As filed with the Securities and Exchange Commission on November 30, 2005
Registration No. 333-______
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
HEMISPHERX BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
52-0845822
(I.R.S. Employer Identification No.)
--------------------
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
--------------------
William A. Carter, M.D., Chief Executive Officer
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of all communications to:
Richard Feiner, Esq.
Silverman Sclar Shin & Byrne PLLC
381 Park Avenue South, Suite 1601
New York, New York, 10016
(212) 779-8600
Fax (212) 779-8858
Approximate date of proposed sale to the public: From time to time or at one
time after the effective date of this Post-Effective Amendment to this
Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 ("Securities Act"), other than securities offered only in connection with
dividend or 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 462(c) under the
Securities Act, check the following box and list the Securities Act registration
number of the earlier effective registration statement for the same offering.[ ]
If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-----------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
======================================== ===================== ===================== ====================== ===================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered (1) Share(5) Price Registration Fee
======================================== ===================== ===================== ====================== ===================
======================================== ===================== ===================== ====================== ===================
Common Stock 1,326,522(2) $2.305 $3,057,633 $327.17
======================================== ===================== ===================== ====================== ===================
======================================== ===================== ===================== ====================== ===================
Common Stock 423,333(3) $2.305 $ 975,783 $104.41
======================================== ===================== ===================== ====================== ===================
======================================== ===================== ===================== ====================== ===================
Common Stock 140,032(4) $2.305 $ 322,774 $ 34.54
======================================== ===================== ===================== ====================== ===================
======================================== ===================== ===================== ====================== ===================
Total Registration Fee $466.12
======================================== ===================== ===================== ====================== ===================
(1) Pursuant to Rule 416 of the Securities Act of 1933, there are also
being registered an indeterminate number of additional shares of common
stock as may become offered, issuable or sold to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
(2) Pursuant to an agreement with the beneficial holders of these
securities, represents 135% of the shares of common stock that are
issuable upon the conversion, prepayment or otherwise relating to the
registrant's 7% Senior Convertible Debentures and as payment of
interest thereon (resulting solely from amendments to the terms of
previously issued 6% Senior Convertible Debentures) and the exercise of
certain warrants issued to the debenture holders. The registration fee
for the balance of the shares issuable upon the conversion, prepayment
or otherwise relating to these debentures was previously paid.
(3) Represent shares issuable upon exercise of warrants owned by certain
selling stockholders.
(4) Represent shares owned by certain selling stockholders.
(5) Estimated solely for the purpose of computing the registration fee in
accordance with Rules 457(c) of the Securities Act on the basis of
$2.305 per share, which was the average of the high and low sales
prices of the shares of common stock of the Registrant reported on the
American Stock Exchange on November 29, 2005.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus included in this Registration Statement also relates to the remaining
unsold shares which were previously registered by the Registrant under
Registration Statement Nos. 333-117178, 333-108645, 333-111135 and 333-113796.
The Registrant hereby amends this registration statement on the 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, as amended, or until the registration statement shall
become effective on a date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be amended. Neither
we nor the selling stockholders may sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where an offer or sale is not
permitted.
Subject to Completion
Preliminary Prospectus Dated November 30, 2005
HEMISPHERX BIOPHARMA, INC.
9,668,433 Shares of Common Stock
----------------------------------------
The Offering:
This prospectus relates to the resale of 9,668,433 shares of our common
stock that may be offered and sold from time to time by selling shareholders and
the persons to whom such selling stockholders may transfer their shares,
consisting of: (1) 135% of 2,731,257 shares of common stock issuable upon the
conversion, redemption or other payments relating to our Series A, B and C 7%
Senior Convertible Debentures Due June 30, 2007 ("Debentures") and as payment of
interest thereon and 135% of 3,615,512 shares of common stock issuable upon the
exercise of related warrants ("Debenture Warrants"); (2) 948,333 shares of
common stock issuable upon exercise of other warrants; and (3) 151,959 shares of
common stock to be sold by certain of the selling stockholders. We are
registering these shares of common stock pursuant to commitments to register the
securities with the selling stockholders.
No securities are being offered or sold by us pursuant to this
prospectus. The selling stockholders acquired the common stock and the warrants
to purchase common stock directly from us in transactions exempt from the
registration requirements of federal and state securities laws. We will not
receive any of the proceeds from the sale of these shares by the selling
stockholders, but we will receive proceeds from the cash exercise of warrants,
if any.
Our common stock is listed on the American Stock Exchange under the
symbol HEB. The reported last sale price on the American Stock Exchange on
November 28, 2005 was $2.26.
The selling stockholders may sell their shares from time to time on the
American Stock Exchange or otherwise, in one or more transactions at fixed
prices, at prevailing market prices at the time of sale or at prices negotiated
with purchasers. The selling stockholders will be responsible for any
commissions or discounts due to brokers or dealers. We will pay substantially
all expenses of registration of the shares covered by this prospectus.
-----------------------------------------
Please see the risk factors beginning on page 5 to read about certain
factors you should consider before buying shares of common stock.
-----------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is November __, 2005
PROSPECTUS SUMMARY
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission, or SEC, utilizing a "shelf" registration
statement. The selling stockholders may from time to time sell their shares of
our common stock in one or more transactions. This prospectus provides you with
a general description of the common stock being offered. You should read this
prospectus, including all documents incorporated herein by reference, together
with additional information described under the heading "Where You Can Find More
Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about us
and the securities being offered under this prospectus. You should read the
registration statement and the accompanying exhibits for further information.
The registration statement and exhibits can be read and are available to the
public over the Internet at the SEC's website at http://www.sec.gov as described
under the heading "Where You Can Find More Information."
About Hemispherx
We are a biopharmaceutical company engaged in the clinical development,
manufacture, marketing and distribution of new drug entities based on natural
immune system enhancing technologies for the treatment of viral and immune based
chronic disorders. We were founded in the early 1970s, as a contract researcher
for the National Institutes of Health. After almost 30 years, we have
established a strong foundation of laboratory, pre-clinical, and clinical data
with respect to the development of nucleic acids to enhance the natural
antiviral defense system of the human body and to aid the development of
therapeutic products for the treatment of chronic diseases. We own a U.S. Food
and Drug Administration ("FDA") approved GMP (good manufacturing practice)
manufacturing facility in New Jersey.
Our flagship products include Ampligen(R) and Alferon N Injection(R).
Ampligen(R) is an experimental drug undergoing clinical development for the
treatment of: Myalgic Encephalomyelitis/Chronic Fatigue Syndrome ("ME/CFS" or
"CFS"), and HIV. In August 2004, we completed a Phase III clinical trial ("AMP
516") treating over 230 ME/CFS patients with Ampligen(R) and are in the process
of preparing a new drug application ("NDA") to be filed with the FDA. Over its
developmental history, Ampligen(R) has received various designations, including
Orphan Drug Product Certification (FDA), Emergency (compassionate) Cost Recovery
Sales Authorization (FDA) and "promising" clinical outcome recognition based on
the evaluation of certain summary clinical reports (AHRQ, Agency Health Research
Quality). However to date, the FDA has determined it has yet to receive
sufficient information to support the potential of Ampligen(R) to treat a
serious or life threatening aspect of ME/CFS. The definition of the "seriousness
of a condition", according to Guidance for Industry documents published in July,
2004 is "a matter of judgment, but generally based on its impact on such factors
as survival, day-to-day functioning, or the likelihood that the disease, if left
untreated, will progress from a less severe condition to a more serious one".
The FDA has recently requested a "complete and audited report of the Amp 516
study to determine whether Ampligen(R) has a clinically meaningful benefit on a
serious or life threatening aspect of ME/CFS in order to evaluate whether the
Amp 516 study results do or do not support a "fast track designation". The FDA
has also invited us to include a schedule for completion of all ME/CFS studies
as well as a proposed schedule for our NDA submission. Because we believe our
ME/CFS studies are complete, we intend to request a pre-NDA meeting to obtain
advice on preparing and submitting our NDA. At the same time we will continue
with our existing ongoing efforts to prepare a complete and audited report of
our various studies, including the well-controlled Amp 516 study. We are using
our best efforts to complete the requisite reports including the hiring of new
staff and various recognized expert medical/regulatory consultants, but can
provide no assurance as to whether the outcome of this large data collection and
filing process (approximately 750 patients, treated more than 45,000 times) will
be favorable or unfavorable, specifically with respect to the FDA's perspective.
Also, we can provide no guidance as to the tentative date at which the
compilation and filing of such data will be complete, as significant factors are
outside our control including, without limitation, the ability and willingness
of the independent clinical investigators to complete the requisite reports at
an acceptable regulatory standard, the ability to collect overseas generated
data, and the ability of Hollister-Stier facilities to interface with our own
New Brunswick staff/facilities to meet the manufacturing regulatory standards.
In addition, Ampligen(R) is undergoing pre-clinical testing for possible
treatment of avian influenza ("bird flu"). Alferon N Injection(R) is the
registered trademark for our injectable formulation of natural alpha interferon,
which is approved by the FDA for the treatment of genital warts. Alferon N
Injection(R) is also in clinical development for treating Multiple Sclerosis and
West Nile Virus ("WNV").
With the threat of an avian influenza pandemic rising and health
officials warning that the virus could develop resistance to current flu
treatments, the pursuit of a cost-effective and complementary treatment to
existing antivirals and vaccines has become critical. This combination may
permit the use of lower dosages and fewer injections of the antivirals and
vaccines used to combat avian flu, thereby decreasing the cost of both
immunization programs and treatment programs for the full-blown disease.
In antimicrobial (antibacterial) therapy, which is the best-studied
clinical model, synergistic drug combinations may result in curative
conditions/outcomes, often not observed when the single drugs are given alone.
In the case of avian influenza where global drug supplies are presumptively in
very limited supply relative to potential needs, therapeutic synergistic
combinations could not only affect the disease outcome, but also the number of
individuals able to access therapies.
We recently announced that true therapeutic synergy had been observed
in the interaction between Ampligen(R) and Tamiflu in the inhibition of the
avian influenza virus. Cell destruction was measured in vitro using different
drug combinations. True therapeutic synergy is defined by mathematical equations
which indicate that the therapeutic effect observed is in fact greater than the
expected arithmetic sum of the two drugs working independently, and is referred
to by pharmacologists as the "Chou/Talalay" equations developed at Johns Hopkins
University.
In a recently reported study from a vaccine group in Japan, the
incorporation of poly I: poly C (dsRNA) into a nasal administration of a killed
influenza A preparation converted a poorly immunogenic response into a highly
efficacious vaccine in protection of mice from lethal infection from human
influenza A. Ampligen is a dsRNA which currently is undergoing testing in this
animal model.
We have over 100 patents worldwide with 9 additional patents pending
comprising our intellectual property. We continually review our patents rights
to determine whether they have continuing value. Such review includes an
analysis of the patent's ultimate revenue and profitability potential on an
undiscounted cash basis to support the realizability of our respective
capitalized cost. In addition, management's review addresses whether each patent
continues to fit into our strategic business plans. We have a fully
commercialized product (Alferon N Injection(R)), and a GMP certified
manufacturing facility.
In March 2004, we completed the step-by-step acquisition from
Interferon Sciences, Inc. ("ISI") of ISI's commercial assets, Alferon N
Injection(R) inventory, a worldwide license for the production, manufacture,
use, marketing and sale of Alferon N Injection(R). As well as, a 43,000 square
foot manufacturing facility in New Jersey and the acquisition of all
intellectual property related to Alferon Injection(R). Alferon N Injection(R) is
a natural alpha interferon that has been approved by the FDA for commercial sale
for the intra-lesional treatment of refractory or recurring external genital
warts in patients 18 years of age or older. The acquisition was completed in
Spring 2004 with the acquisition of all world wide commercial rights.
We outsource certain components of our research and development,
manufacturing, marketing and distribution while maintaining control over the
entire process through our quality assurance group and our clinical monitoring
group.
Since the completion of our AMP 516 ME/CFS Phase III clinical trial for
use of Ampligen(R) in the treatment of ME/CFS we have received inquiries from
and, under confidentiality agreements, are having dialogue with other companies
regarding marketing opportunities. No proposals or agreements have resulted from
the dialogue, nor can we be assured that any proposals or agreements will result
from these inquiries.
Our principal executive offices are located at One Penn Center, 1617
JFK Boulevard, Philadelphia, Pennsylvania 19103, and its telephone number is
215-988-0080.
Securities Offered
Common stock to be offered
by the selling stockholders 9,668,433 Shares
Common stock outstanding
prior to this offerng 54,940,700 Shares
Use of Proceeds We will not receive any of the proceeds from the
sale of the shares of common stock because they
are being offered by the selling stockholders and
we are not offering any shares for sale under this
prospectus, but we may receive proceeds from the
exercise of warrants held by certain of the
selling stockholders. We will apply such proceeds,
if any, toward funding our research and
development efforts, capital improvements and
working capital. See "Use of Proceeds."
American Stock Exchange symbol HEB
The 9,668,433 shares of our common stock offered consist of:
o 135% of 2,731,257 shares of common stock
issuable upon the conversion, redemption or
other payments relating to our Series A, B
and C 7% Senior Convertible Debentures Due
June 30, 2007 (collectively, the "Debentures"
and individually, "Series A Debentures,"
Series B Debentures" and "Series C
Debentures") and as payment of interest
thereon;
o 135% of 3,615,512 shares of common stock
issuable upon the exercise of related
warrants ("Debenture Warrants");
o 948,333 shares of common stock issuable upon
exercise of other warrants; and
o 151,959 shares of common stock owned by
certain of the selling stockholders.
RISK FACTORS
Special Note Regarding Forward-Looking Statements
Certain statements in this prospectus constitute "forwarding-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1995
(collectively, the "Reform Act"). Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and uncertainties.
All statements other than statements of historical fact, included in this
prospectus regarding our financial position, business strategy and plans or
objectives for future operations are forward-looking statements. Without
limiting the broader description of forward-looking statements above, we
specifically note that statements regarding potential drugs, their potential
therapeutic effect, the possibility of obtaining regulatory approval, our
ability to manufacture and sell any products, market acceptance or our ability
to earn a profit from sales or licenses of any drugs or our ability to discover
new drugs in the future are all forward-looking in nature.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, including but not limited to, the risk factors
discussed below, which may cause the actual results, performance or achievements
of Hemispherx and its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements and other factors referenced in this prospectus. We
do not undertake and specifically decline any obligation to publicly release the
results of any revisions which may be made to any forward-looking statement to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
The following cautionary statements identify important factors that
could cause our actual result to differ materially from those projected in the
forward-looking statements made in this prospectus. Among the key factors that
have a direct bearing on our results of operations are:
No assurance of successful product development
Ampligen(R) and related products. The development of Ampligen(R) and
our other related products is subject to a number of significant risks.
Ampligen(R) may be found to be ineffective or to have adverse side effects, fail
to receive necessary regulatory clearances, be difficult to manufacture on a
commercial scale, be uneconomical to market or be precluded from
commercialization by proprietary right of third parties. Our products are in
various stages of clinical and pre-clinical development and, require further
clinical studies and appropriate regulatory approval processes before any such
products can be marketed. We do not know when, if ever, Ampligen(R) or our other
products will be generally available for commercial sale for any indication.
Generally, only a small percentage of potential therapeutic products are
eventually approved by the FDA for commercial sale.
The clinical development of the experimental therapeutic, Ampligen(R)
for CFS was initiated approximately 16 years ago. To date federal health
agencies have yet to reach a consensus regarding various aspects of ME/CFS,
including parameters of "promising therapies" for ME/CFS and which aspects of
ME/CFS are anticipated to be "serious or life-threatening".
Over its developmental history, Ampligen(R) has received various
designations, including Orphan Drug Product Certification (FDA), Emergency
(compassionate) Cost Recovery Sales Authorization (FDA) and "promising" clinical
outcome recognition based on the evaluation of certain summary clinical reports
(AHRQ, Agency Health Research Quality). However to date, the FDA has determined
it has yet to receive sufficient information to support the potential of
Ampligen(R) to treat a serious or life threatening aspect of ME/CFS. The
definition of the "seriousness of a condition", according to Guidance for
Industry documents published in July, 2004 is "a matter of judgment, but
generally based on its impact on such factors as survival, day-to-day
functioning, or the likelihood that the disease, if left untreated, will
progress from a less severe condition to a more serious one". The FDA has
recently requested a "complete and audited report of the Amp 516 study to
determine whether Ampligen(R) has a clinically meaningful benefit on a serious
or life threatening aspect of ME/CFS in order to evaluate whether the Amp 516
study results do or do not support a "fast track designation". The FDA has also
invited us to include a schedule for completion of all ME/CFS studies as well as
a proposed schedule for our NDA submission. Because we believe our ME/CFS
studies are complete, we intend to request a pre-NDA meeting to obtain advice on
preparing and submitting our NDA. At the same time we will continue with our
existing ongoing efforts to prepare a complete and audited report of our various
studies, including the well-controlled Amp 516 study. We are using our best
efforts to complete the requisite reports including the hiring of new staff and
various recognized expert medical/regulatory consultants, but can provide no
assurance as to whether the outcome of this large data collection and filing
process (approximately 750 patients, treated more than 45,000 times) will be
favorable or unfavorable, specifically with respect to the FDA's perspective.
Also, we can provide no guidance as to the tentative date at which the
compilation and filing of such data will be complete, as significant factors are
outside our control including, without limitation, the ability and willingness
of the independent clinical investigators to complete the requisite reports at
an acceptable regulatory standard, the ability to collect overseas generated
data, and the ability of Hollister-Stier facilities to interface with our own
New Brunswick staff/facilities to meet the manufacturing regulatory standards.
ALFERON N Injection(R). Although ALFERON N Injection(R) is approved for
marketing in the United States for the intralesional treatment of refractory or
recurring external genital warts in patients 18 years of age or older; to date
it has not been approved for other indications. We face many of the risks
discussed above, with regard to developing this product for use to treat other
ailments such as multiple sclerosis and cancer.
Our drug and related technologies are investigational and subject to regulatory
approval. If we are unable to obtain regulatory approval, our operations will be
significantly affected.
All of our drugs and associated technologies, other than ALFERON N
Injection(R), are investigational and must receive prior regulatory approval by
appropriate regulatory authorities for general use and are currently legally
available only through clinical trials with specified disorders. At present,
ALFERON N Injection(R) is only approved for the intralesional treatment of
refractory or recurring external genital warts in patients 18 years of age or
older. Use of ALFERON N Injection(R) for other indications will require
regulatory approval. In this regard, ISI, the company from which we obtained our
rights to ALFERON N Injection(R), conducted clinical trials related to use of
ALFERON N Injection(R) for treatment of HIV and Hepatitis C. In both instances,
the FDA determined that additional studies were necessary in order to fully
evaluate the efficacy of ALFERON N Injection(R) in the treatment of HIV and
Hepatitis C diseases. We have no immediate plans to conduct these additional
studies at this time.
Our products, including Ampligen(R), are subject to extensive
regulation by numerous governmental authorities in the U.S. and other countries,
including, but not limited to, the FDA in the U.S., the Health Protection Branch
("HPB") of Canada, and the Agency for the Evaluation of Medicinal Products
("EMEA") in Europe. Obtaining regulatory approvals is a rigorous and lengthy
process and requires the expenditure of substantial resources. In order to
obtain final regulatory approval of a new drug, we must demonstrate to the
satisfaction of the regulatory agency that the product is safe and effective for
its intended uses and that we are capable of manufacturing the product to the
applicable regulatory standards. We require regulatory approval in order to
market Ampligen(R) or any other proposed product and receive product revenues or
royalties. We cannot assure you that Ampligen(R) will ultimately be demonstrated
to be safe or efficacious. In addition, while Ampligen(R) is authorized for use
in clinical trials in the United States, we cannot assure you that additional
clinical trial approvals will be authorized in the United States or in other
countries, in a timely fashion or at all, or that we will complete these
clinical trials. If Ampligen(R) or one of our other products does not receive
regulatory approval in the U.S. or elsewhere, our operations most likely will be
materially adversely affected.
Although preliminary in vitro testing indicates that Ampligen(R) enhances the
effectiveness of different drug combinations on avian influenza, preliminary
testing in the laboratory is not necessarily predictive of successful results in
clinical testing or human treatment.
Ampligen(R) is undergoing pre-clinical testing for possible treatment
of avian flu. Although preliminary in vitro testing indicates that Ampligen(R)
enhances the effectiveness of different drug combinations on avian flu,
preliminary testing in the laboratory is not necessarily predictive of
successful results in clinical testing or human treatment. No assurance can be
given that similar results will be observed in clinical trials. Use of
Ampligen(R) in the treatment of avian flu requires prior regulatory approval.
Only the FDA can determine whether a drug is safe, effective or promising for
treating a specific application. As discussed in the prior risk factor,
obtaining regulatory approvals is a rigorous and lengthy process.
In addition, Ampligen(R) is being tested on one strain of avian flu.
There are a number of strains and strains mutate. No assurance can be given that
a Ampligen(R) will be effective on any strains that might infect humans.
We may continue to incur substantial losses and our future profitability is
uncertain.
We began operations in 1966 and last reported net profit from 1985
through 1987. Since 1987, we have incurred substantial operating losses, as we
pursued our clinical trial effort and expanded our efforts in Europe. As of
September 30, 2005 our accumulated deficit was approximately $147,741,000. We
have not yet generated significant revenues from our products and may incur
substantial and increased losses in the future. We cannot assure that we will
ever achieve significant revenues from product sales or become profitable. We
require, and will continue to require, the commitment of substantial resources
to develop our products. We cannot assure that our product development efforts
will be successfully completed or that required regulatory approvals will be
obtained or that any products will be manufactured and marketed successfully, or
be profitable.
We may require additional financing which may not be available.
The development of our products will require the commitment of
substantial resources to conduct the time-consuming research, preclinical
development, and clinical trials that are necessary to bring pharmaceutical
products to market. As of September 30, 2005, we had approximately $11,632,000
in cash and cash equivalents and short-term investments. These funds should be
sufficient to meet our operating cash requirements, including debt service, for
the near term. However, we may need to raise additional funds through additional
equity or debt financing or from other sources in order to complete the
necessary clinical trials and the regulatory approval processes including the
commercializing of Ampligen(R) products. There can be no assurances that we will
raise adequate funds which may have a material adverse effect on our ability to
develop our products. Also, we have the ability to curtail discretionary
spending, including some research and development activities, if required to
conserve cash.
Under the common stock purchase agreement signed with Fusion Capital on
July 8, 2005, we only have the right to receive $40,000 per trading day unless
our stock price equals or exceeds $2.00, in which case the daily amount may be
increased under certain conditions as the price of our common stock increases
(For a more detailed description of the terms of this agreement, see the
agreement filed as an exhibit to our Current Report on Form 8-K filed with the
SEC on July 11, 2005). Fusion Capital shall not have the right nor the
obligation to purchase any shares of our common stock on any trading days that
the market price of our common stock is less than $1.00. Since we initially
registered 10,000,000 shares purchasable by Fusion Capital pursuant to the
common stock purchase agreement, the selling price of our common stock to Fusion
Capital will have to average at least $2.00 per share for us to receive the
maximum proceeds of $20.0 million without registering additional shares of
common stock. As of November 28, 2005, we need an average selling price of $2.04
per share for the remainder of the agreement to realize the $20,000,000 in
proceeds. The closing price of our stock was $2.26 on November 28, 2005. Subject
to approval by our board of directors, we have the right, but not the
obligation, to issue more than 10,000,000 shares to Fusion Capital. In the event
we elect to issue more than 10,000,000 shares, we will be required to file a new
registration statement and have it declared effective by the Securities and
Exchange Commission. In the event that we decide to issue more than 10,113,278
(19.99% of our outstanding shares of common stock as of the date of our
agreement), we would first be required to seek stockholder approval in order to
be in compliance with the American Stock Exchange Market rules.
The extent to which we rely on Fusion Capital as a source of funding
will depend on a number of factors including, the prevailing market price of our
common stock and the extent to which we are able to secure working capital from
other sources. Specifically, Fusion Capital shall not have the right nor the
obligation to purchase any shares of our common stock on any trading days that
the market price of our common stock is less than $1.00. If obtaining sufficient
financing from Fusion Capital were to prove unavailable or prohibitively
dilutive and if we are unable to commercialize and sell Ampligen(R) and/or
increase sales of ALFERON N Injection(R) or our other products, we will need to
secure another source of funding in order to satisfy our working capital needs.
Even if we are able to access the full $20.0 million under the common stock
purchase agreement with Fusion Capital, we may still need additional capital to
fully implement our business, operating and development plans. Should the
financing we require to sustain our working capital needs be unavailable or
prohibitively expensive when we require it, the consequences would materially
adversely affect our business, operating results, financial condition and
prospects.
We may not be profitable unless we can protect our patents and/or receive
approval for additional pending patents.
We need to preserve and acquire enforceable patents covering the use of
Ampligen(R) for a particular disease in order to obtain exclusive rights for the
commercial sale of Ampligen(R) for such disease. We obtained all rights to
ALFERON N Injection(R), and we plan to preserve and acquire enforceable patents
covering its use for existing and potentially new diseases. Our success depends,
in large part, on our ability to preserve and obtain patent protection for our
products and to obtain and preserve our trade secrets and expertise. Certain of
our know-how and technology is not patentable, particularly the procedures for
the manufacture of our drug product which are carried out according to standard
operating procedure manuals. We have been issued certain patents including those
on the use of Ampligen(R) and Ampligen(R) in combination with certain other
drugs for the treatment of HIV. We also have been issued patents on the use of
Ampligen(R) in combination with certain other drugs for the treatment of chronic
Hepatitis B virus, chronic Hepatitis C virus, and a patent which affords
protection on the use of Ampligen(R) in patients with Chronic Fatigue Syndrome.
We have not yet been issued any patents in the United States for the use of
Ampligen(R) as a sole treatment for any of the cancers, which we have sought to
target. With regard to ALFERON N Injection(R), we have acquired from ISI its
patents for natural alpha interferon produced from human peripheral blood
leukocytes and its production process. We cannot assure that our competitors
will not seek and obtain patents regarding the use of similar products in
combination with various other agents, for a particular target indication prior
to our doing such. If we cannot protect our patents covering the use of our
products for a particular disease, or obtain additional patents, we may not be
able to successfully market our products.
The patent position of biotechnology and pharmaceutical firms is highly
uncertain and involves complex legal and factual questions.
To date, no consistent policy has emerged regarding the breadth of
protection afforded by pharmaceutical and biotechnology patents. There can be no
assurance that new patent applications relating to our products or technology
will result in patents being issued or that, if issued, such patents will afford
meaningful protection against competitors with similar technology. It is
generally anticipated that there may be significant litigation in the industry
regarding patent and intellectual property rights. Such litigation could require
substantial resources from us and we may not have the financial resources
necessary to enforce the patent rights that we hold. No assurance can be made
that our patents will provide competitive advantages for our products or will
not be successfully challenged by competitors. No assurance can be given that
patents do not exist or could not be filed which would have a materially adverse
effect on our ability to develop or market our products or to obtain or maintain
any competitive position that we may achieve with respect to our products. Our
patents also may not prevent others from developing competitive products using
related technology.
There can be no assurance that we will be able to obtain necessary licenses if
we cannot enforce patent rights we may hold. In addition, the failure of third
parties from whom we currently license certain proprietary information or from
whom we may be required to obtain such licenses in the future, to adequately
enforce their rights to such proprietary information, could adversely affect the
value of such licenses to us.
If we cannot enforce the patent rights we currently hold we may be
required to obtain licenses from others to develop, manufacture or market our
products. There can be no assurance that we would be able to obtain any such
licenses on commercially reasonable terms, if at all. We currently license
certain proprietary information from third parties, some of which may have been
developed with government grants under circumstances where the government
maintained certain rights with respect to the proprietary information developed.
No assurances can be given that such third parties will adequately enforce any
rights they may have or that the rights, if any, retained by the government will
not adversely affect the value of our license.
There is no guarantee that our trade secrets will not be disclosed or known by
our competitors.
To protect our rights, we require certain employees and consultants to
enter into confidentiality agreements with us. There can be no assurance that
these agreements will not be breached, that we would have adequate and
enforceable remedies for any breach, or that any trade secrets of ours will not
otherwise become known or be independently developed by competitors.
If our distributors do not market our products successfully, we may not generate
significant revenues or become profitable.
We have limited marketing and sales capability. We are dependent upon
existing and, possibly future, marketing agreements and third party distribution
agreements for our products in order to generate significant revenues and become
profitable. As a result, any revenues received by us will be dependent on the
efforts of third parties, and there is no assurance that these efforts will be
successful. Our agreement with Accredo offers the potential to provide some
marketing and distribution capacity in the United States while agreements with
Bioclones (Proprietary), Ltd ("Bioclones"), Biovail Corporation and Laboratorios
Del Dr. Esteve S.A. may provide a sales force in South America, Africa, United
Kingdom, Australia and New Zealand, Canada, Spain and Portugal. On December 27,
2004, we initiated a lawsuit in Federal Court identifying a conspiratorial group
seeking to illegally manipulate our stock for purposes of bringing about the
hostile takeover of Hemispherx. This conspiratorial group includes Bioclones and
the potential legal action may adversely effect our agreement with Bioclones and
the potential for marketing and distribution capacity in South America, Africa,
United Kingdom, Australia and New Zealand.
We cannot assure that our domestic or foreign marketing partners will
be able to successfully distribute our products, or that we will be able to
establish future marketing or third party distribution agreements on terms
acceptable to us, or that the cost of establishing these arrangements will not
exceed any product revenues. The failure to continue these arrangements or to
achieve other such arrangements on satisfactory terms could have a materially
adverse effect on us.
There are no long-term agreements with suppliers of required materials. If we
are unable to obtain the required raw materials, we may be required to scale
back our operations or stop manufacturing ALFERON N Injection(R) and/or
Ampligen(R).
A number of essential materials are used in the production of ALFERON N
Injection(R), including human white blood cells. We do not have long-term
agreements for the supply of any of such materials. There can be no assurance we
can enter into long-term supply agreements covering essential materials on
commercially reasonable terms, if at all.
At present, we do not have any agreements with third parties for the
supply of any polymers for use in manufacturing Ampligen(R). We are establishing
relevant manufacturing operations within our New Brunswick, New Jersey facility
for the production of Ampligen(R) raw materials in order to obtain polymers on a
more consistent manufacturing basis. The establishment of an Ampligen(R) raw
materials production line within our own facilities, while having obvious
advantages with respect to regulatory compliance (other parts of the 43,000 sq.
ft. wholly owned facility are already in compliance for Alferon N Injection(R)
manufacture), may delay certain steps in the commercialization process,
specifically a targeted NDA filing.
If we are unable to obtain or manufacture the required raw materials,
we may be required to scale back our operations or stop manufacturing. The costs
and availability of products and materials we need for the production of
Ampligen(R) and the commercial production of ALFERON N Injection(R) and other
products which we may commercially produce are subject to fluctuation depending
on a variety of factors beyond our control, including competitive factors,
changes in technology, and FDA and other governmental regulations and there can
be no assurance that we will be able to obtain such products and materials on
terms acceptable to us or at all.
There is no assurance that successful manufacture of a drug on a limited scale
basis for investigational use will lead to a successful transition to
commercial, large-scale production.
Small changes in methods of manufacturing, including commercial
scale-up, may affect the chemical structure of Ampligen(R) and other RNA drugs,
as well as their safety and efficacy, and can, among other things, require new
clinical studies and affect orphan drug status, particularly, market exclusivity
rights, if any, under the Orphan Drug Act. The transition from limited
production of pre-clinical and clinical research quantities to production of
commercial quantities of our products will involve distinct management and
technical challenges and will require additional management and technical
personnel and capital to the extent such manufacturing is not handled by third
parties. There can be no assurance that our manufacturing will be successful or
that any given product will be determined to be safe and effective, capable of
being manufactured economically in commercial quantities or successfully
marketed.
We have limited manufacturing experience and capacity.
Ampligen(R) has been only produced in limited quantities for use in our
clinical trials and we are dependent upon third party suppliers for key
components of our products and for substantially all of the production process.
The failure to continue these arrangements or to achieve other such arrangements
on satisfactory terms could have a material adverse affect on us. Also, to be
successful, our products must be manufactured in commercial quantities in
compliance with regulatory requirements and at acceptable costs. To the extent
we are involved in the production process, our current facilities are not
adequate for the production of our proposed products for large-scale
commercialization, and we currently do not have adequate personnel to conduct
commercial-scale manufacturing. We intend to utilize third-party facilities if
and when the need arises or, if we are unable to do so, to build or acquire
commercial-scale manufacturing facilities. We will need to comply with
regulatory requirements for such facilities, including those of the FDA
pertaining to current Good Manufacturing Practices ("cGMP") regulations. There
can be no assurance that such facilities can be used, built, or acquired on
commercially acceptable terms, or that such facilities, if used, built, or
acquired, will be adequate for our long-term needs.
In connection with settling various manufacturing infractions
previously noted by the FDA, Schering-Plough ("Schering") entered into a
"Consent Decree" with the FDA whereby, among other things, it agreed to
discontinue various contract (third party) manufacturing activities at various
facilities including its San Juan, Puerto Rico, plant. Ampligen(R) (which was
not involved in any of the cited infractions) was produced at this Puerto Rico
plant from year 2000-2004. Operating under instructions from the Consent Decree,
Schering has advised us that it would no longer manufacture Ampligen(R) in this
facility beyond 2004 and would assist us in an orderly transfer of said
activities to other non Schering facilities.
On September 9, 2005, we signed a Letter of Intent ("LOI") with
Hollister-Stier Laboratories LLC of Spokane, Washington ("Hollister-Stier"), for
the contract manufacturing of Ampligen(R). In November 2005, we paid $100,000
upon executing the LOI in order to initiate the manufacturing project. The LOI
shall remain in full force and effect for 90 calendar days or until a definitive
agreement is reached. The achievement of the initial objectives described in the
LOI, in combination with our polymer production facility under construction in
New Brunswick, N.J., may enable us to manufacture the raw materials for
approximately 10,000 doses of Ampligen(R) per week. Based on the LOI,
Hollister-Stier has agreed to formulate and bottle Ampligen(R) using raw
materials received from us. We have an executed confidentiality agreement in
place and; therefore, have commenced the preliminary transfer of our
manufacturing technology to Hollister-Stier. Our decision to transfer relevant
manufacturing technology absent of an executed agreement, was done in part to
expedite the eventual manufacture of Ampligen(R) by Hollister-Stier. On November
30, 2005 we completed our negotiations and executed a Supply Agreement with
Hollister-Stier for the production of Ampligen(R) for a five year term. We have
agreed to pay a one time start up fee and will provide funds to acquire certain
equipment dedicated to Ampligen production.
We have identified two other capable cGMP facilities in the US for the
manufacture of Ampligen(R) and obtained proposals from both. If either of these
two facilities are acceptable, we would be able to maintain a minimum of two
independent production sites. We are in the process of reviewing these other
proposals.
The purified drug concentrate utilized in the formulation of ALFERON N
Injection(R) is manufactured in our New Brunswick, New Jersey facility and
ALFERON N Injection(R) was formulated and packaged at a production facility
formerly owned and operated by Abbott Laboratories located in Kansas. Abbott
Laboratories has sold the facility to Hospira. Hospira recently completed the
production of 12,000 vials. Hospira is ceasing the labeling and packaging of
Alferon N Injection(R) as they are seeking larger production runs for cost
efficiency purposes. We have identified five new potential contract
manufacturers, obtained proposals from all five, and have audited two,
concerning the future formulation and packaging of Alferon N Injection(R). If we
are unable to secure a new facility within a reasonable period of time to
formulate and package ALFERON N Injection(R) at an acceptable cost, our ability
to sell ALFERON N Injection(R) and to generate profits therefrom will be
adversely affected.
We may not be profitable unless we can produce Ampligen(R) or other products in
commercial quantities at costs acceptable to us.
We have never produced Ampligen(R) or any other products in large
commercial quantities. We must manufacture our products in compliance with
regulatory requirements in large commercial quantities and at acceptable costs
in order for us to be profitable. We intend to utilize third-party manufacturers
and/or facilities if and when the need arises or, if we are unable to do so, to
build or acquire commercial-scale manufacturing facilities. If we cannot
manufacture commercial quantities of Ampligen(R) or enter into third party
agreements for its manufacture at costs acceptable to us, our operations will be
significantly affected. Also, each production lot of Alferon N Injection(R) is
subject to FDA review and approval prior to releasing the lots to be sold. This
review and approval process could take considerable time, which would delay our
having product in inventory to sell.
Rapid technological change may render our products obsolete or non-competitive.
The pharmaceutical and biotechnology industries are subject to rapid
and substantial technological change. Technological competition from
pharmaceutical and biotechnology companies, universities, governmental entities
and others diversifying into the field is intense and is expected to increase.
Most of these entities have significantly greater research and development
capabilities than us, as well as substantial marketing, financial and managerial
resources, and represent significant competition for us. There can be no
assurance that developments by others will not render our products or
technologies obsolete or noncompetitive or that we will be able to keep pace
with technological developments.
Our products may be subject to substantial competition.
Ampligen(R). Competitors may be developing technologies that are, or in
the future may be, the basis for competitive products. Some of these potential
products may have an entirely different approach or means of accomplishing
similar therapeutic effects to products being developed by us. These competing
products may be more effective and less costly than our products. In addition,
conventional drug therapy, surgery and other more familiar treatments may offer
competition to our products. Furthermore, many of our competitors have
significantly greater experience than us in pre-clinical testing and human
clinical trials of pharmaceutical products and in obtaining FDA, HPB and other
regulatory approvals of products. Accordingly, our competitors may succeed in
obtaining FDA, HPB or other regulatory product approvals more rapidly than us.
There are no drugs approved for commercial sale with respect to treating ME/CFS
in the United States. The dominant competitors with drugs to treat HIV diseases
include Gilead Pharmaceutical, Pfizer, Bristol-Myers, Abbott Labs, Glaxo
Smithkline, Merck and Schering-Plough Corp. These potential competitors are
among the largest pharmaceutical companies in the world, are well known to the
public and the medical community, and have substantially greater financial
resources, product development, and manufacturing and marketing capabilities
than we have. Although we believe our principal advantage is the unique
mechanism of action of Ampligen(R) on the immune system, we cannot assure that
we will be able to compete.
ALFERON N Injection(R). Many potential competitors are among the
largest pharmaceutical companies in the world, are well known to the public and
the medical community, and have substantially greater financial resources,
product development, and manufacturing and marketing capabilities than we have.
ALFERON N Injection(R) currently competes with Schering's injectable recombinant
alpha interferon product (INTRON(R) A) for the treatment of genital warts. 3M
Pharmaceuticals also received FDA approval for its immune-response modifier,
Aldara(R), a self-administered topical cream, for the treatment of external
genital and perianal warts. ALFERON N Injection(R) also competes with surgical,
chemical, and other methods of treating genital warts. We cannot assess the
impact products developed by our competitors, or advances in other methods of
the treatment of genital warts, will have on the commercial viability of ALFERON
N Injection(R). If and when we obtain additional approvals of uses of this
product, we expect to compete primarily on the basis of product performance. Our
potential competitors have developed or may develop products (containing either
alpha or beta interferon or other therapeutic compounds) or other treatment
modalities for those uses. In the United States, three recombinant forms of beta
interferon have been approved for the treatment of relapsing-remitting multiple
sclerosis. There can be no assurance that, if we are able to obtain regulatory
approval of ALFERON N Injection(R) for the treatment of new indications, we will
be able to achieve any significant penetration into those markets. In addition,
because certain competitive products are not dependent on a source of human
blood cells, such products may be able to be produced in greater volume and at a
lower cost than ALFERON N Injection(R). Currently, our wholesale price on a per
unit basis of ALFERON N Injection(R) is higher than that of the competitive
recombinant alpha and beta interferon products.
General. Other companies may succeed in developing products earlier
than we do, obtaining approvals for such products from the FDA more rapidly than
we do, or developing products that are more effective than those we may develop.
While we will attempt to expand our technological capabilities in order to
remain competitive, there can be no assurance that research and development by
others or other medical advances will not render our technology or products
obsolete or non-competitive or result in treatments or cures superior to any
therapy we develop.
Possible side effects from the use of Ampligen(R) or ALFERON N Injection(R)
could adversely affect potential revenues and physician/patient acceptability of
our product.
Ampligen(R). We believe that Ampligen(R) has been generally well
tolerated with a low incidence of clinical toxicity, particularly given the
severely debilitating or life threatening diseases that have been treated. A
mild flushing reaction has been observed in approximately 15% of patients
treated in our various studies. This reaction is occasionally accompanied by a
rapid heart beat, a tightness of the chest, urticaria (swelling of the skin),
anxiety, shortness of breath, subjective reports of "feeling hot," sweating and
nausea. The reaction is usually infusion-rate related and can generally be
controlled by slowing the infusion rate. Other adverse side effects include
liver enzyme level elevations, diarrhea, itching, asthma, low blood pressure,
photophobia, rash, transient visual disturbances, slow or irregular heart rate,
decreases in platelets and white blood cell counts, anemia, dizziness,
confusion, elevation of kidney function tests, occasional temporary hair loss
and various flu-like symptoms, including fever, chills, fatigue, muscular aches,
joint pains, headaches, nausea and vomiting. These flu-like side effects
typically subside within several months. One or more of the potential side
effects might deter usage of Ampligen(R) in certain clinical situations and
therefore, could adversely affect potential revenues and physician/patient
acceptability of our product.
ALFERON N Injection(R). At present, ALFERON N Injection(R) is only
approved for the intralesional (within the lesion) treatment of refractory or
recurring external genital warts in adults. In clinical trials conducted for the
treatment of genital warts with ALFERON N Injection(R), patients did not
experience serious side effects; however, there can be no assurance that
unexpected or unacceptable side effects will not be found in the future for this
use or other potential uses of ALFERON N Injection(R) which could threaten or
limit such product's usefulness.
We may be subject to product liability claims from the use of Ampligen(R),
Alferon N Injection(R), or other of our products which could negatively affect
our future operations.
We face an inherent business risk of exposure to product liability
claims in the event that the use of Ampligen(R) or other of our products results
in adverse effects. This liability might result from claims made directly by
patients, hospitals, clinics or other consumers, or by pharmaceutical companies
or others manufacturing these products on our behalf. Our future operations may
be negatively affected from the litigation costs, settlement expenses and lost
product sales inherent to these claims. While we will continue to attempt to
take appropriate precautions, we cannot assure that we will avoid significant
product liability exposure. Although we currently maintain product liability
insurance coverage, there can be no assurance that this insurance will provide
adequate coverage against Ampligen(R) and/or Alferon N Injection(R) product
liability claims. A successful product liability claim against us in excess of
Ampligen(R)'s $1,000,000 in insurance coverage; $3,000,000 in aggregate, or in
excess of Alferon N Injection(R)'s $5,000,000 in insurance coverage; $5,000,000
in aggregate; or for which coverage is not provided could have a negative effect
on our business and financial condition.
The loss of Dr. William A. Carter's services could hurt our chances for success.
Our success is dependent on the continued efforts of Dr. William A.
Carter because of his position as a pioneer in the field of nucleic acid drugs,
his being the co-inventor of Ampligen(R), and his knowledge of our overall
activities, including patents and clinical trials. The loss of Dr. Carter's
services could have a material adverse effect on our operations and chances for
success. We have secured key man life insurance in the amount of $2,000,000 on
the life of Dr. Carter and we have an employment agreement with Dr. Carter that,
as amended, runs until May 8, 2008. However, Dr. Carter has the right to
terminate his employment upon not less than 30 days prior written notice. The
loss of Dr. Carter or other personnel, or the failure to recruit additional
personnel as needed could have a materially adverse effect on our ability to
achieve our objectives.
Uncertainty of health care reimbursement for our products.
Our ability to successfully commercialize our products will depend, in
part, on the extent to which reimbursement for the cost of such products and
related treatment will be available from government health administration
authorities, private health coverage insurers and other organizations.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products, and from time to time legislation is proposed, which, if
adopted, could further restrict the prices charged by and/or amounts
reimbursable to manufacturers of pharmaceutical products. We cannot predict
what, if any, legislation will ultimately be adopted or the impact of such
legislation on us. There can be no assurance that third party insurance
companies will allow us to charge and receive payments for products sufficient
to realize an appropriate return on our investment in product development.
There are risks of liabilities associated with handling and disposing of
hazardous materials.
Our business involves the controlled use of hazardous materials,
carcinogenic chemicals, flammable solvents and various radioactive compounds.
Although we believe that our safety procedures for handling and disposing of
such materials comply in all material respects with the standards prescribed by
applicable regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of such an
accident or the failure to comply with applicable regulations, we could be held
liable for any damages that result, and any such liability could be significant.
We do not maintain insurance coverage against such liabilities.
Risks Associated With and Investment in Our Common Stock
The market price of our stock may be adversely affected by market volatility.
The market price of our common stock has been and is likely to be
volatile. In addition to general economic, political and market conditions, the
price and trading volume of our stock could fluctuate widely in response to many
factors, including:
o announcements of the results of clinical
trials by us or our competitors;
o adverse reactions to products;
o governmental approvals, delays in expected
governmental approvals or withdrawals of any
prior governmental approvals or public or
regulatory agency concerns regarding the
safety or effectiveness of our products;
o changes in U.S. or foreign regulatory policy
during the period of product development;
o developments in patent or other proprietary
rights, including any third party challenges
of our intellectual property rights;
o announcements of technological innovations by
us or our competitors;
o announcements of new products or new
contracts by us or our competitors;
o actual or anticipated variations in our
operating results due to the level of
development expenses and other factors;
o changes in financial estimates by securities
analysts and whether our earnings meet or
exceed the estimates;
o conditions and trends in the pharmaceutical
and other industries; new accounting
standards; and
o the occurrence of any of the risks described
in these "Risk Factors."
Our common stock is listed for quotation on the American Stock
Exchange. For the 12-month period ended September 30, 2005, the price of our
common stock has ranged from $1.25 to $2.50 per share. We expect the price of
our common stock to remain volatile. The average daily trading volume of our
common stock varies significantly. Our relatively low average volume and low
average number of transactions per day may affect the ability of our
stockholders to sell their shares in the public market at prevailing prices and
a more active market may never develop.
In the past, following periods of volatility in the market price of the
securities of companies in our industry, securities class action litigation has
often been instituted against companies in our industry. If we face securities
litigation in the future, even if without merit or unsuccessful, it would result
in substantial costs and a diversion of management attention and resources,
which would negatively impact our business.
Our stock price may be adversely affected if a significant amount of shares,
primarily those registered herein and in prior registration statements, are sold
in the public market.
As of November 28, 2005, approximately 1,132,457 shares of our common
stock, constituted "restricted securities" as defined in Rule 144 under the
Securities Act of 1933, 402,798 of which are registered for public sale. Also,
we have registered 21,106,907 shares issuable (i) to Fusion Capital pursuant to
the common stock purchase agreement with Fusion Capital; (11) upon conversion of
approximately 135% of Debentures that we issued in 2003 and 2004; (iii) as
payment of 135% of the interest on all of the Debentures; (iv) upon exercise of
135% of the certain Warrants; and (v) upon exercise of certain other warrants.
In addition we will be registering an aggregate of 1,224,983 shares representing
135% of shares issuable upon exercise of the October 2009 Warrants and as
additional interest shares (resulting from the amendment to the Debentures.
Registration of the shares permits the sale of the shares in the open market or
in privately negotiated transactions without compliance with the requirements of
Rule 144. To the extent the exercise price of the warrants is less than the
market price of the common stock, the holders of the warrants are likely to
exercise them and sell the underlying shares of common stock and to the extent
that the conversion price and exercise price of these securities are adjusted
pursuant to anti-dilution protection, the securities could be exercisable or
convertible for even more shares of common stock. We also may issue shares to be
used to meet our capital requirements or use shares to compensate employees,
consultants and/or directors. We are unable to estimate the amount, timing or
nature of future sales of outstanding common stock. Sales of substantial amounts
of our common stock in the public market could cause the market price for our
common stock to decrease. Furthermore, a decline in the price of our common
stock would likely impede our ability to raise capital through the issuance of
additional shares of common stock or other equity securities.
The sale of our common stock to Fusion Capital may cause dilution and the sale
of the shares of common stock acquired by Fusion Capital and other shares by
Selling Stockholders listed in this prospectus and another prospectus could
cause the price of our common stock to decline.
The sale by Fusion Capital and other selling stockholders listed in
this prospectus and another prospectus of our common stock will increase the
number of our publicly traded shares, which could depress the market price of
our common stock. Moreover, the mere prospect of resales by Fusion Capital and
other selling stockholders could depress the market price for our common stock.
The issuance of shares to Fusion Capital under the common stock purchase
agreement dated July 8, 2005, will dilute the equity interest of existing
stockholders and could have an adverse effect on the market price of our common
stock.
The purchase price for the common stock to be sold to Fusion Capital
pursuant to the common stock purchase agreement will fluctuate based on the
price of our common stock. All shares sold to Fusion Capital are freely
tradable. Fusion Capital may sell none, some or all of the shares of common
stock purchased from us at any time. We expect that the shares will be sold over
a period of in excess of 25 months from August 3, 2005. Depending upon market
liquidity at the time, a sale of shares under this offering at any given time
could cause the trading price of our common stock to decline. The sale of a
substantial number of shares of our common stock to Fusion Capital pursuant to
the purchase agreement, or anticipation of such sales, could make it more
difficult for us to sell equity or equity-related securities in the future at a
time and at a price that we might otherwise wish to effect sales.
Provisions of our Certificate of Incorporation and Delaware law could defer a
change of our management which could discourage or delay offers to acquire us.
Provisions of our Certificate of Incorporation and Delaware law may
make it more difficult for someone to acquire control of us or for our
stockholders to remove existing management, and might discourage a third party
from offering to acquire us, even if a change in control or in management would
be beneficial to our stockholders. For example, our Certificate of Incorporation
allows us to issue shares of preferred stock without any vote or further action
by our stockholders. Our Board of Directors has the authority to fix and
determine the relative rights and preferences of preferred stock. Our Board of
Directors also has the authority to issue preferred stock without further
stockholder approval. As a result, our Board of Directors could authorize the
issuance of a series of preferred stock that would grant to holders the
preferred right to our assets upon liquidation, the right to receive dividend
payments before dividends are distributed to the holders of common stock and the
right to the redemption of the shares, together with a premium, prior to the
redemption of our common stock. In this regard, in November 2002, we adopted a
stockholder rights plan and, under the Plan, our Board of Directors declared a
dividend distribution of one Right for each outstanding share of Common Stock to
stockholders of record at the close of business on November 29, 2002. Each Right
initially entitles holders to buy one unit of preferred stock for $30.00. The
Rights generally are not transferable apart from the common stock and will not
be exercisable unless and until a person or group acquires or commences a tender
or exchange offer to acquire, beneficial ownership of 15% or more of our common
stock. However, for Dr. Carter, our chief executive officer, who already
beneficially owns 10.3% of our common stock, the Plan's threshold will be 20%,
instead of 15%. The Rights will expire on November 19, 2012, and may be redeemed
prior thereto at $.01 per Right under certain circumstances.
Because the risk factors referred to above could cause actual results
or outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Our research in clinical efforts
may continue for the next several years and we may continue to incur losses due
to clinical costs incurred in the development of Ampligen(R) for commercial
application. Possible losses may fluctuate from quarter to quarter as a result
of differences in the timing of significant expenses incurred and receipt of
licensing fees and/or cost recovery treatment revenues in Europe, Canada and in
the United States.
SELLING STOCKHOLDERS
We have registered all 9,668,433 shares of common stock covered by this
prospectus on behalf of the selling stockholders named in the table below. We
issued the shares, the Debentures convertible into shares, and the warrants
exercisable for shares to the selling stockholders in private transactions. We
have registered the shares to permit the selling stockholders and their
respective transferees, assignees or other successors-in-interest that receive
their shares from a selling stockholder to resell the shares, from time to time,
when they deem appropriate.
The table below identifies the selling stockholders who will be
offering shares and other information regarding the beneficial ownership of the
common stock held by each of the selling stockholders. For the Debenture holders
(the first two stockholders listed below), the second column lists the number of
shares of common stock beneficially owned by each selling stockholder as of
November 28, 2005, based on each selling stockholder's ownership of shares of
common stock, Debentures and Debenture Warrants, and assumes the conversion of
all the Debentures, the payment of all interest in stock and the exercise of all
Debenture Warrants. Because the conversion price of the Debentures and the
exercise price of the warrants are subject to adjustment for anti-dilution
protection, the interest on the Debentures may be paid in cash or common stock,
and the value attributed to any shares issued to the investors as interest (the
"Interest Shares") depends on the average closing price of the common stock
during the five consecutive business days ending on the third business day
immediately preceding the applicable interest payment date, the numbers listed
in the second column may change. For the other selling stockholders, the second
column lists the number of shares of common stock beneficially owned by the
selling stockholder as of the above date, based on each selling stockholder's
ownership of shares of common stock, and, except as set forth in the relevant
footnotes, does not assume the conversion of any of the Debentures, the exercise
of any warrants or the payment of any interest on the Debentures in the form of
common stock rather than cash.
The third column lists each selling stockholder's portion, based on
agreements with us, of the 9,668,433 shares of common stock being offered by
this prospectus. With regard to the first two selling stockholders, the number
of shares being offered by this prospectus was determined in accordance with the
terms of the registration rights agreements with them, in which we agreed to
register the resale of 135% of (w) the number of shares of common stock issuable
upon conversion of the Debentures, plus (x) the number of shares of common stock
issuable upon exercise of the Debenture Warrants, plus (y) an estimate of the
number of Interest Shares that may be issued to the selling stockholders as
interest payments on the Debentures and assuming interest is paid exclusively in
Interest Shares over the full term of the Debentures, rather than in cash. As we
stated above, the number of shares that will actually be issued may be more or
less than the 9,668,433 shares being offered by this prospectus.
Under the terms of the Debentures and the Debenture Warrants, no
selling stockholder who owns any of these securities may convert any of their
Debentures or exercise any of the foregoing Warrants to the extent that the
conversion or exercise would cause the selling stockholder, together with its
affiliates, to beneficially own more than 4.99% of the shares of our then
outstanding common stock following such conversion or exercise. For purposes of
making this determination, shares of common stock issuable upon conversion of
those Debentures which have not been converted and upon exercise of the Warrants
which have not been exercised are excluded. The number of shares in the second
and third columns does not reflect this limitation.
Any selling stockholder may sell all, some or none of its respective
shares in this offering. See "How The Shares May Be Distributed" below.
Effective October 6, 2005, we amended our outstanding debentures due to
mature on October 31, 2005 and January 31, 2006 to extend the maturity dates to
June 30, 2007 and increase the interest rates from 6% per annum to 7% per annum.
These debentures, as so amended, are referred to as the Series A, B and C 7%
Senior Secured Convertible Debenture due June 30, 2007. In addition we issue to
the debenture holders common stock purchase warrants to purchase, in the
aggregate, 225,000 shares of our common stock for a period of four years at an
exercise price of $2.50 per share. Pursuant to our agreement with the holders,
we have registered on their behalf 135% of the shares issuable upon (i) payment
of additional interest on the debentures resulting from the above mentioned
revisions to the debentures and (ii) exercise of the warrants. These shares are
included in the table below.
Common Stock Common Stock
Owned Prior No. of Shares Owned After
Selling Stockholder To Offering Being Offered The Offering
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Portside Growth & Opportunity Fund 3,207,477 (1) 3,940,670 (1) 288,462
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Leonardo L.P. 3,427,756 (2) 4,627,471 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Cardinal Securities LLC 156,666 (3) 156,666 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Windward Capital Advisors, LLC 186,667 (4) 186,667 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ --- ------------------------- ---------------------
HefCap Holdings, LLC 186,667 (5) 186,667 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ --- ------------------------- ---------------------
Baxter Capital Advisors, Inc. 30,000 (6) 30,000 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
CEOCast, Inc. 20,000 (7) 20,000 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Christopher Chipman 30,000 (8) 30,000 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Fried Epstein & Rettig LLP 5,000 (9) 5,000 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Business Asia Consultants, Inc. 17,959 (10) 17,959 -
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
JMBL, LTD 75,000 (11) 25,000 50,000
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
The Investor Relations Group 84,000 (12) 84,000
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
William Mason 131,066 (13) 41,666(13) 89,400
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
W. Barry McDonald 131,067 (13) 41,667(13) 89,400
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Wayne Pambianchi 131,067 (13) 41,667(13) 89,400
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Gordon Ramseier 131,066 (13) 41,666(13) 89,400
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Daniel Tripodi 131,067 (13) 41,667(13) 89,400
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
Michael Burrows 690,000 (14) 150,000 540,000
-------------------------------------------------- ------------------------ ---------------------------- ----------------------
(1) Includes (i) up to 1,116,654 shares of common stock issuable upon
conversion of the Debentures, (ii) up to 107,104 shares of common stock
issuable upon exercise of the Debenture Warrants; (iii) up to 650,000
shares of common stock issuable upon exercise of Warrants that expire
in May 2009, (iv) up to 650,000 shares of common stock issuable upon
exercise of Warrants that expire in June 2009 and (v) up to 395,257
shares of common stock issuable upon exercise of Warrants that expire
in July 2009. Common Stock owned prior to the offering also includes an
additional 288,462 shares issuable upon exercise of warrants issued in
the August 5, 2004 Private Placement, which shares have been registered
in another registration statements and are eligible for resale pursuant
to a separate prospectus. Ramius Capital Group, LLC ("Ramius Capital")
is the investment adviser of Portside Growth & Opportunity Fund
("Portside") and consequently has voting control and investment
discretion over securities held by Portside. Ramius Capital disclaims
beneficial ownership of the shares held by Portside. Peter A. Cohen,
Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon are the sole
managing members of C4S& Co., LLC, the sole managing member of Ramius
Capital. As a result, Messrs. Cohen, Stark, Strauss and Solomon may be
considered beneficial owners of any shares deemed to be beneficially
owned by Ramius Capital. Messrs. Cohen, Stark, Strauss and Solomon
disclaim beneficial ownership of these shares.
(2) Represents (i) up to 1,614,603 shares of common stock issuable upon
conversion of the Debentures, (ii) up to 117,896 shares of
common stock issuable upon exercise of the Debenture Warrants; (iii)
up to 1,300,000 shares of common stock issuable upon exercise
of Warrants that expire in May 2009, and (iv) up to 395,257 shares of
common stock issuable upon exercise of Warrants that expire
in July 2009. Angelo, Gordon & Co., L.P. ("Angelo, Gordon") is the
sole director of the general partner of Leonardo, L.P.
("Leonardo") and consequently has voting control and investment
discretion over securities held by Leonardo. Angelo, Gordon
disclaims beneficial ownership of the shares held by Leonardo. Mr.
John M. Angelo, the Chief Executive Officer of Angelo, Gordon,
and Mr. Michael L. Gordon, the Chief Operating Officer of Angelo,
Gordon, are the sole general partners of AG Partners, L.P., the
sole general partner of Angelo, Gordon. As a result, Messrs. Angelo
and Gordon may be considered beneficial owners of any shares
deemed to be beneficially owned by Angelo, Gordon. Messrs. Angelo and
Gordon disclaim beneficial ownership of these shares.
(3) Represents up to 156,666 shares of common stock issuable upon exercise
of warrants owned by Cardinal of which (i) 33,750 are exercisable at a
price of $2.57 per share, (ii) 66,666 are exercisable at a price of
$2.50 per share, (iii) 26,250 are exercisable at a price if $2.42 per
share, and (iv) 30,000 are exercisable at a price of $3.04 per share.
The members of Cardinal, who share voting control and investment
discretion, are H. David Coherd and Robert Rosenstein. Does not include
shares beneficially owned by Messrs. Coherd and Rosenstein through,
respectively, Windward Capital Advisors, LLC and HefCap Holdings, LLC.
(4) H. David Coherd is the sole member of Windward Capital Advisors, LLC.
Mr. Coherd is one of the members of Cardinal Securities LLC.
Accordingly, the shares beneficially owned by Cardinal are deemed to be
beneficially owned by this selling stockholder. In addition, shares
owned and offered include up to 186,667 shares of common stock issuable
upon exercise of warrants of which (i) 33,750 are exercisable at a
price of $2.57 per share, (ii) 91,667 are exercisable at a price of
$2.50 per share, (iii) 6,250 are exercisable at a price if $2.42 per
share, and (iv) 30,000 are exercisable at a price of $3.04 per share,
and (v) 25,000 are exercisable at a price of $4.07 per share.
(5) Robert Rosenstein is the sole member of Hefcap Holdings, LLC. Mr.
Rosenstein is one of the members of Cardinal Securities LLC.
Accordingly, the shares beneficially owned by Cardinal are deemed to be
beneficially owned by this selling stockholder. In addition, shares
owned and offered include up to 186,667 shares of common stock issuable
upon exercise of warrants of which (i) 33,750 are exercisable at a
price of $2.57 per share, (ii) 91,667 are exercisable at a price of
$2.50 per share, (iii) 6,250 are exercisable at a price if $2.42 per
share, (iv) 30,000 are exercisable at a price of $3.04 per share, and
(v) 25,000 are exercisable at a price of $4.07 per share.
(6) Peter Baxter is the president of Baxter Capital Advisors, Inc. Shares
owned and offered include up to 30,000 shares of common stock issuable
upon exercise of warrants of which (i) 11,250 are exercisable at a
price of $2.57 per share, (ii) 8,750 are exercisable at a price if
$2.42 per share, and (iii) 10,000 are exercisable at a price of $3.04
per share.
(7) Messrs. Ken Sgro and Rachel Glicksman share voting control and
investment discretion over the shares. CEOCast provides investor
relations consulting services to us.
(8) Represents (i) 5,000 shares issuable upon exercise of warrants
exercisable at $3.91 per shares expiring on February 28, 2009, (ii)
5,000 shares issuable upon exercise of warrants exercisable at $4.25
per shares expiring on January 31, 2009, (iii) 5,000 shares issuable
upon the exercise of warrants at $3.51 per share expiring March 31,
2009. (iv) 5,000 shares issuable upon the exercise of warrants at $1.50
expiring March 31, 2010, (v) 5,000 shares issuable upon the exercise of
warrants at $1.87 expiring June 30, 2010 and (vi) 5,000 shares issuable
upon the exercise of warrants at $1.70 expiring September 30, 2010. Mr.
Chipman provides us with financial and accounting consulting services.
(9) Represents shares issued to Fried Epstein & Rettig LLP, a law firm, for
legal services provided to us. The three named partners share voting
control and investment discretion over the shares.
(10) Business Asia Consultants, Inc. provides consulting services related
to obtaining distribution channels in China. It is owned by
Lawrence Kronick.
(11) Jeffrey M. Busch, the principal of JMBL LLC, is deemed to be the
beneficial owner of all shares of common stock owned by JMBL LLC. Mr.
Busch has voting and investment power over the JMBL LLC shares being
offered under this prospectus. Common Stock owned prior to the offering
also includes 50,000 shares, which shares have been registered in
another registration statements and are eligible for resale pursuant to
a separate prospectus.
(12) Dian Griesel is the owner of the Investor Relations Group and is deemed
to be the beneficial owner of all common stock owned by
the Investors Relations Group.
(13) Both columns include shares issuable upon the exercise of outstanding
options exercisable at $1.55 per share expiring February 14,
2015. The first column also includes 89,400 shares owned by The Sage
Group. The principals of The Sage Group are Wayne
Pambianchi, Daniel Tripodi, W. Barry McDonald, Gordon Ramseier and R.
Douglas Hulse. The foregoing securities were issued to The
Sage Group and its principals for services provided to us. Mr. Hulse
is our President.
(14) Consists of shares issuable upon exercise of 150,000 options issued in
2005 to purchase common stock at $2.00 per share expiring September 23,
2015. Mr. Burrows is a former member of the Board of Directors ad
serves as an advisor to the Company from time to time. Also includes
540,000 shares of common stock of which Mr. Burrows is the beneficial
owner.
The selling stockholders have not been employed by, held office in, or
had any other material relationship with us or any of our affiliates within the
past three years except as described in the footnotes above.
HOW THE SHARES MAY BE DISTRIBUTED
The shares to be sold in this offering have been or are in the process
of being listed on the American Stock Exchange, subject to official notice of
issuance. The selling stockholders may sell their shares of common stock from
time to time in various ways and at various prices. The shares may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions that may involve
crosses or block transactions. Some of the methods by which the selling
stockholders may sell the shares include:
o on any national securities exchange or quotation service on which the shares
may be listed or quoted at the time of sale;
o in the over-the-counter market;
o in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
o through the writing of options, whether such options are listed on an options
exchange or otherwise;
o ordinary brokerage transactions and transactions in which the broker solicits
purchasers;
o privately negotiated transactions;
o block trades in which the broker or dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker or dealer as principal and resale by that broker or
dealer for the selling stockholder's account under this prospectus;
o sales under Rule 144 rather than by using this prospectus;
o through the settlement of short sales;
o a combination of any of these methods of sale; or
o any other legally permitted method.
In connection with sales of the shares or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the shares in the course of hedging in
positions they assume. The selling stockholders may also sell shares short and
deliver shares to close out short positions, provided that the selling
stockholders may not close out short positions entered into prior to the
effective date of the registration statement of which this prospectus is a part
with any shares included in this prospectus. The selling stockholders may also
pledge their shares as collateral for a margin loan under their customer
agreements with their brokers. If there is a default by the selling
stockholders, the brokers may offer and sell the pledged shares from time to
time under this prospectus or an amendment to this prospectus under Rule
424(b)(3) or other applicable provisions of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
Brokers or dealers may receive commissions or discounts from the
selling stockholders (or, if the broker-dealer acts as agent for the purchaser
of the shares, from that purchaser) in amounts to be negotiated. These
commissions may exceed those customary in the types of transactions involved.
We cannot estimate at the present time the amount of commissions or
discounts, if any, that will be paid by the selling stockholders in connection
with sales of the shares.
The selling stockholders and any broker-dealers or agents that
participate with the selling stockholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares. There is no underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
selling stockholders. In addition, each of the selling stockholders who is a
registered broker-dealer or is affiliated with a registered broker-dealer has
advised us that:
o it purchased the shares in the ordinary course of business; and
o at the time of the purchase of the shares to be resold, it had no agreements
or understandings, directly or indirectly, with any person to distribute the
shares.
Under the securities laws of certain states, the shares may be sold in
those states only through registered or licensed broker-dealers. In addition,
the shares may not be sold unless they have been registered or qualified for
sale in the relevant state or unless they qualify for an exemption from
registration or qualification.
We do not know whether any selling stockholder will sell any or all of
the shares registered by the shelf registration statement of which this
prospectus forms a part.
We have agreed to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to certain of the selling stockholders. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Certain of the selling stockholders have also agreed to indemnify us,
our directors, officers, agents and representatives against certain liabilities,
including certain liabilities under the Securities Act.
The selling stockholders and other persons participating in the
distribution of the shares offered under this prospectus are subject to the
applicable requirements of Regulation M promulgated under the Exchange Act in
connection with sales of the shares.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus is a part effective until all the shares
registered under the registration statement have been resold.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered by the selling stockholders. Proceeds from the exercising of the
Warrants, if any, will be used for funding our research and development efforts,
capital improvements and working capital.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Many of our Securities and Exchange Commission
filings are also available to the public from the Securities and Exchange
Commission's Website at "http://www.sec.gov."
We have filed with the Securities and Exchange Commission a
registration statement (which contains this prospectus) as amended on Form S-3
under the Securities Act of 1933. The registration statement relates to the
securities offered by the selling stockholders. This prospectus does not contain
all of the information set forth in the registration statement and the exhibits
and schedules to the registration statement. Please refer to the registration
statement and its exhibits and schedules for further information with respect to
us, the common stock and the Warrants. Statements contained in this prospectus
as to the contents of any contract or other document are not necessarily
complete and, in each instance, we refer you to the copy of that contract or
document filed as an exhibit to the Registration Statement. You may read and
obtain a copy of the registration statement and its exhibits and schedules from
the SEC, as described in the preceding paragraph.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information
that we file with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later information
that we file with the Commission will automatically update and supercede this
information. We incorporate by reference the following documents and any future
filing made with the Commission under Sections 13(a), 14 or 15(d) of the
Securities Exchange Act of 1934 until we and the selling stockholders sell all
the securities included in this prospectus:
(a) Our annual report on Form 10-K for our fiscal year ended December 31, 2004,
SEC File No. 1-13441.
(b) Our quarterly report on Form 10-Q for the quarterly period ended March 31,
2005, SEC File No. 1-13441.
(c) Our proxy statement on schedule 14A for our 2005 annual meeting, SEC File
No. 1-13441.
(d) Our quarterly report on Form 10-Q for the quarterly period ended June 30,
2005, SEC File No. 1-13441.
(e) Our current report on Form 8-K filed on October 20, 2005, SEC File No.
1-13441.
(f) Our current report on Form 8-K/A filed on October 28, 2005, SEC File No.
1-13441.
(g) Our quarterly report on Form 10-Q for the quarterly period ended September
30, 2005, SEC File No. 1-13441
(h) A description of our common stock contained in our registration statement on
Form S-1, SEC File No. 33-93314, and any amendment or report filed for the
purpose of updating this description filed subsequent to the date of this
prospectus and prior to the termination of this offering.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address: Hemispherx Biopharma, Inc., 1617 JFK Boulevard,
Philadelphia, Pennsylvania 19103, telephone number 215-988-0080.
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We and the selling stockholders
will not make offers to these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other that the date on the front of those
documents.
LEGAL MATTERS
The validity of the common stock offered in this prospectus has been
passed upon for us by Silverman Sclar Shin & Byrne PLLC, 381 Park Avenue South,
Suite 1601, New York, New York 10016.
EXPERTS
The financial statements incorporated by reference in this Prospectus have been
audited by BDO Seidman, LLP, an independent registered public accounting firm,
to the extent and for the periods set forth in their reports incorporated herein
by reference, and are incorporated herein in reliance upon such reports given
upon the authority of said firm as experts in auditing and accounting.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
No dealer, salesman or any other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
these securities and it is not a solicitation of an offer to buy these
securities in any state where the offer or sale is not permitted. The
information contained in this Prospectus is current only as of this date.
TABLE OF CONTENTS
Page
------------------------------------------------------------------------------
Prospectus Summary.............. 2
------------------------------------------------------------------------------
Risk Factors.....................5
Selling Stockholders............21
How the Shares May
Be Distributed..................25
Use of Proceeds.................27
------------------------------------------------------------------------------
Where you can find
------------------------------------------------------------------------------
------------------------------------------------------------------------------
More information................27
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Information Incorporated
------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Reference....................28
------------------------------------------------------------------------------
Legal Matters...................29
Experts.........................29
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
9,668,433 SHARES OF
COMMON STOCK
------------------------------------------------------------------------------
------------------------------------------------------------------------------
HEMISPHERX BIOPHARMA, INC.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
PROSPECTUS
------------------------------------------------------------------------------
November ___, 2005
------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the registrant
in connection with resales of the securities being registered, including the
preparation and filing of this post-effective amendment. All amounts are
estimates subject to future contingencies except the SEC registration statement
filing fee.
SEC Filing Fees......................................$ 466.12
American Stock Exchange Listing Fee..................$ 15,000.00
Printing and Engraving Expenses......................$ 5,000.00
Accounting Fees and Expenses.........................$ 6,000.00
Legal Fees and Expenses..............................$ 7,000.00
Transfer Agent and Registrar Fees....................$ 1,500.00
Miscellaneous........................................$ 1,500.00
Total Expenses......................................$$ 36,466.12
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Amended and Restated Certificate of Incorporation provides
that the Registrant shall indemnify to the extent permitted by Delaware law any
person whom it may indemnify thereunder, including directors, officers,
employees and agents of the Registrant. Such indemnification (other than an
order by a court) shall be made by the Registrant only upon a determination that
indemnification is proper in the circumstances because the individual met the
applicable standard of conduct. Advances for such indemnification may be made
pending such determination. In addition, the Registrant's Amended and Restated
Certificate of Incorporation eliminates, to the extent permitted by Delaware
law, personal liability of directors to the Registrant and its stockholders for
monetary damages for breach of fiduciary duty as directors.
The Registrant's authority to indemnify its directors and officers is governed
by the provisions of Section 145 of the Delaware General Corporation Law, as
follows:
(a) A corporation shall have the power to indemnify any person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than action by or in the right of the
corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to
believe that the person's conduct was unlawful.
(b) A corporation shall have the power to indemnify any person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the
defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such other
court shall deem proper.
(c) To the extent that a present or former director or officer
of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b) of this section, or
in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the present or former
director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such
determination (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors,
even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer
or director in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the
final disposition or such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director
or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be
indemnified by the corporation as authorized in this
section. Such expenses incurred by former directors and
officers and other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems
appropriate.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subsections of this
section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of
expenses may be entitled under any by, agreement, vote of
stockholders or disinterested directors or otherwise, both
as to action in such person's official capacity and as to
action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against such person and
incurred by such person in any such capacity, or arising out
of his status as such, whether or not the corporation would
have the power to indemnify such person against such
liability under this section.
(h) For purposes of this section, references to the
"corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is
or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request
of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or
surviving corporation as such person would have with respect
to such constituent corporation if its separate existence
had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans,
references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit
plan, and references to "serving at the request of the
corporation" shall include any service as a director,
officer, employee, or agent with respect to any employee
benefit plan, its participants or beneficiaries, and a
person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the
participants and beneficiaries of any employee benefit plan
shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in
this section.
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for
advancement of expenses or indemnification brought under
this section, or under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The
Court of Chancery may summarily determine a corporation's
obligation to advance expenses (including attorneys' fees).
ITEM 16. EXHIBITS.
Exhibit No. Description
4.1 Specimen certificate representing our Common Stock (1)
4.2 Rights Agreement, dated as of November 19, 2002, between the Company and
Continental Stock Transfer & Trust Company. The Right Agreement includes the
Form of Certificate of Designation, Preferences and Rights of the Series A
Junior Participating Preferred Stock, the Form of Rights Certificate and the
Summary of the Right to Purchase Preferred Stock.(2)
4.3 Form of 6% Convertible Debenture of the Company issued in October 2003.(3)
4.4 Form of Warrant for Common Stock of the Company issued in October 2003.(3)
4.5 Form of 6% Convertible Debenture of the Company issued in January 2004.(4)
4.6 Form of Warrant for Common Stock of the Company issued in January 2004.(4)
4.7 Form of Additional Investment Rights to acquire debentures issued in January
2004(4)
4.8 Form of Warrant for Common Stock of the Company issued in May 2004.(5)
4.9 Securities Purchase Agreement, dated October 29, 2003, by and among the
Company and the Buyers named therein.(3)
4.10 Registration Rights Agreement, dated October 29, 2003, by and among the
Company and the Buyers named therein.(3)
4.11 Securities Purchase Agreement, dated January 26, 2004, by and among the
Company and the Buyers named therein.(4)
4.12 Registration Rights Agreement, dated January 26, 2004, by and among the
Company and the Buyers named therein.(4)
4.13 Amendment Agreement, effective October 6, 2005, by and among the Company
and debenture holders.(6)
4.14 Form of Series A amended 7% Convertible Debenture of the Company (amending
Debenture due October 31, 2005). (6)
4.15 Form of Series B amended 7% Convertible Debenture of the Company (amending
Debenture issued on January 26, 2004 and due January 31, 2006). (6)
4.16 Form of Series C amended 7% Convertible Debenture of the Company (amending
Debenture issued on July 13, 2004 and due January 31, 2006). (6)
4.17 Form of Warrant issued effective October 6, 2005 for Common Stock of the
Company.(6)
5.1 Opinion of Silverman Sclar Shin & Byrne PLLC, legal counsel.
23.1 Consent of BDO Seidman, LLP, independent registered public accountants.
23.2 Consent of Silverman Sclar Shin & Byrne PLLC, legal counsel (included in
Exhibit 5.1).
24.1 Powers of Attorney (included in Signature Pages to this Registration
Statement on Form S-3).
-------------------------------------------------
(1) Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (Registration No. 33-93314) declared effective by the Securities and
Exchange Commission on November 2, 1995.
(2) Incorporated by reference from the exhibits to the Registrant's Registration
Statement on Form 8-A (No. 0-27072) filed on November 20, 2002.
(3) Incorporated by reference from the exhibits to the Registrant's Current
Report on Form 8-K (No. 1-13441) filed on October 30, 2003.
(4) Incorporated by reference from the exhibits to the Registrant's Current
Report on Form 8-K (No. 1-13441) filed on January 27, 2004.
(5) Incorporated by reference from exhibits to the Registrant's Form 10-Q for
the quarter ended March 31, 2004 (No. 1-13441) filed on May 14, 2004.
(6) Incorporated by reference from the exhibits to the Registrant's Current
Report on Form 8-K/A-1 (No. 1-13441) filed on October 28, 2005.
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of 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 20 percent 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) herein do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the SEC by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
B. 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
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. 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 Securities Act of
1933 and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, this Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on
the 28th day of November, 2005.
HEMISPHERX BIOPHARMA, INC.
(Registrant)
By: /s/ William A. Carter
-----------------------------------
William A. Carter, M.D.,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on the dates indicated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints William A. Carter acting alone, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person in his name, place and stead, in any and all capacities, in
connection with the Registrant's registration statement now on Form S-3 under
the Securities Act of 1933, including, without limiting the generality of the
foregoing, to sign the registration statement in the name and on behalf of the
Registrant or on behalf of the undersigned as a director or officer of the
Registrant, and any and all amendments or supplements to the registration
statement, including any and all stickers and post-effective amendments to the
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-regulatory
body, granting unto said attorney-in-fact and agents, each acting alone, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
/s/ William A. Carter Chairman of the Board, November 28, 2005
---------------------- Chief Executive Officer
William A. Carter, M.D. (Principal Executive) and Director
/s/ Richard Piani Director November 28, 2005
-----------------
Richard C. Piani
/s/ Robert Peterson Chief Financial Officer g November 28, 2005
------------------- and Chief Accountin Officer
Robert E. Peterson
/s/ Ransom Etheridge Secretary, General Counsel November 28, 2005
--------------------- And Director
Ransom W. Etheridge
/s/ William Mitchell Director November 30, 2005
------------------------
William M. Mitchell, M.D., Ph.D.
/s/ Steven Spence Director November 30, 2005
-------------------------
Steven D. Spence
/s/ Iraj-Eqhbal Kiani Director November 30, 2005
-------------------------
Iraj-Eqhbal Kiani, M.D.
Hemispherx Biopharma, Inc.
Form S-3
Index to Exhibits
Exhibit No. Description
5.1 Opinion of Silverman Sclar Shin & Byrne PLLC, legal counsel.
23.1 Consent of BDO Seidman, LLP, independent registered public accountants.
Exhibit 5.1
SILVERMAN SCLAR SHIN & BYRNE PLLC
381 Park Avenue South, Suite 1601
New York, New York 10016
Tel. No. 212-779-8600
Telecopy Number - (212) 779-8858
November 30, 2005
Board of Directors
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, PA 19103
Re: Hemispherx Biopharma, Inc. - Registration Statement on Form S-3
Gentlemen:
We have acted as counsel for Hemispherx Biopharma, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of the registration
statement on Form S-3 (the "Registration Statement") relating to the
registration under the Securities Act of 1933, as amended (the "Act"), of the
following shares of the Company's Common Stock, par value $0.001 per share (the
"Common Stock"): (i) 757,609 shares of Common Stock (the "Debenture Shares")
issuable upon conversion of the Company's Series A, B and C 7% Senior
Convertible Debentures Due June 30, 2007 (the "Debentures") based upon the
conversion price of the Debentures as of the date hereof and issuable as payment
of interest on the Debentures (all of the foregoing resulting solely from
amendments to the terms of previously issued 6% Senior Convertible Debentures
and changes resulting from changes in the number of shares issued and issuable
to the debentureholders as installment payments and interest payments due to
fluctuating market prices of the Company's common stock; the balance of shares
issuable upon conversion of the Debentures and payment of interest thereon
having been previously registered); (ii) 225,000 shares (the "Debenture Warrant
Shares") issuable upon exercise of certain outstanding warrants ("Debenture
Warrants") of the Company issued to the debenture holders in conjunction with
the amendment to the terms of previously issued 6% Senior Convertible
Debentures; (iii) 343,913 shares (the "Antidilution Shares") issuable upon
conversion of the Debentures, as payment of interest thereon or upon exercise of
the Debenture Warrants as a result of adjustments to the conversion price of the
Debentures or the exercise price of the Warrants, as the case may be, in
accordance with the respective terms thereof; (iv) an aggregate of 423,333
shares issuable upon exercise of certain outstanding warrants of the Company
(the "Other Warrant Shares") owned by certain selling stockholders listed in the
Registration Statement and (v) and aggregate of 140,032 shares owned in the
aggregate by certain selling stockholders listed in the Registration Statement
(the "Other Shares"). The Debenture Shares, Debenture Warrant Shares,
Antidilution Shares, Other Warrant Shares and Other Shares are to be offered and
sold by certain securityholders of the Company (the "Selling Stockholders").
We have reviewed and are familiar with such corporate proceedings and other
matters as we have deemed necessary for this opinion. Based upon the foregoing,
we are of the opinion that (i) the Debenture Shares to be offered and sold by
the Selling Stockholders have been duly authorized and, when issued by the
Company upon conversion of the Debentures or as interest payments under the
Debentures in accordance with the Debentures, will be legally issued, fully paid
and nonassessable, (ii) the Debenture Warrant Shares and Other Warrant Shares to
be offered and sold by the Selling Stockholders have been duly authorized and,
when issued by the Company upon exercise of the respective warrants in
accordance with the terms of such warrants, will be legally issued, fully paid
and nonassessable; (iii) the Antidilution Shares to be offered and sold by the
Selling Stockholders have been duly authorized and, when issued by the Company
upon conversion of the Debentures in accordance with the Debenture or upon
exercise of the Debenture Warrants in accordance with the terms of the Debenture
Warrants, as the case may be, will be legally issued, fully paid and
nonassessable. and (iv) the Shares to be offered and sold by the Selling
Stockholders have been duly authorized, legally issued, fully paid and
nonassessable.
This opinion is limited to matters governed by the General Corporation Law of
the State of Delaware. No opinion is expressed as to the effect that the law of
any other jurisdiction may have upon the subject matter of the opinion expressed
herein under conflicts of law principles, rules and regulations or otherwise.
This opinion is limited to the specific issues addressed herein, and no opinion
may be inferred or implied beyond that expressly stated herein. We assume no
obligation to revise or supplement this opinion should the present laws of the
State of Delaware be changed by legislative action, judicial decision or
otherwise.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
This opinion is furnished to you in connection with the filing of the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Very truly yours,
/s/ Silverman Sclar Shin & Byrne PLLC
-------------------------------------
Silverman Sclar Shin & Byrne PLLC
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
Hemispherx Biopharma, Inc.
Philadelphia, Pennsylvania
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our reports dated February
4, 2005, relating to the consolidated financial statements and the effectiveness
of Hemispherx Biopharma, Inc.'s internal control over financial reporting
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 2004.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
Philadelphia, Pennsylvania
November 30, 2005