes in recent years include controls on health care
spending and the creation of large purchasing groups. In the future, the U.S.
government may institute further controls and limits on Medicare and Medicaid
spending. These controls and limits might affect the payments we could collect
from sales of our products. Uncertainties regarding future health care reform
and private market practices could adversely affect our ability to sell any
products profitably in the U.S.
Difficult Manufacturing Requirements. The manufacture of genetically
engineered commensals is a time-consuming and complex process. Our management
believes that we have the ability to acquire or produce quantities of
genetically engineered commensals sufficient to support our present needs for
research and our projected needs for our initial clinical development programs.
However, we believe that improvements in our manufacturing technology will be
required to enable us to meet the volume and cost requirements needed for
certain commercial applications of commensal products. Products based on
commensals have never been manufactured on a commercial scale. The manufacture
of all of our products will be subject to current GMP requirements prescribed by
the FDA or other standards prescribed by the appropriate regulatory agency in
the country of use. There can be no assurance that we will be able to
manufacture products, or have products manufactured for us, in a timely fashion
at acceptable quality and prices, that we or third party manufacturers can
comply with GMP or that we or third party manufacturers will be able to
manufacture an adequate supply of product.
The future issuance of preferred stock may adversely effect the rights of
the holders of our common stock. Our certificate of incorporation allows our
Board of Directors to issue up to 10,000,000 shares of preferred stock and to
fix the voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of these shares without any further vote or action
by the stockholders. The rights of the holders of common stock will be subject
to, and could be adversely affected by, the rights of the holders of any
preferred stock that we may issue in the future. The issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock, thereby delaying, deferring or preventing a change in control.
Concentration of ownership of our capital stock could delay or prevent
change of control. Our directors, executive officers and principal stockholders
beneficially own a significant percentage of our common stock and preferred
stock. They also have, through the exercise or conversion of certain securities,
the right to acquire additional common stock. As a result, these stockholders,
if acting together, have the ability to significantly influence the outcome of
corporate actions requiring shareholder approval. Additionally, this
concentration of ownership may have the effect of delaying or preventing a
change in control of SIGA. At December 31, 2002, directors, officers and
principal stockholders beneficially own approximately 37% of our outstanding
capital stock.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC"). The prospectus relates to
3,913,966 shares of our common stock which the selling stockholders named in
this prospectus may sell from time to time. We will not receive any of the
proceeds from these sales but we will receive proceeds from the exercise of
warrants held by the selling stockholders. We have agreed to pay the expenses
incurred in registering the shares, including legal and accounting fees.
The shares have not been registered under the securities laws of any state
or other jurisdiction as of the date of this prospectus. Brokers or dealers
should confirm the existence of an exemption from registration or effectuate
such registration in connection with any offer and sale of the shares.
This prospectus describes certain risk factors that you should consider
before purchasing the shares. See "Risk Factors" beginning on page 3. You should
read this prospectus together with the additional information described under
the heading "Where You Can Find More Information."
12
FORWARD-LOOKING STATEMENTS
This prospectus and the other reports we have filed with the SEC, contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, or the "Securities Act," and Section 21E of the
Securities Exchange Act of 1934, as amended, or the "Exchange Act." The words or
phrases "can be", "expects", "may affect", "may depend", "believes", "estimate",
"project", and similar words and phrases are intended to identify such
forward-looking statements. Such forward-looking statements are subject to
various known and unknown risks and uncertainties and we caution you that any
forward-looking information provided by or on behalf of SIGA is not a guarantee
of future performance. Our actual results could differ materially from those
anticipated by such forward-looking statements due to a number of factors, some
of which are beyond our control, in addition to those risks discussed in "Risk
Factors" in this prospectus and in our other public filings, press releases and
statements by our management, including (i) the volatile and competitive nature
of the biotechnology industry, (ii) changes in domestic and foreign economic and
market conditions, and (iii) the effect of federal, state and foreign regulation
on our businesses. All forward-looking statements are current only as of the
date on which such statements were made. We do not undertake any obligation to
publicly update any forward-looking statement to reflect events or circumstances
after the date on which any such statement is made or to reflect the occurrence
of unanticipated events.
USE OF PROCEEDS
The net proceeds from the sale of the shares of common stock offered will
be received by the selling stockholders. We will not receive any of the proceeds
from the sale of the shares of common stock offered by the selling stockholders
but we will receive proceeds from the exercise of the warrants held by the
selling stockholders. We will use proceeds from the exercise of warrants as
general working capital.
SELLING STOCKHOLDERS
The table below sets forth information regarding ownership of our common
stock by the selling stockholders on January 16, 2003 and the shares of common
stock to be sold by them under this prospectus. Beneficial ownership is
determined in accordance with SEC rules and includes voting or investment power
with respect to the securities. Except as indicated by footnote, and subject to
applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of common stock shown as
beneficially owned by them. SEC rules require that the number of shares of
common stock outstanding used in calculating the percentage for each listed
person includes the shares of common stock underlying warrants or options held
by such person that are exercisable within 60 days of January 16, 2003. As of
January 16, 2003, 13,226,649 shares of common stock were outstanding.
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------ -------------------------------
Shares of
Common Stock Number of
Shares of Percent of Offered Shares of Percent of
Name of Selling Stockholder Common Stock Common Stock Hereby Common Stock Common Stock
- ----------------------------------- ------------ ------------ ------------ -------------- --------------
Murray Alon........................ 50,000 * 50,000 0 *
Leonard Cohen...................... 25,000 * 25,000 0 *
Marvin Sheeber..................... 50,000 * 50,000 0 *
Ronald Schaffer.................... 25,000 * 25,000 0 *
Robert Walker...................... 12,500 * 12,500 0 *
Jerome Belson...................... 50,000 * 50,000 0 *
Robert Karsten, DDS................ 50,000 * 50,000 0 *
Guy Michael Dart................... 50,000 * 50,000 0 *
Jeanette Dart...................... 12,500 * 12,500 0 *
Robert M. Rosenblum................ 25,000 * 25,000 0 *
Gerald Brauser..................... 100,000 * 100,000 0 *
Maximillian Santos................. 22,727 * 22,727 0 *
13
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------ -------------------------------
Shares of
Common Stock Number of
Shares of Percent of Offered Shares of Percent of
Name of Selling Stockholder Common Stock Common Stock Hereby Common Stock Common Stock
- ----------------------------------- ------------ ------------ ------------ -------------- --------------
Bruce B. Federman.................. 25,000 * 25,000 0 *
Leo Berman......................... 18,750(1) * 18,750(1) 0 *
E. Gerald Kay...................... 75,000(2) * 75,000(2) 0 *
Delores Bowman..................... 87,500(3) * 87,500(3) 0 *
C. Ames Byrd & Donna Byrd
JTWROS............................. 75,000(2) * 75,000(2) 0 *
Paul Becker........................ 150,000(4) 1.10% 150,000(4) 0 *
Kevin Hurley....................... 75,000(2) * 75,000(2) 0 *
Dennis Levine...................... 62,500(3) * 62,500(3) 0 *
Urs Brunner........................ 150,000(4) 1.10% 150,000(4) 0 *
Lance Investments Holdings Ltd..... 150,000(4) 1.10% 150,000(4) 0 *
Henderson Orthopedics Profit
Sharing Plan....................... 37,500(3) * 37,500(3) 0 *
Kenneth Wilk....................... 64,773(3) * 64,773(3) 0 *
Tis Prager......................... 75,000(2) * 75,000(2) 0 *
Keys Foundation.................... 112,500(5) * 112,500(5) 0 *
Israel Cohen....................... 75,000(2) * 75,000(2) 0 *
Lindsay E. Dart.................... 75,000(2) * 75,000(2) 0 *
Joseph Giamanco.................... 150,000(4) 1.10% 150,000(4) 0 *
Warren Gilbert & Marianne Gilbert
JT IN THE ENTIRETY................. 37,500(3) * 37,500(3) 0 *
Bruno Widmer....................... 37,500(3) * 37,500(3) 0 *
Harold Miller...................... 31,250(1) * 31,250(1) 0 *
Daniel Orenstein................... 31,250(1) * 31,250(1) 0 *
Frank Lagano....................... 62,500(3) * 62,500(3) 0 *
Ronald J. Menello.................. 75,000(2) * 75,000(2) 0 *
Bridge Ventures, Inc............... 300,000(6) 2.2% 300,000(6) 0 *
Langley Partners................... 366,667(7) 2.7% 300,000 66,667(7) *
Gryphpon Master Fund, L.P.......... 500,000(8) 3.6% 400,000 100,000(8) *
Cranshire Capital.................. 408,333(9) 3.0% 200,000 208,333(9) 1.6%
Alfons Melohn...................... 343,478(10) * 100,000 243,478(10) 1.8%
First Montauk...................... 26,736(11) * 26,736(11) 0 *
Christine Walker................... 3,176(12) * 3,176(12) 0 *
Kevin J. Martin.................... 74,169(13) * 74,169(13) 0 *
Daniel Walsh....................... 74,169(13) * 74,169(13) 0 *
Michael Jacks...................... 10,000(14) * 10,000(14) 0 *
Gary J. Shemano.................... 40,000(15) * 40,000(15) 0 *
Willaim Corbett.................... 40,000(15) * 40,000(15) 0 *
Scarborough, Ltd................... 10,228(16) * 10,228(16) 0 *
The Promotion Factory.............. 65,000(17) * 65,000(17) 0 *
14
Securities Owned Prior to Offering Securities Owned After Offering
------------------------------------------ -------------------------------
Shares of
Common Stock Number of
Shares of Percent of Offered Shares of Percent of
Name of Selling Stockholder Common Stock Common Stock Hereby Common Stock Common Stock
- ----------------------------------- ------------ ------------ ------------ -------------- --------------
Bridington Ltd..................... 65,000(17) * 65,000(18) 0 *
- ----------
* Less than one percent
(1) Includes 6,250 shares of common stock issuable upon exercises of warrants.
(2) Includes 25,000 shares of common stock issuable upon exercises of
warrants.
(3) Includes 12,500 shares of common stock issuable upon exercises of
warrants.
(4) Includes 50,000 shares of common stock issuable upon exercises of
warrants.
(5) Includes 37,500 shares of common stock issuable upon exercises of
warrants.
(6) Includes 250,000 shares of common stock issuable upon exercises of
warrants.
(7) Includes 66,667 shares of common stock issuable upon exercises of
warrants.
(8) Includes 100,000 shares of common stock issuable upon exercises of
warrants.
(9) Includes 208,333 shares of common stock issuable upon exercises of
warrants.
(10) Includes 240,478 shares of common stock issuable upon exercises of
warrants.
(11) Includes 26,736 shares of common stock issuable upon exercise of warrants.
(12) Includes 3,176 shares of common stock issuable upon exercises of warrants.
(13) Includes 74,169 shares of common stock issuable upon exercises of
warrants.
(14) Includes 10,000 shares of common stock issuable upon exercises of
warrants.
(15) Includes 40,000 shares of common stock issuable upon exercises of
warrants.
(16) Includes 10,228 shares of common stock issuable upon exercises of
warrants.
(17) Includes 65,000 shares of common stock issuable upon exercises of options.
The information provided in the table above with respect to the selling
stockholders has been obtained from such selling stockholders.
The selling stockholders have not within the past three years had any
position, office or other material relationship with us or any of our
predecessors or affiliates. Because the selling stockholders may sell all or
some portion of the shares of common stock beneficially owned by them, only an
estimate (assuming the selling stockholders sell all of the shares offered
hereby) can be given as to the number of shares of common stock that will be
beneficially owned by the selling stockholders after this offering. In addition,
the selling stockholders may have sold, transferred or otherwise disposed of, or
may sell, transfer or otherwise dispose of, at any time or from time to time
since the dates on which they provided the information regarding the shares
beneficially owned by them, all or a portion of the shares beneficially owned by
them in transactions exempt from the registration requirements of the Securities
Act.
We have filed with the SEC, under the Securities Act of 1933, a
registration statement on Form S-3, of which this prospectus forms a part, with
respect to the resale of the securities from time to time on the Nasdaq SmallCap
Market or in privately-negotiated transactions and have agreed to prepare and
file such amendments and supplements to the registration statement as may be
necessary to keep the registration statement effective until the earlier of (i)
April 15, 2006, (ii) the date when the selling stockholders may sell all of the
shares of common stock under Rule 144 without volume or other restrictions or
limits, or (iii) the date on which the selling stockholders have sold all of the
shares of common stock.
15
PLAN OF DISTRIBUTION
This prospectus covers the sale of shares of common stock from time to
time by the selling stockholders named in the table above. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The selling stockholders may effect such transactions
by selling the shares to or through broker-dealers. The shares may be sold by
one or more of, or a combination of, the following:
o a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In effecting
sales, broker-dealers engaged by the selling stockholder may arrange for other
broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus.
The selling stockholders also may loan or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default the broker-dealer may sell the pledged shares pursuant to this
prospectus. Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. Broker-dealers or agents and any other participating broker-dealers or
the selling stockholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because the
selling stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. The selling stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities. There is
no underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
16
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, the
selling stockholders will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
We will file a supplement to this prospectus, if required, pursuant to
Rule 424(b) under the Securities Act upon being notified by the selling
stockholders that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
o the name of the selling stockholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
o other facts material to the transaction.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. We have agreed
to indemnify certain selling stockholders against certain liabilities, including
liabilities under the Securities Act in connection with the offering of the
shares or to contribute to payments which such selling stockholders may be
required to make in respect thereof. The selling stockholders may agree to
indemnify certain persons, including broker-dealers and agents, against certain
liabilities in connection with the offering of the shares, including liabilities
arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for SIGA by Kramer Levin Naftalis & Frankel LLP.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-KSB for the year ended December 31, 2002 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
In the opinion of the Securities and Exchange Commission, or "Commission,"
indemnification for certain acts of directors, officers and controlling persons
is against public policy, as expressed in the Securities Act, and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer or
controlling person of SIGA in the successful defense of any action, suit or
proceeding) is asserted by any SIGA director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling
17
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by SIGA is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of that issue.
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-3 with the Commission
relating to the common stock offered by this prospectus. This prospectus does
not contain all of the information set forth in the registration statement and
the exhibits and schedules to the registration statement. Statements contained
in this prospectus concerning the contents of any contract or other document
referred to are not necessarily complete and in each instance we refer you to
the copy of the contract or other document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.
For further information with respect to us and the common stock being
offered, please refer to the registration statement. A copy of the registration
statement can be inspected by anyone without charge at the public reference room
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices located at 233 Broadway, New York, New
York 10279, and 500 West Madison Street, Chicago, Illinois 60601. Please call
the Commission at 1-800-SEC-0330 for further information on the operation of the
public reference room. Copies of these materials can be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site
(http://www.sec.gov) that contains information regarding registrants that file
electronically with the Commission.
INCORPORATION BY REFERENCE
Incorporated by reference into this prospectus is the information set
forth in the following documents:
o our Annual Report on Form 10-KSB for the year ended December 31,
2002;
o the description of our common stock contained in our registration
statement on Form 8-A under Section 12 of the Exchange Act, dated
September 5, 1997, including any amendment or reports filed for the
purpose of updating such description; and
o our current report on Form 8-K filed on January 14, 2003.
All documents subsequently filed by SIGA pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering, shall be deemed to be incorporated by reference into this prospectus.
We will furnish to any person to whom this prospectus is delivered,
without charge, a copy of these documents upon written or oral request to Thomas
N. Konatich, Acting Chief Executive Officer and Chief Financial Officer, 420
Lexington Avenue, Suite 601, New York, New York 10170, tel. (212) 672-9100.
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated costs and expenses of the
sale and distribution of the securities being registered, all of which are being
borne by us.
Amount
----------
SEC filing fee................................ $ 435.37
Printing expenses............................. 2,000.00
Legal Fees and Expenses....................... 15,000.00
Accounting Fees and Expenses.................. 5,000.00
Miscellaneous................................. 64.63
Total................................ $22,500.00
==========
All of the amounts shown are estimates except for the fee payable to the
SEC.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers, as well as other employees and
individuals, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by any such person
in connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Article IX of the Registrant's Certificate of Incorporation and Article VII of
the Registrant's Bylaws provides for indemnification by the Registrant of its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
provides for such limitation of liability.
Item 16. Exhibits
Exhibit No. Description
- ----------- -----------
5.1* Opinion of Kramer Levin Naftalis & Frankel LLP.
10.1** Promissory Note of Plexus Vaccines, Inc., dated March 26,
2003.
23.1** Consent of PricewaterhouseCoopers LLP.
II-1
Exhibit No. Description
- ----------- -----------
23.2* Consent of Kramer Levin Naftalis & Frankel LLP (contained in
the opinion filed as Exhibit 5.1 hereto).
- ----------
* To be filed by amendment
** Filed herewith.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sale; are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply
if the registration statement is on Form S-3, and the information required
to be, included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to
II-2
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by the final adjudication
of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SIGA
Technologies, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
first amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, New York on
April 15, 2003.
SIGA Technologies, Inc.
By: /s/ Thomas N. Konatich
------------------------------
Thomas N. Konatich
Acting Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title of Capacities Date
--------- ------------------- ----
/s/ Thomas N. Konatich Acting Chief Executive Officer
- ---------------------------- and Chief Financial Officer April 15, 2003
* Chairman of the Board April 15, 2003
- ----------------------------
* Director April 15, 2003
- ----------------------------
* Director April 15, 2003
- ----------------------------
* Director April 15, 2003
- ----------------------------
* Director April 15, 2003
- ----------------------------
* Director April 15, 2003
- ----------------------------
* By: /s/ Thomas N. Konatich
----------------------
Thomas N. Konatich
Attorney-in-Fact
II-4
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
5.1* Opinion of Kramer Levin Naftalis & Frankel LLP.
10.1** Promissory Note of Plexus Vaccines, Inc., dated March 26,
2003.
23.1** Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Kramer Levin Naftalis & Frankel LLP (contained in
the opinion filed as Exhibit 5.1 hereto).
- ----------
* To be filed by amendment
** Filed herewith.
II-5
Exhibit 10.1
PROMISSORY NOTE
$50,000.00 March 26, 2003
San Diego, California
1. Obligation. Plexus Vaccine Inc., a California corporation ("Plexus"),
hereby unconditionally promises to pay, in lawful money of the United States of
America, to the order of SIGA Technologies, Inc., a Delaware corporation
("SIGA"), the principal sum of $50,000, together with interest thereon at the
rate of six percent (6%) per annum, at the Maturity Date (defined below), at the
principal place of business of SIGA, New York City, New York. If Plexus fails to
pay any amounts due under this Note when due, interest shall accrue from the due
date until the date of payment at a rate of ten percent (10%) per annum, or to
the extent permitted by applicable law.
2. Maturity Date. The principal and accrued interest due under this Note
shall become due and payable in full on the earliest of (i) the acquisition by
SIGA of substantially all of the assets of Plexus, (ii) three months following
the date when SIGA gives written notice to Plexus that SIGA does not intend to
proceed with the purchase of Plexus' assets, for reasons other than a default by
Plexus, (iii) ten days following a date when SIGA gives written notice to Plexus
that SIGA does not intend to proceed with the purchase of Plexus' assets, due to
a default by Plexus under the Plexus obligations set forth in the Asset Purchase
Agreement which the parties contemplate to be entered into within the next
several weeks, or (iv) November 30, 2003 (with the earliest of the foregoing
dates being the "Maturity Date" under this Note).
3. Accelerated Maturity.
(a) In the event Plexus makes an assignment for the benefit of
creditors, or appoints a receiver for all or substantially all of the Plexus
assets, or files a petition in bankruptcy or other similar proceedings for the
relief of debtors, or a creditor files a petition for bankruptcy of Plexus, then
upon the occurrence of any such event, the entire unpaid balance of principal
and accrued interest shall immediately become due and payable.
(b) In the event Plexus undertakes any transaction involving the
consolidation or merger of Plexus with or into any individual, partnership,
limited liability company, venture, unincorporated association, organization,
syndicate, corporation, trust or trustee, executor, administrator or other legal
or personal representative or any government or any agency or political
subdivision thereof (a "Person") other than SIGA or the sale or conveyance to
any Person other than SIGA of all or substantially all of the assets of Plexus,
then upon the occurrence of any such event, the entire unpaid balance of
principal and accrued interest shall immediately become due and payable.
4. Representations and Warranties. Plexus hereby represents and warrants
to SIGA:
a. Enforceable Obligations. This Note has been duly executed and
delivered on behalf of Plexus, and constitutes the legal, valid and binding
obligation of Plexus, enforceable against it in accordance with its terms.
b. No Legal Bar. The execution, delivery and performance of this
Note and the consummation of the transactions contemplated hereby, do not and
will not (i) violate any law, treaty, rule, regulation, right, privilege,
qualification or license or determination of an arbitrator or a court or other
governmental authority, in each case applicable to or binding upon Plexus or any
of its property or to which Plexus or any of its property is subject, or (ii)
conflict with or result in a breach of the terms or provisions of, or constitute
a default under, or result in the creation of any lien or other encumbrance
under any contractual obligation of the Plexus.
5. Cost of Collections. If this Note is not paid when due, whether at
maturity or by acceleration, Plexus promises to pay all reasonable costs
incurred by SIGA in collecting the amounts due and payable under this Note,
including reasonable attorney's fees and expenses.
6. Waiver. Plexus hereby waives diligence, demand, presentment, protest
and notice of any kind, release, surrender or forbearance or other indulgence,
without notice.
7. Modification. This Note may not be changed, modified, or terminated
orally, but only by an agreement in writing signed by the party to be charged.
8. Governing Law. IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS
NOTE, PLEXUS KNOWINGLY AND VOLUNTARILY WAIVES (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) THE RIGHT TO A TRIAL BY JURY AND THE DEFENSES OF FORUM NON
CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS AND SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF
PLEXUS AND INURE TO THE BENEFIT OF SIGA AND ITS SUCCESSORS AND ASSIGNS. If any
item or provision of this Note shall be held invalid, illegal or unenforceable,
the validity of all other terms and provisions herein shall in no way be
affected thereby.
PLEXUS VACCINE INC.
By: /s/ Susan Burgess
----------------------------------------
Name: Susan Burgess
Title: President and Chief Executive Officer
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 14, 2003 relating to the
financial statements, which appears in SIGA Technologies, Inc.'s Annual Report
on Form 10-KSB for the year ended December 31, 2002. We also consent to the
references to us under the heading "Experts" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
April 15, 2003