As filed with the Securities and Exchange Commission on April 3, 2002
REGISTRATION STATEMENT NO. 333-84326
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT ON FORM S-3
UNDER THE SECURITIES ACT OF 1933
---------------------------
IMMTECH INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 39-1523370
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
150 Fairway Drive, Suite 150,
Vernon Hills, Illinois 60061
(847) 573-0033
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------------
T. Stephen Thompson, President
150 Fairway Drive, Suite 150,
Vernon Hills, Illinois 60061
(847) 573-0033
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
---------------------------
COPY TO:
JOHN F. FRITTS, ESQ.
CADWALADER, WICKERSHAM & TAFT
100 MAIDEN LANE
NEW YORK, NEW YORK 10038-4892
---------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [_]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND
OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST
THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [_]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [_]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [_]
CALCULATION OF REGISTRATION FEE
=====================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
-----------------------------------------------------------------------------------------------------
Common Stock, par value
0.01 per share 1,825,786 shares $5.68 $14,200,000 $1,306.00(2)
======================================================================================================
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(1) In the event of a stock split, stock dividend or similar transaction
involving our common stock, in order to prevent dilution, the number of
shares registered shall automatically be increased to cover the additional
shares in accordance with Rule 416(a) under the Securities Act of 1933, as
amended (the "Securities Act").
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the low bid and high
asked prices of the common stock on the NASDAQ on March 12, 2002. The
maximum price per share will be determined from time to time in connection
with the resale by the Selling Stockholders of the shares registered
hereunder.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The information in this Prospectus is not complete and may be changed. The
Selling Stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
SUBJECT TO COMPLETION, DATED APRIL 3, 2002.
PROSPECTUS
1,825,786 SHARES
[LOGO] IMMTECH INTERNATIONAL, INC.
COMMON STOCK
----------
Stockholders of Immtech International, Inc. named under the caption
"Selling Stockholders" may from time to time offer and sell up to 1,825,786
shares of the Company's Common Stock ("Shares"). The Shares may be sold in
transactions occurring either on or off the NASDAQ at prevailing market prices
or at negotiated prices. Sales may be made through brokers or through dealers,
who are expected to receive customary commissions or discounts. We will receive
no proceeds from the sale of Shares offered by this Prospectus. No period of
time has been fixed within which the Shares registered hereunder may be offered
or sold. Our obligation to keep the Registration Statement of which this
Prospectus is a part effective expires as to 1,681,743 of the Selling
Stockholders' Shares on February 14, 2004, 44,043 Shares on February 22, 2004
and 100,000 Shares on September 12, 2002, or sooner if all Selling Stockholders'
Shares are sold. As used in this Prospectus, the terms "we," "us, "our," the
"Company" and "Immtech" mean Immtech International, Inc. and the term "Common
Stock" means the common stock of Immtech, $0.01 par value.
Our Common Stock is traded on the NASDAQ SmallCap Market under the symbol
"IMMT." The last reported sale price of our Common Stock on April 1, 2002 was
$5.40. The address of our principal executive offices is 150 Fairway Drive,
Suite 150, Vernon Hills, Illinois 60061, and our telephone number is (847)
573-0033.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK, YOU SHOULD
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-1 OF THIS PROSPECTUS
BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-i-
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS,
INCORPORATED BY REFERENCE OR PROVIDED BY SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THIS PROSPECTUS IS NOT AN
OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
TABLE OF CONTENTS
RISK FACTORS...............................................................S-1
ABOUT THIS PROSPECTUS.....................................................S-11
WHERE YOU CAN FIND MORE INFORMATION.......................................S-12
FORWARD-LOOKING STATEMENTS................................................S-13
THE COMPANY...............................................................S-14
USE OF PROCEEDS...........................................................S-19
SELLING STOCKHOLDERS......................................................S-19
DESCRIPTION OF CAPITAL STOCK..............................................S-22
PLAN OF DISTRIBUTION......................................................S-23
LEGAL MATTERS.............................................................S-24
EXPERTS...................................................................S-24
GLOSSARY..................................................................S-25
RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
In addition to the other information contained in this Prospectus, the following
risk factors should be considered carefully in evaluating our business before
purchasing the Shares.
THERE IS NO ASSURANCE THAT WE WILL SUCCESSFULLY DEVELOP A COMMERCIALLY VIABLE
PRODUCT.
We are at an early stage of clinical development activities required for
drug approval and commercialization. Since our formation in October 1984, we
have engaged in developing research programs, recruiting scientific advisors and
scientists, negotiating and consummating technology licensing agreements, and
sponsoring research and development activities. We have generated no revenue
from product sales and do not have any products currently available for sale,
and none are expected to be commercially available for at least one year, if at
all. There can be no assurance that the research we fund and manage will lead to
the development of commercially viable products.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT; OUR FUTURE PROFITABILITY
IS UNCERTAIN.
We have experienced significant operating losses since our inception and
we expect to incur additional operating losses as we continue research and
development and clinical trial efforts. As of January 31, 2002 we had an
accumulated deficit of approximately $35,201,000.
WE NEED SUBSTANTIAL ADDITIONAL FUNDS.
Our operations to date have consumed substantial amounts of cash. Negative
cash flow from operations is expected to continue in the foreseeable future. Our
cash requirements may vary materially from those now planned because of results
of research and development, results of pre-clinical and clinical testing,
responses to our grant requests, relationships with strategic partners, changes
in the focus and direction of our research and development programs, competitive
and technological advances, the FDA regulatory process and other factors. In any
of these circumstances we may require substantially more funds than we currently
have available or currently intend to raise to continue our business. We may
seek to satisfy future funding requirements through public or private offerings
of securities, by collaborative or other arrangements with pharmaceutical
companies, or from other sources. Additional financing may not be available when
needed or may not be available on acceptable terms. If adequate financing is not
available we may not be able to continue as a going concern or may be required
to delay, scale back or eliminate certain research and development programs,
relinquish rights to certain technologies or product candidates, forego desired
opportunities, or license third parties to commercialize our products or
technologies that we would otherwise seek to develop internally. To the extent
we raise additional capital by issuing equity securities, ownership dilution to
existing stockholders will result.
S-1
THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A "GOING CONCERN."
We have a shortage of unrestricted working capital and have had recurring
losses from operations and negative cash flows from operations since our
inception. These factors, among others discussed herein, raise substantial doubt
about our ability to continue as a going concern. (See "Item 6. Management's
Discussion and Analysis of Financial Condition and Results of Operations," "Item
7. Financial Statements - Notes to Financial Statements and Independent
Auditors' Report" (which contains an explanatory paragraph relating to
substantial doubt about our ability to continue as a going concern) and
elsewhere in our Form 10-KSB/A (Amendment No. 1) and our Quarterly Reports on
Form 10-Q, incorporated by reference herein, for further information on our
financial position and results of operations). Our ability to continue to
operate will ultimately depend upon raising additional funds, attaining
profitability and operating at a profit on a consistent basis, which will not
occur for some time or may never occur.
OUR DEPENDENCE ON KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS.
Our business depends to a significant degree on the continuing
contributions of our key management, scientific and technical personnel, as well
as on the continued discoveries of scientists, researchers, and technicians at
The University of North Carolina at Chapel Hill ("UNC"), Duke University
("Duke"), Auburn University ("Auburn") and Georgia State University ("Georgia
State") (collectively, the "Consortium") who have entered into an agreement
dated January 15, 1997, as amended, and a License Agreement dated as of January
28, 2002 (collectively, the "Consortium Agreements") by which the members of the
Consortium have given us exclusive rights to commercialize certain
pharmaceutical product candidates developed in the Consortium-member
laboratories related to the dication technology. There can be no assurance that
the loss of certain members of management or the scientists, researchers and
technicians from the Consortium-member universities would not materially
adversely affect our business. We do not have key-man life insurance policies on
any of our executives.
ADDITIONAL RESEARCH GRANTS MAY NOT BE AVAILABLE.
We will continue to apply for new grants to support continuing research
and development of the dication platform technology and, with our joint venture
company NextEra, our biological product candidates. The process of obtaining
grants is extremely competitive and there can be no assurance that any of our
grant applications will be acted upon favorably.
OUR PRODUCT CANDIDATES ARE IN EARLY STAGE CLINICAL TRIALS.
All of our product candidates, including DB289, require additional
clinical testing, regulatory approval and development of marketing and
distribution channels, all of which are expected to require substantial
additional investment prior to commercialization. There can be no assurance that
any of our product candidates will be successfully developed, prove to be safe
and effective in human clinical trials, meet applicable regulatory standards, be
capable of being produced in commercial quantities at acceptable costs, be
eligible for third party reimbursement from governmental or private insurers, be
successfully marketed, or achieve market acceptance.
S-2
THERE ARE SUBSTANTIAL UNCERTAINTIES RELATED TO CLINICAL TRIALS.
To obtain required regulatory approvals for the commercial sale of our
product candidates, we must demonstrate through clinical trials that such
product candidates are safe and effective for their intended uses.
We may find, at any stage of our research and development, that product
candidates which appeared promising in earlier clinical trials do not
demonstrate safety or effectiveness in later clinical trials and therefore do
not receive regulatory approvals. The results from pre-clinical testing and
early clinical trials may not be predictive of results obtained in later
clinical trials and large-scale testing. Companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in various stages of
clinical trials, even after promising results had been obtained in earlier stage
trials. Completion of the clinical trials may be delayed by many factors,
including slower than anticipated patient enrollment, difficulty in securing
sufficient supplies of clinical trial materials or adverse events occurring
during clinical trials. Completion of testing, studies and trials may take
several years, and the length of time varies substantially with the type,
complexity, novelty, and intended use of the product. Delays or rejections may
be based upon many factors, including changes in regulatory policy during the
period of product development. No assurance can be given that any of our
development programs will be successfully completed, that any Investigational
New Drug application filed with the FDA (or any foreign equivalent filed with
the appropriate foreign authorities) will become effective, that additional
clinical trials will be allowed by the FDA or other regulatory authorities, or
that clinical trials will commence as planned. There have been delays in our
testing and development schedules to date and there can be no assurance that our
future testing and development schedules will be met.
WE HAVE NO MANUFACTURING CAPABILITY WHICH COULD IMPAIR OUR ABILITY TO DEVELOP
COMMERCIALLY VIABLE PRODUCTS AT REASONABLE COSTS.
Our ability to conduct clinical trials and to commercialize product
candidates will depend in part upon our ability to manufacture the product
candidates, either directly or through third parties, at a competitive cost and
in accordance with FDA and other regulatory requirements. We currently lack
facilities and personnel to manufacture our product candidates. There can be no
assurance that we will be able to acquire such resources, either directly or
through third parties, at reasonable costs if we develop commercially viable
products.
WE ARE DEPENDENT ON THIRD-PARTY RELATIONSHIPS FOR CRITICAL ASPECTS OF OUR
BUSINESS.
We follow a business strategy of utilizing the expertise and resources of
third parties in a number of areas, including the research and development of
potential products, the manufacture of potential products for clinical trial
purposes, the conduct of pre-clinical and clinical trials and the future
development and manufacture of commercialized drugs. This strategy creates risks
by placing critical aspects of our business in the hands of third parties whom
we may not be able to control. If these third parties do not perform in a timely
and satisfactory manner, we may incur costs and delays as we seek alternate
sources of such products and services, if available. Such costs and delays may
have a material adverse effect on our business.
We have invested in NextEra Therapeutics Inc. ("NextEra") in a joint
venture with Franklin Research Group ("Franklin") and one individual by
contributing technology, patent assignments
S-3
and cash. The success of NextEra is partially dependent on the performance by
Franklin of its obligations to NextEra and the results of certain research.
NextEra's research and development and ability to continue as a going concern
has been adversely effected by a dispute among its joint venture partners and
from a lack of available funds (See "Item 1. Business of the Company - Joint
Ventures," "Item 3. Legal Proceedings," and "Item 7. Financial Statements -
Notes to Financial Statements and Independent Auditors' Report" and elsewhere in
our Form 10-KSB/A (Amendment No. 1)).
We may seek additional third party relationships in certain areas,
particularly in clinical testing, marketing, manufacturing and other areas where
pharmaceutical company collaborators will enable us to develop particular
products or geographic markets which are otherwise beyond our resources and/or
capabilities. There is no assurance that we will be able to obtain any such
collaboration or any other research and development, manufacturing, or clinical
trial agreement. Our inability to obtain and maintain satisfactory relationships
with third parties may have a material adverse effect on our business.
WE ARE UNCERTAIN ABOUT THE ABILITY TO PROTECT OR OBTAIN NECESSARY PATENTS AND
PROTECT OUR PROPRIETARY INFORMATION.
There can be no assurance that any particular patent will be granted or
that issued patents will provide us, directly or through licenses, with the
intellectual property protection contemplated. Patents and licenses of patents
can be challenged, invalidated or circumvented. It is also possible that
competitors will develop similar products simultaneously. Our breach of any
license agreement or the failure to obtain a license to any technology or
process which may be required to develop or commercialize one or more of our
product candidates may have a material adverse effect on our business.
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings, and a substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Third parties may
have filed applications for or have been issued patents and may obtain
additional patents and proprietary rights related to products or processes
competitive with or similar to those that we are attempting to develop and
commercialize. We may not be aware of all of the patents potentially adverse to
our interests that may have been issued to others. No assurance can be given
that patents do not exist, have not been filed, or could not be filed or issued,
which contain claims relating to or competitive with our technology, products or
processes. If patents have been or are issued to others containing preclusive or
conflicting claims, then we may be required to obtain licenses to one or more of
such patents or to develop or obtain alternate technology. There can be no
assurance that the licenses that might be required for such technology,
processes or products would be available on commercially acceptable terms, or at
all.
Because of the substantial length of time and expense associated with
bringing new products to the marketplace through the development and regulatory
approval process, the biotechnology industry places considerable importance on
patent and trade secret protection for new technologies, products and processes.
Since patent applications in the United States are confidential until patents
are issued and since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, we cannot be certain that we (or
our licensors) were the first to make the inventions covered by pending patent
applications or that we (or our
S-4
licensors) were the first to file patent applications for such inventions. The
patent positions of pharmaceutical and biotechnology companies can be highly
uncertain and involve complex legal and factual questions, and therefore, the
breadth of claims allowed in pharmaceutical and biotechnology patents, or their
enforceability, cannot be predicted. There can be no assurance that any patents
under pending patent applications or any further patent applications will be
issued. Furthermore, there can be no assurance that the scope of any patent
protection will exclude competitors or provide us competitive advantages, that
any of our (or our licensors) patents that have been issued or may be issued
will be held valid if subsequently challenged, or that others, including
competitors or current or former employers of our employees, advisors and
consultants, will not claim rights in, or ownership to, our (or our licensors)
patents and other proprietary rights. There can be no assurance that others will
not independently develop substantially equivalent proprietary information or
otherwise obtain access to our proprietary information, or that others may not
be issued patents that may require us to obtain a license for, and pay
significant fees or royalties for, such proprietary information.
The biotechnology industry has experienced extensive litigation regarding
patent and other intellectual property rights. We could incur substantial costs
in defending suits that may be brought against us (or our licensors) claiming
infringement of the rights of others or in asserting our (or our licensors)
patent rights in a suit against another party. We may also be required to
participate in interference proceedings declared by the United States Patent and
Trademark Office for the purpose of determining the priority of inventions in
connection with our (or our licensors) patent applications.
Adverse determinations in litigation or interference proceedings could
require us to seek licenses (which may not be available on commercially
reasonable terms) or subject us to significant liabilities to third parties, and
could therefore have a material adverse effect on our business. Even if we
prevail in an interference proceeding or a lawsuit, substantial resources,
including the time and attention of our officers, will be required.
As of June 8, 1995, certain legislative changes implementing the General
Agreement on Trade and Tariffs (1947), as amended, resulted in changes to United
States patent laws that affect the length of patent protection. Whereas the term
for patent applications used to be for a period of seventeen years from the date
of grant, the new term of a United States patent commences on the date of
issuance and terminates twenty years from the earliest effective filing date of
an application. The time from filing to issuance of a biotechnology patent
application is often more than three years, consequently, a twenty-year term
from the effective date of filing may result in a negative impact on our (or our
licensors) patent position by offering a substantially shortened term of
protection.
We also rely on trade secrets, know-how and technological advancement to
maintain our competitive position. Although we use confidentiality agreements
and employee proprietary information and invention assignment agreements to
protect our trade secrets and other unpatented know-how, these agreements may be
breached by the other party thereto or may otherwise be of limited effectiveness
or enforceability.
S-5
OUR BUSINESS HAS SIGNIFICANT COMPETITION; OUR PRODUCT CANDIDATES MAY BECOME
OBSOLETE PRIOR TO COMMERCIALIZATION DUE TO ALTERNATIVE TECHNOLOGIES.
The biopharmaceutical field is characterized by extensive research efforts
and rapid technological progress. Competition from other biotechnology
companies, pharmaceutical companies and research and academic institutions is
intense and other companies are engaged in research and product development for
treatment of the same diseases as we are. New developments in molecular cell
biology, molecular pharmacology, recombinant DNA technology and other
pharmaceutical processes are expected to continue at a rapid pace in both
industry and academia. There can be no assurance that research and discoveries
by others will not render some or all of our programs or products noncompetitive
or obsolete.
We are aware of other companies and institutions dedicated to the
development of therapeutics similar to those we are developing, including Eli
Lilly and Company, Hoffman-LaRoche Ltd., Chiron Corporation, Cubist
Pharmaceuticals, Inc., Schering-Plough Corporation, and Abbott Laboratories.
Many of our existing or potential competitors have substantially greater
financial and technical resources and therefore may be in a better position to
develop, manufacture, and market biopharmaceutical products. Many of these
competitors are also more experienced with regard to pre-clinical testing, human
clinical trials and obtaining regulatory approvals. The current or future
existence of competitive products may also adversely affect the marketability of
our product candidates.
THERE IS NO ASSURANCE THAT WE WILL RECEIVE FDA APPROVAL FOR ANY OF OUR PRODUCT
CANDIDATES; GOVERNMENT REGULATION MAY IMPEDE, DELAY OR PREVENT THE
COMMERCIALIZATION OF OUR PRODUCT CANDIDATES.
All new drugs and biologics (a biologic is a naturally occurring protein,
or a synthetic form thereof), including our product candidates, are subject to
extensive and rigorous regulation by the federal government, principally the FDA
under the Federal Food, Drug and Cosmetic Act and other laws including, in the
case of biologics, the Public Health Services Act, and by state, local and
foreign governments. Such regulations govern, among other things, the
development, testing, manufacture, labeling, storage, pre-market clearance or
approval, advertising, promotion, sale and distribution of drugs and biologics.
If drug products are marketed abroad they are subject to extensive regulation by
foreign governments. Failure to comply with applicable regulatory requirements
may subject us to administrative or judicially imposed sanctions such as civil
penalties, criminal prosecution, injunctions, product seizure or detention,
product recalls, total or partial suspension of production, and FDA refusal to
approve pending applications.
WE HAVE NOT RECEIVED REGULATORY APPROVAL IN THE UNITED STATES OR ANY FOREIGN
JURISDICTION FOR THE COMMERCIAL SALE OF ANY OF OUR PRODUCT CANDIDATES.
The process of obtaining FDA and other required regulatory approvals,
including foreign approvals, often takes many years and varies substantially
based upon the type, complexity and novelty of the products involved and the
indications being studied. Furthermore, the approval process is extremely
expensive and uncertain. There can be no assurance that our product candidates
will be cleared for commercial sale in the United States by the FDA or
regulatory agencies in foreign countries. The regulatory review process can take
many years and we will need to raise additional funds prior to completing the
regulatory review process for our current
S-6
and future product candidates. Failure to receive FDA approval for our product
candidates would preclude us from marketing and selling such products in the
United States. Therefore, the failure to receive FDA approval would have a
material adverse effect on our business. Even if regulatory approval of a
product is granted, there can be no assurance that we will be able to obtain the
labeling claims (a labeling claim is a product's description and its FDA
permitted uses) necessary or desirable for the promotion of such product. FDA
regulations prohibit the marketing or promotion of a drug for unapproved
indications. Furthermore, regulatory marketing approval may entail ongoing
requirements for postmarketing studies if regulatory approval is obtained; we
will then be subject to ongoing FDA obligations and continued regulatory review.
In particular, we, or our third party manufacturers, will be required to adhere
to regulations setting forth Good Manufacturing Practices which require us (or
our third party manufacturers) to manufacture products and maintain records in a
prescribed manner with respect to manufacturing, testing and quality control
activities. Further, we (or our third party manufacturer) must pass a
manufacturing facilities pre-approval inspection by the FDA before obtaining
marketing approval. Failure to comply with applicable regulatory requirements
may result in penalties such as restrictions on a product's marketing or
withdrawal of the product from the market. In addition, identification of
certain side effects after a drug is on the market or the occurrence of
manufacturing problems could cause subsequent withdrawal of approval,
reformulation of the drug, additional pre-clinical testing or clinical trials
and changes in labeling of the product.
Prior to the submission of an application for FDA approval, our product
candidates must undergo rigorous pre-clinical and clinical testing which may
take several years and the expenditure of substantial financial and other
resources. Before commencing clinical trials in humans we must submit to the FDA
and receive clearance of an Investigational New Drug Application ("IND"). There
can be no assurance that submission of an IND for future clinical testing of any
of our product candidates under development or other future product candidates
would result in FDA permission to commence clinical trials or that we will be
able to obtain the necessary approvals for future clinical testing in any
foreign jurisdiction. Further, there can be no assurance that if such testing of
product candidates under development is completed, any such drug compounds will
be accepted for formal review by the FDA or any foreign regulatory body or
approved by the FDA for marketing in the United States or by any such foreign
regulatory bodies for marketing in foreign jurisdictions. Future federal, state,
local or foreign legislation or administrative acts could also prevent or delay
regulatory approval of our product candidates.
Prior to the submission of an application for FDA approval, our biologics
and biologics developed by our joint venture partner NextEra, must undergo
rigorous pre-clinical and clinical testing which may take several years and the
expenditure of substantial resources. Before commencing clinical trials in
humans in the United States, we (or NextEra) must submit to the FDA and receive
clearance of an IND. If clinical trials of a new product are completed
successfully, then we (or NextEra) may seek FDA marketing approval. If the
product is regulated as a biologic, the FDA will require the submission and
approval of both a Product License Application ("PLA") and an Establishment
License Application before commercial marketing can commence. The PLA must
include detailed information about the biologic and its manufacture and the
results of product development, pre-clinical studies and clinical trials. The
FDA's time to review PLAs averages two to five years. The FDA may ultimately
decide that the PLA does not satisfy its regulatory criteria for approval and
deny approval or require additional
S-7
clinical studies. Future federal, state, local or foreign legislation or
administrative acts could also prevent or delay regulatory approval of our (or
NextEra's) biologic candidates.
THERE IS UNCERTAINTY REGARDING THE AVAILABILITY OF HEALTH CARE REIMBURSEMENT FOR
PURCHASERS OF OUR ANTICIPATED PRODUCTS; HEALTH CARE REFORM MAY NEGATIVELY IMPACT
THE ABILITY OF PROSPECTIVE PURCHASERS OF OUR ANTICIPATED PRODUCTS TO PAY FOR
SUCH PRODUCTS.
Our ability to commercialize any of our product candidates will depend in
part on the extent to which reimbursement for the costs of the resulting drug or
biologic will be available from government health administration authorities,
private health insurers and others. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. There can be no
assurance of the availability of third-party insurance reimbursement coverage
enabling us to establish and maintain price levels sufficient for realization of
a profit on our investment in developing pharmaceutical and biological products.
Government and other third-party payers are increasingly attempting to contain
health care costs by limiting both coverage and the level of reimbursement for
new drug or biologic products approved for marketing by the FDA and by refusing,
in some cases, to provide any coverage for uses of approved products for disease
indications for which the FDA has not granted marketing approval. If adequate
coverage and reimbursement levels are not provided by government and third-party
payers for uses of our anticipated products, the market acceptance of these
products would be adversely affected.
Health care reform proposals have previously been introduced in Congress
and in various state legislatures and there is no guarantee that such proposals
will not be introduced in the future. We cannot predict when any proposed
reforms will be implemented, if ever, or the effect of any implemented reforms
on our business. There can be no assurance that any implemented reforms will not
have a material adverse effect on our business. Such reforms, if enacted, may
affect the availability of third-party reimbursement for our anticipated
products as well as the price levels at which we are able to sell such products.
In addition, if we are able to commercialize products in overseas markets then
our ability to achieve success in such markets may depend, in part, on the
health care financing and reimbursement policies of such countries.
CONFIDENTIALITY AGREEMENTS MAY NOT ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.
We require our employees and consultants to execute confidentiality
agreements upon the commencement of their relationship with the Company. The
agreements generally provide that trade secrets and all inventions conceived by
the individual and all confidential information developed or made known to the
individual during the term of the relationship shall be Immtech's exclusive
property and shall be kept confidential and not disclosed to third parties
except in specified circumstances. There can be no assurance, however, that
these agreements will provide meaningful protection for our proprietary
information in the event of unauthorized use or disclosure of such information.
POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE.
Sales of our Common Stock (including the issuance of Shares upon
conversion of preferred stock and the exercise of outstanding options and
warrants at prices substantially below the current closing bid price) in the
public market could materially and adversely affect the market price of shares
of our Common Stock. Such sales also might make it more difficult for us to sell
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equity securities or equity-related securities in the future at a time and price
that we deem appropriate.
As of April 1, 2002, we had 6,066,459 shares of Common Stock outstanding
(not including 905,536 shares of Common Stock reserved for conversion of Series
A Convertible Preferred Stock, 508,478 shares of Common Stock reserved for
exercise of outstanding options and 2,035,250 shares of Common Stock reserved
for exercise of outstanding warrants held by certain investors). Of the shares
outstanding, 3,976,175 shares of Common Stock are freely tradable without
restriction. All of the remaining 2,090,284 shares are restricted from resale
except pursuant to certain exceptions under the Securities Act of 1933, as
amended.
POTENTIAL ADVERSE EFFECT OF OUTSTANDING COMMON STOCK OPTIONS AND WARRANTS.
We have outstanding options and warrants for the purchase of shares of our
Common Stock which may adversely affect our ability to consummate future equity
financings. Further, the holders of such warrants and options may exercise them
at a time when we would otherwise be able to obtain additional equity capital on
more favorable terms. To the extent any such options and warrants are exercised,
the outstanding shares of our Common Stock will be diluted.
THE LISTING OF OUR COMMON STOCK HAS BEEN TRANSFERRED FROM THE NASDAQ NATIONAL
MARKET SYSTEM TO THE NASDAQ SMALLCAP MARKET.
On March 6, 2002 we received notice from a NASDAQ listing review panel
that our stock would be transferred from the NASDAQ National Market System to
the NASDAQ SmallCap Market effective March 8, 2002. On March 8, 2002 our Common
Stock began trading on the NASDAQ SmallCap Market. Our ability to remain listed
on the NASDAQ SmallCap Market is contingent upon continued compliance with all
NASDAQ SmallCap Market requirements including but not limited to (i) $35 million
market capitalization and (ii) net tangible assets in excess of $2 million or
stockholders equity of $2.5 million. Our Common Stock has been trading in the
$5.50 per share range. Assuming a $5.50 per share price and 6,066,459 Common
Stock shares outstanding, our market capitalization is approximately $33 million
and the net proceeds of our February 14, 2002 and February 22, 2002 private
placements provided us with net tangible assets in excess of $2 million as of
February 22, 2002. Trading on the NASDAQ SmallCap Market may result in a reduced
market for our Common Stock and consequently a reduced liquidity for our
stockholders.
IF WE CANNOT SATISFY NASDAQ'S SMALLCAP MAINTENANCE REQUIREMENTS, NASDAQ MAY
TRANSFER OUR COMMON STOCK TO THE OTC BULLETIN BOARD.
If we fail to continue to meet the listing maintenance requirements of the
NASDAQ SmallCap Market and NASDAQ rules, which require, among other things,
minimum net tangible assets of $2 million or $35 million market capitalization
and a minimum bid price for our Common Stock of $1.00, we may be subject to
transfer from the NASDAQ SmallCap Market. Trading, if any, of our Common Stock
would thereafter be conducted in the over-the-counter market in the so-called
"pink sheets" or on the National Association of Securities Dealers, Inc.
"electronic bulletin board." As a consequence of any such transfer, a
stockholder would likely find it more difficult to dispose of, or to obtain
accurate quotations as to the prices of, our Common Stock.
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IF OUR COMMON STOCK IS TRANSFERRED TO THE PINK SHEETS OR THE ELECTRONIC BULLETIN
BOARD, IT MAY BECOME SUBJECT TO THE SEC'S "PENNY STOCK" RULES, WHICH MAY MAKE
SHARES OF OUR COMMON STOCK MORE DIFFICULT TO SELL.
SEC rules require brokers to provide certain information to purchasers of
securities traded at less than $5.00 and not traded on a national securities
exchange or quoted on the NASDAQ Stock Market (a "penny stock"). If our Common
Stock becomes a penny stock that is not exempt from these SEC rules, these
disclosure requirements may have the effect of reducing trading activity in our
Common Stock and making it more difficult for investors to sell. The rules
require a broker to deliver a risk disclosure document that provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker must also give bid and offer quotations and broker and salesperson
compensation information to the customer orally or in writing before or with the
confirmation. The SEC rules also require a broker to make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction before
completion of the transaction.
THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE SIGNIFICANT VOLATILITY.
The securities markets from time to time experience significant price and
volume fluctuations unrelated to the operating performance of particular
companies. In addition, the market prices of the common stock of many publicly
traded pharmaceutical and biotechnology companies have been and can be expected
to be especially volatile. Announcements of technological innovations or new
products by us or our competitors, developments or disputes concerning patents
or proprietary rights, publicity regarding actual or potential clinical trial
results relating to products under development by us or our competitors,
regulatory developments in both the United States and foreign countries, delays
in our testing and development schedules, public concern as to the safety of
vaccines or biological products and economic and other external factors, as well
as period-to-period fluctuations in our financial results, may have a
significant impact on the market price of our Common Stock. The realization of
any of the risks described in these "Risk Factors" may have a significant
adverse impact on such market prices.
WE DO NOT PAY DIVIDENDS ON OUR COMMON STOCK.
We have never declared or paid dividends on our Common Stock and we do not
intend to pay any Common Stock dividends in the foreseeable future. Our Series A
Convertible Preferred Stock earns a 6% per annum dividend payable, at our
option, in cash or in shares of Common Stock, including the Shares covered by
this Prospectus.
THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS, AND WE MAY HAVE TO
INDEMNIFY OUR OFFICERS AND DIRECTORS IN CERTAIN INSTANCES.
Our Certificate of Incorporation limits, to the maximum extent permitted
by the Delaware Law, the personal liability of our directors for monetary
damages for breach of their fiduciary duties as directors. Our Bylaws provide
that the we shall indemnify our officers and directors and may indemnify our
employees and other agents to the fullest extent permitted by law. We have
entered into indemnification agreements with our officers and directors
containing provisions which are in some respects broader than the specific
indemnification provisions
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contained in the Delaware Law. The indemnification agreements may require us,
among other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors' and
officers' insurance if available on reasonable terms. Section 145 of the
Delaware Law provides that a corporation may indemnify a director, officer,
employee or agent made or threatened to be made a party to an action by reason
of the fact that he was a director, officer, employee or agent of the
corporation or was serving at the request of the corporation, against expenses
actually and reasonably incurred in connection with such action if he or she
acted in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The Delaware Law does not permit a corporation to
eliminate a director's duty of care, and the provisions of our Certificate of
Incorporation have no effect on the availability of equitable remedies, such as
injunction or rescission, for a director's breach of the duty of care.
OUR JOINT VENTURE PARTNER AND NEXTERA HAVE BROUGHT SUIT AGAINST US.
Our biological program, operated through NextEra Therapeutics, Inc. ("NextEra"),
stalled in April 2000 when Franklin Research Group ("Franklin"), our joint
venture partner, filed a complaint against us in United States District Court
for the Southern District of Ohio, Eastern Division in connection with the
Funding and Research Agreement between Franklin, Immtech and NextEra. On March
23, 2001, Franklin voluntarily dismissed that action and filed a new complaint
in the Court of Common Pleas, Franklin County, Ohio in which NextEra joined as a
plaintiff with Franklin. In May 2001, Franklin and NextEra voluntarily dismissed
the state action and entered into negotiations with us to determine if the joint
venture can be managed and funded going forward. Further Phase II clinical
trials at a cancer research center to study effectiveness of rmCRP will begin if
we and Franklin can reach an agreement and secure additional funding for
NextEra. We are not certain about the future of NextEra nor the potential for
renewed litigation.
NEXTERA HAS A NEED FOR SUBSTANTIAL ADDITIONAL FUNDS.
NextEra has incurred accumulated losses of approximately $2,174,000 since
inception (July 8, 1998) through December 31, 2001. NextEra is expected to
continue to incur significant losses during the next several years. In addition,
as of December 31, 2001, NextEra's current liabilities exceeded its current
assets by approximately $303,000 and NextEra had a stockholders' deficiency of
approximately $269,000. NextEra's ability to continue as a going concern is
dependent upon its ability to generate sufficient funds to meet its obligations
as they become due and, ultimately, to obtain profitable operations. NextEra's
financial plans for the forthcoming year include efforts to obtain additional
equity financing, as NextEra needs to raise substantial additional funds.
ABOUT THIS PROSPECTUS
This document is called a Prospectus and is part of a registration
statement that we filed with the Securities and Exchange Commission ("SEC")
using a "shelf" registration or continuous
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offering process. Under this shelf Prospectus the Selling Stockholders may from
time to time collectively offer up to 1,825,786 Shares of our Common Stock. This
Prospectus provides you with a general description of the securities the Selling
Stockholders may offer. We may file a prospectus supplement which may include a
discussion of any risk factors or other special considerations applicable to
those securities. A prospectus supplement may also add, update or change
information in this Prospectus. If there is any inconsistency between the
information in this Prospectus and any prospectus supplement, you should rely on
the information in the prospectus supplement. You should read both this
Prospectus and any prospectus supplement together with the additional
information described under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual and quarterly reports, proxy statements and other
information required by the Securities Exchange Act of 1934, as amended
("Exchange Act") with the Securities and Exchange Commission ("SEC"). Our SEC
filings are available to the public over the Internet at the SEC's website at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at its public reference rooms located at 450 Fifth Street, N.W., Washington,
D.C. 20549, at 233 Broadway, 16th Floor, New York, New York, 10279 and at
Northwest Atrium Center, 5000 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.
We have filed with the SEC a registration statement on Form S-3
("Registration Statement") under the Securities Act of 1933, as amended
("Securities Act"), with respect to the Shares. This Prospectus, which
constitutes a part of that Registration Statement, does not contain all the
information contained in that Registration Statement and its exhibits. For
further information with respect to the Company and the Shares, you should
consult the Registration Statement and its exhibits. The Registration Statement
and any of its amendments, including exhibits filed as a part of the
Registration Statement or an amendment to the Registration Statement, are
available for inspection and copying through the SEC's public reference rooms
listed above.
The SEC allows us to "incorporate by reference" in this Prospectus the
information that we file with them, which means we can disclose important
information to you by referring you to other documents that contain that
information. The information we incorporate by reference is considered to be
part of this Prospectus and information we later file with the SEC will
automatically update and supersede the information in this Prospectus. The
following documents filed by us with the SEC pursuant to Section 13 of the
Exchange Act (File No. 000-25669) and any future filings under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act made before the termination of the
offering are incorporated by reference:
(i) our Annual Report on Form 10-KSB/A (Amendment No. 1) for the fiscal
year ended March 31, 2001;
(ii) all other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act since March 31, 2001;
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(iii) the description of our Common Stock contained in our registration
statement filed under Section 12 of the Exchange Act, including any
amendments or reports filed for the purpose of updating such
description; and
(iv) the description of our Series A Convertible Preferred Stock, $0.01
par value, contained in the Form 8-K filed on February 14, 2002.
Nothing in this Prospectus shall be deemed to incorporate information
furnished but not filed with the SEC pursuant to Item 9 of Form 8-K.
Statements made in this Prospectus, in any prospectus supplement or in any
document incorporated by reference 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 the contract or other document filed as an exhibit to
the registration statement of which this Prospectus is a part or as an exhibit
to the documents incorporated by reference. Each statement about the contents of
any contract or other document is qualified in all material respects by
reference to such contract or other document.
We will provide to you a copy of any document incorporated by reference in
this Prospectus and any exhibits specifically incorporated by reference in those
documents at no cost. You may request copies by contacting us at the following
address or telephone number: Corporate Secretary, Immtech International, Inc.,
150 Fairway Drive, Suite 150, Vernon Hills, Illinois, 60061, Telephone No.:
(847) 573-0033.
Any statement incorporated or deemed incorporated herein by reference
shall be deemed to be modified or superseded for the purpose of the Registration
Statement and this Prospectus to the extent that a statement contained herein or
in any subsequently filed document modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus and in the documents
incorporated by reference herein, including, without limitation, statements
containing the words "believe," "anticipate," "expect" and words of similar
import, constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act of 1934, as
amended. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from any
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
(i) our history of operating losses, (ii) our need for substantial additional
funds, (iii) our ability to access the capital markets and/or to secure private
sources of funding, (iv) the availability of grant money, (v) the length of time
until any of our product candidates may be available for sale, (vi) the
uncertainties involved in clinical trials being performed on the product
candidates we are developing, (vii) our dependence on third party relationships
for the research and manufacture of our product candidates and the performance
of clinical trials with regard to our product candidates, (viii) the intense
competition and rapid technological changes
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in our industry, (ix) the extensive and rigorous federal and foreign regulations
of the testing, manufacturing and sale of our product candidates, (x) our
dependence on key personnel and contributions from scientists, researchers and
technicians from our licensors, (xi) our ability to protect our (or our
licensors') technology, patents and proprietary information on which our
business relies, (xii) the disposition of certain legal actions and (xiii) other
factors referenced in this Prospectus. Given these uncertainties, readers of
this Prospectus and investors are cautioned not to place undue reliance on such
forward-looking statements. We disclaim any obligation to update any such
factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.
THE COMPANY
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION PROVIDED UNDER
"RISK FACTORS" BEGINNING ON PAGE S-1. A GLOSSARY BEGINS ON PAGE S-23 WHICH
DEFINES VARIOUS TERMS USED IN THIS PROSPECTUS.
Immtech International, Inc. ("Company") is a biopharmaceutical company
focused on the discovery, development and commercialization of drugs for the
treatment of fungal diseases, hepatitis, tuberculosis, pneumonia, diarrhea, and
cancer. The Company has two separate platform technologies for developing drugs,
one for developing a new class of anti-microbial molecules as pharmaceuticals
and the other for developing a series of biological proteins that work in
conjunction with the immune system. Our biological program is operated through
NextEra Therapeutics, Inc., a joint venture among the Company, Franklin Research
Group, Inc. and an individual. NextEra's research and development and ability to
continue as a going concern has been adversely effected by a dispute among its
joint venture partners and from a lack of available funds (See "Item 1. Business
of the Company - Joint Ventures," "Item 3. Legal Proceedings," and "Item 7.
Financial Statements - Notes to Financial Statements and Independent Auditors'
Report" and elsewhere in our Form 10-KSB/A (Amendment No. 1)).
Since our formation in October 1984, we have engaged in developing
research programs, recruiting scientific advisors and scientists, negotiating
and consummating technology licensing agreements, and engaging in and sponsoring
drug research and development activities. We use the expertise and resources of
strategic partners and third parties in a number of areas, including: (i)
laboratory research, (ii) pre-clinical and human clinical trials and (iii) the
manufacture of pharmaceutical and therapeutic compounds and products
(pharmaceuticals are typically synthetic chemicals and therapeutics are
typically naturally occurring proteins). We hold worldwide patents, licenses and
rights to license worldwide patents and patent applications from third parties
that are integral to our business. We do not currently have any commercially
available products nor do we expect to have any commercially available products
for several years, if at all.
Our pharmaceutical program is based on technology for developing a class
of compounds known as dications. The dication technology is the result of a
research program designed to understand how dications bind to the
deoxyribonucleic acid ("DNA") of infectious microorganisms. The dication
platform was developed by scientists at The University of North
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Carolina at Chapel Hill ("UNC"), Duke University ("Duke"), Auburn University
("Auburn") and Georgia State University ("Georgia State") (collectively, the
"Consortium"). We entered into an agreement with the Consortium, dated January
15, 1997, as amended, and a License Agreement dated as of January 28, 2002, to
commercialize product candidates resulting from the Consortium's research,
including the dication technology (collectively, the "Consortium Agreements").
Structurally, dications are chemical molecules which have two positively
charged ends that are held together by a chemical linker. The composition of the
dications, with positive charges on both ends (shaped like molecular barbells)
allows dications to bind (similar to a bandaid) to the negatively charged active
sites (sites where enzymes interact with DNA) in certain areas of an infectious
microorganism's DNA. The bound dications prevent enzymes necessary to the life
of the microorganism from attaching to certain of its DNA's active sites.
Research has shown that once a site is occupied by a dication, enzymes necessary
to the life of the infectious microorganism are blocked and the infectious
microorganism dies.
Our biological program, operated through NextEra in a joint venture with
the Franklin Research Group ("Franklin") and an individual, concentrates on
developing products for treating cancer. The biological program is focused on
the development of a synthetic protein to replace a protein called modified
C-reactive protein ("mCRP"), naturally found in human tissues. Our research,
prior to the formation of NextEra, and NextEra's subsequent research, has shown
that mCRP is noticeably absent, or present at severely reduced levels, in the
tissue of patients with cancer. Laboratory tests, in both animal studies and
human clinical trials, showed that the recombinant (synthetically made) mCRP
("rmCRP") caused the subjects to produce cells which were able to combat cancer
and infectious diseases associated with AIDS.
This NextEra program was delayed in April 2000 when our joint venture
partner, Franklin, filed suit against us. The parties entered a Stipulation of
Dismissal in May 2001 which resulted in a withdrawal of the suit. Franklin
reserved the right to refile the suit should negotiations fail to settle the
dispute (See "Item 3. Legal Proceedings" in our Form 10-KSB/A (Amendment No.
1)). NextEra's research and development of its product candidates continue, but
at a slowed pace, while we and Franklin negotiate a settlement to the dispute
and NextEra seeks additional funding.
STRATEGY
Our strategy is to develop drugs effective against infectious diseases and
cancer by utilizing the dicationic platform technology developed by Consortium
scientists. Our plan is to commercialize dications first in certain niche
markets by taking advantage of fast-track FDA approvals permitted in those areas
due to the absence of currently available effective treatment in such markets.
We believe that our first products will demonstrate the power and versatility of
the dication platform technology. We then intend to work on developing
treatments for other infectious diseases which afflict large populations of
people.
We intend to continue to cooperate with and oversee the results of
independent research and to use business-sponsored research programs, joint
ventures and other forms of collaborative programs for product development,
manufacturing and, subject to regulatory review of a product candidate,
marketing. We consider our current collaborative relationships significant to
the
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successful development of our business and we believe that we will enter into
additional arrangements in the future to develop, manufacture and market not
only the product candidates on which we are currently focusing, but also those
dications which the Consortium members are developing (and are expected to
develop in the future) for future commercialization.
NextEra's strategy is to commercialize its biological product candidates
as a primary therapy against cancer and as a treatment in combination with
chemotherapy in treating cancer and diseases which affect immune-suppressed
patients.
PRODUCT CANDIDATES
The information below is a summary of our product candidates.
Pharmaceutical Products - Dications
The platform technology, the result of the Consortium's research programs,
is focused on understanding how dications bind to the DNA of infectious
microorganisms. Through the Consortium Agreements we have been granted certain
exclusive rights to the platform technology (and the dications created with such
technology) and to develop and commercialize dications. When dications bind to
the organism's DNA, a key enzyme is blocked from attaching and the infectious
organism is killed. The methodology used by the Consortium researchers to
develop dications evolved into the Consortium's platform technology for
designing dications to treat infectious diseases. The Consortium is using this
platform technology to design new treatments for a range of infectious diseases,
including protozoan, fungal, bacterial and viral infections.
In May 2001, we completed single- and multi-dose safety trials of the
dication DB289 in human volunteers. In these trials, DB289 was shown to be safe
to humans at dosage levels expected to be effective against disease. DB289 is
designed to be delivered orally to patients without toxic side effects. Since
DB289 can be given orally, we anticipate that it will be self-administered, thus
making it practical to deliver and substantially less expensive than competitive
products.
DB289 has been advanced into a Phase II human clinical trial of
Trypanosomiasis (African Sleeping Sickness). The clinical trial program is (part
of a clinical research subcontract between us and UNC ("Clinical Research
Agreement")) funded by $9.8 million of a $15.1 million grant to UNC from the
Bill & Melinda Gates Foundation ("Gates Foundation"). DB289 has demonstrated
improved safety and effectiveness when compared to existing treatments in animal
models. On March 27, 2002, we were granted FDA approval to export DB289 to the
Democratic Republic of the Congo to open a second Phase II clinical site which
allows us to increase the enrollment of patients in our clinical trial for
African Sleeping Sickness and expedite DB289's Phase II testing process.
We have received approval from the South African government Health
Ministry to conduct a second Phase IIa human trial for the treatment of
Pneumocystis carinii pneumonia ("PCP") with HIV and AIDS patients. PCP, a
disease which affects immuno-suppressed patients, can be fatal if not treated.
The primary use of the drug would be for long-term prophylaxis of patients at
risk of PCP. This Phase IIa human trial is scheduled to take place in the cities
of Durbin and
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Johannesburg, South Africa and will be managed locally by Quintiles
Transnational Corporation, a company that provides global clinical trial
services for all phases of human drug development.
We believe DB289 is well suited to demonstrate the power and versatility
of the dicationic technology platform and the effectiveness of the dicationic
oral drug delivery ("pro-drug") technology.
Other Pharmaceutical Programs
Our other pharmaceutical research programs include antifungal, hepatitis,
Mycobacterium tuberculosis ("TB"), malaria, Leishmaniasis and cancer programs.
Our antifungal program focuses on developing a new orally delivered dication
with effectiveness against the three most common forms of fungi, which are
Candida, Asperigillus, and Cryptococcus. During the previous 12 months the
Consortium screened a series of new compounds for effectiveness against the
three strains of fungi and the Consortium researchers identified several new
dicationic compounds that showed promising results.
In the TB program, the National Institutes of Health ("NIH") researchers
have also been evaluating the Consortium's dications for effectiveness against
TB, having screened over 500 of the Consortium's dications. The NIH screening
test has identified approximately 10 to 15 dications with activity comparable,
or superior, in performance to drugs currently available for the treatment of
TB.
Additionally, Dr. Scott G. Franzblau of the University of Illinois-Chicago
("UIC"), a recognized expert in TB research, has joined with the Consortium to
test dications for effectiveness against TB. We will assist Dr. Franzblau to
obtain new grants and we have given a grant of approximately $74,000 to the UIC
to fund Dr. Franzblau's studies. UIC will screen dications sent by the Georgia
State and UNC combinatorial chemistry laboratories in the UIC TB tests. The
dication that shows the greatest potential for effectiveness against TB will be
sent to UNC for further testing in animal studies. We expect to continue
monitoring the testing of dications and intend to identify within the next 12 to
18 months a lead dication potent against TB and safe to the patient as an orally
administered drug candidate.
In the hepatitis program, scientists at Auburn University ("Auburn") have
developed a laboratory screening test using the bovine viral diarrhea virus
("BVDV") as a substitute for the hepatitis C virus ("HCV") to gauge the
potential for effectiveness of dications against HCV. The Auburn scientists have
advanced the dicationic candidates believed to have the greatest potential for
effectiveness into a special animal (mouse) model that develops a chronic viral
infection of BVDV. The results of this animal model are expected to help the
researchers determine which dications will be further studied or advanced into
primate or other advanced animal models of HCV.
In the Leishmaniasis program, also part of the Gates Foundation grant, we
are working with The London School of Hygiene and Tropical Medicine in England
("The London School"), Ohio State University ("OSU"), UNC and Georgia State to
develop a drug to treat Leishmaniasis. The U.S. military supported initial work
of the Leishmaniasis program with a grant of approximately $80,000 to Georgia
State to develop dications that were screened in the military's laboratory for
potential for effectiveness. The London School and OSU have sub-contracted with
the
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Consortium to screen the drug candidates supplied by Georgia State and UNC. The
London School researchers have screened Consortium dications for effectiveness
in animal tests and have identified dications that show promising preliminary
test results. The identified dications have shown potential for effectiveness
equivalent to or better than drugs currently used to treat Leishmaniasis. We are
responsible (under the Clinical Research Agreement with UNC in connection with
the Gates Foundation grant) for the pre-clinical development of a new drug
resulting from the Consortium, OSU and The London School research for treatments
of Leishmaniasis.
In the cancer program, the National Cancer Institute (the "NCI") has
tested over 550 of the Consortium's dications for anti-cancer activity,
reporting that a significant number of the dications tested have either retarded
or killed cancer cells. The NCI has identified 47 of the Consortium's dications
as displaying specificity (effectiveness against specific cancer types) and
potency as anti-cancer agents. Eighteen have been identified by the NCI to
advance to animal (mouse) model testing. Early test results show that specific
dications may be effective against different cancer types and that most of the
dications tested had some effectiveness even at low doses. While the
Consortium's dications have shown effectiveness against cancer, this research is
at an early stage and the treatment of cancer is a highly specialized endeavor
that is outside the scope of our current expertise. We intend to seek partners
to jointly develop and commercialize the dications in our cancer program.
Biological Products
Our biological program is operated through the joint venture company
NextEra, formed in July 1998 by us, Franklin Research Group ("Franklin") and an
individual. This program focuses on strengthening the body's natural immune
system by (i) improving the structural environment around cells, and (ii)
reprogramming cancer cells to act normally. We entered into an agreement in 1998
with Franklin to obtain funding for NextEra to accelerate the biological program
for the treatment of cancer and related diseases.
Immtech and NextEra scientists have discovered that, as part of the immune
system's response to disease, the blood protein known as C-reactive protein
"CRP" is modified by the body to form modified CRP ("mCRP"). Modified CRP
strengthens tissues and their interconnective structures that work to increase
the body's ability to resist disease and improve the effectiveness of the immune
system. mCRP is found naturally in healthy tissues surrounding blood vessels, in
the tissues in lymphatic organs, and in cells that secrete proteins or other
cell products. In contrast, mCRP is absent (or present in greatly reduced
amounts) in cancerous tissues found in the lung, breast or prostate.
Immtech and NextEra scientists have discovered further that when cancerous
cells come in contact with mCRP, cell behavior is markedly changed, abnormal
rapid growth ceases and the cell returns to normal activity. NextEra's
biological program focuses on replacing mCRP in areas where mCRP is deficient,
thereby increasing barriers between cells to reduce the entry and propagation of
diseases (including cancer) and enhancing immune reactions.
In 1996, we conducted a Phase I human clinical trial to evaluate the
safety of our recombinant or (genetically engineered) rmCRP ("rmCRP") product
candidate in volunteers who were infected with HIV. The results showed that the
drug was safe to administer and duplicated
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the results seen in animal pre-clinical tests. Subsequently, we contributed our
rmCRP program to NextEra as part of the joint venture with Franklin. NextEra's
research and development and ability to continue as a going concern has been
adversely effected by a dispute among its joint venture partners and from a lack
of available funds (See "Item 1. Business of the Company - Joint Ventures,"
"Item 3. Legal Proceedings," and "Item 7. Financial Statements - Notes to
Financial Statements and Independent Auditors' Report" and elsewhere in our Form
10-KSB/A (Amendment No. 1)).
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares
offered hereby.
SELLING STOCKHOLDERS
The Selling Stockholders other than Yorkshire Capital Limited
("Yorkshire") and Jesse B. Shelmire ("Shelmire"), Scott R. Griffith ("Griffith")
and Griffith Shelmire Partners, Inc. ("GS Partners," collectively with Shelmire
and Griffith, the "Stonegate Principals") listed below acquired our Series A
Convertible Preferred Stock, $0.01 par value ("Preferred Stock") and warrants to
purchase Common Stock in private placements on February 14, 2002 or February 22,
2002. Such Selling Stockholders have the right to acquire Shares (i) upon
conversion of the Preferred Stock, (ii) upon exercise of the warrants (upon
payment in full therefor) or (iii) upon issuance of Common Stock as stock
dividends to Preferred Stockholders, granted to them in connection with their
participation in the private placements.
On February 14, 2002 and February 22, 2002 the Selling Stockholders other
than Yorkshire and the Stonegate Principals purchased in the aggregate 160,100
shares of our Preferred Stock and were granted warrants to purchase 400,250
shares of Common Stock for gross proceeds to us of $4,002,500. Subject to
adjustment for dilution protection triggered by issuances of Common Stock or
securities convertible or exercisable into Common Stock at a price below $4.42
prior to January 1, 2003, each share of Preferred Stock is convertible into
5.6561 shares of Common Stock and each such Selling Stockholder was granted a
warrant to purchase 2.5 shares of Common Stock for each Share of Preferred Stock
purchased. The Preferred Stock earns a 6% per annum dividend payable
semi-annually each April 15th and October 15th, at the Company's option, in cash
or Common Stock so long as the Preferred Stock remains outstanding. If Common
Stock is to be used to pay the Preferred Stock dividend such Common Stock is to
be valued at the 10 day volume weighed average price immediately prior to the
date of payment. We agreed to use reasonable efforts to register the resale by
the Selling Stockholders of the Shares issuable upon conversion of the Preferred
Stock or exercise of the warrants, in each case within 120 days after the date
of purchase of the Preferred Stock and to keep such registration effective for
the lesser of two years or until all of their Shares are sold.
On January 31, 2002, we entered into a consulting agreement with Yorkshire
for assistance to be provided by Yorkshire in connection with raising equity
capital for the consideration of 60,000 Shares of Common Stock and warrants to
purchase 360,000 shares of Common Stock. Yorkshire's warrants were granted in
three tranches; the first 100,000 shares are immediately exercisable at $6.00
per share, the second 130,000 shares are exercisable at $9.00 per share if our
Common Stock trades at or above $9.00 for 20 consecutive trading days prior to
January 31,
S-19
2003, and the third 130,000 shares are exercisable at $12.00 per share if our
Common Stock trades at or above $12.00 for 20 consecutive trading days prior to
January 31, 2003. The second and third tranche warrants terminate if our Common
Stock fails to meet the trading price requirement by January 31, 2003. Pursuant
to the terms of the consulting agreement, we agreed to use reasonable efforts to
register the resale by Yorkshire of the 60,000 shares of Common Stock and the
Shares issuable upon exercise of the warrants, in each case within 120 days
after the date of issuance of the Common Stock and warrants and to keep such
registration effective for the lesser of two years or until all of Yorkshire's
Shares are sold.
On July 31, 2000, we entered into an agreement with Stonegate Securities,
Inc. ("Stonegate") for assistance to be provided by Stonegate in connection with
raising additional equity capital for the consideration of the issuance to the
Stonegate Principals of warrants to purchase 200,000 shares of Common Stock in
the aggregate. Under the agreement each of Shelmire and Griffith were granted
warrants to purchase 85,000 shares of Common Stock and GS Partners was granted a
warrant to purchase 30,000 shares. Pursuant to a notice of termination of the
agreement dated December 8, 2000, warrants to purchase 100,000 shares of Common
Stock did not vest resulting in a 50% reduction of the warrants granted to each
Stonegate Principal. The warrants for the remaining 100,000 Shares expire on
July 31, 2005 and have an exercise price of $12.06 per share. Pursuant to the
terms of the agreement we agreed to use reasonable efforts to register the
resale by the Stonegate Principals of the Shares issuable upon exercise of the
warrants in the event we register other equity securities and the Stonegate
Principals notify us of their desire to have their Shares included in such
registration. The Stonegate Principals so notified us. We have agreed to keep
the registration of the Stonegate Principals Shares effective for the lesser of
180 days or until all of their Shares are sold.
The following table sets forth for each Selling Stockholder the number of
Shares being registered by this Prospectus. Except for T. Stephen Thompson, who
has been the President, Chief Executive Officer and a director of Immtech since
April, 1991, Eric L. Sorkin, who has been a director of Immtech since January,
2000, Frederick W. Wackerle, who has been a director of Immtech since December
17, 2001 and Gary C. Parks, who has been the Secretary and Chief Financial
Officer of Immtech since December, 1993, no Selling Stockholder has been an
officer, director or employee of Immtech for the past three years. Each of the
above-mentioned officers and directors have agreed to forego the conversion
rights of their Preferred Stock until such time as the Company's stockholders
approve such conversion or until such officer or director is no longer an
officer or director of the Company. Because the Selling Stockholders may offer
all, some or none of their Shares, we cannot provide a definitive estimate of
the number of Shares they will hold after such registration. This Prospectus is
filed at the Company's expense.
SHARES
BENEFIC- SHARES
PREFERRED SHARES OF IALLY REGIST-
NAME STOCK COMMON STOCK WARRANTS OWNED ERED
---------------------------------------------------------------------------------------------------------------------
Yorkshire Capital Limited 0 60,000 360,000 420,000 420,000
Monet Capital Fund 1, LP 14,000 79,185 35,000 114,185 114,185
TEFA Capital, Inc. 14,000 79,185 35,000 114,185 114,185
Ching-Jung Cheng 12,000 67,873 30,000 172,773 97,873
Clough Investment Partners I, LP 11,400 64,480 28,500 92,980 92,980
Thomas G. Hill 10,000 56,561 25,000 81,561 81,561
Bruce Chiu 8,000 45,249 20,000 65,249 65,249
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SHARES
BENEFIC- SHARES
PREFERRED SHARES OF IALLY REGIST-
NAME STOCK COMMON STOCK WARRANTS OWNED ERED
---------------------------------------------------------------------------------------------------------------------
T. Stephen Thompson(1) 8,000 45,249 20,000 369,842 65,249
Chan Chee Wing 6,000 33,937 15,000 208,747 48,937
Jesse B. Shelmire 0 0 42,500 42,500 42,500
Scott R. Griffith 0 0 42,500 42,500 42,500
Cheng Yuk Chor Dickie 4,000 22,624 10,000 49,624 32,624
High Achiever Inc. 4,000 22,624 10,000 32,624 32,624
Arvin H. Kash 4,000 22,624 10,000 91,857 32,624
Kingsway Lion Spur Technology Ltd. 4,000 22,624 10,000 32,624 32,624
Li Kwo Yuk 4,000 22,624 10,000 32,624 32,624
Wong Lin Chooi 4,000 22,624 10,000 32,624 32,624
Eric L. Sorkin(2) 3,600 20,362 9,000 280,362 29,362
Clough Offshore Fund, Ltd. 3,400 19,231 8,500 27,731 27,731
Thorpe Limited 2,800 15,837 7,000 22,837 22,837
Tsang Wai Ping Alfred 2,800 15,837 7,000 22,837 22,837
Fu Hui Chen 2,500 14,140 6,250 20,390 20,390
Dwight B. Crane 2,400 13,575 6,000 29,575 19,575
Frederick W. Wackerle(2) 2,400 13,575 6,000 65,797 19,575
Lau Chu 2,000 11,312 5,000 21,312 16,312
To Wing Ming James 2,000 11,312 5,000 20,512 16,312
Vivienne Lee 2,000 11,312 5,000 107,912 16,312
Ho Sin Wai Celia 2,000 11,312 5,000 16,312 16,312
Donald H. Wong 2,000 11,312 5,000 29,322 16,312
Select Defender Fund 2,000 11,312 5,000 16,312 16,312
Wo Ka Po 2,000 11,312 5,000 16,312 16,312
Griffith Shelmire Partners, Inc. 0 0 15,000 15,000 15,000
Val Busler 1,200 6,787 3,000 9,787 9,787
Clough Investment Partners II, LP 1,200 6,787 3,000 9,787 9,787
Lau Mei Lin Amy 1,200 6,787 3,000 11,537 9,787
Cheung Wai Hung 1,000 5,656 2,500 8,156 8,156
Stephen D. Chubb 1,000 5,656 2,500 14,406 8,156
John J. Orlando 1,000 5,656 2,500 12,656 8,156
Purchase Power Management Ltd. 1,000 5,656 2,500 8,156 8,156
Wong Hon Fai Jones 1,000 5,656 2,500 8,156 8,156
Martin Boyle 800 4,525 2,000 6,525 6,525
Chu Yau Shun 800 4,525 2,000 6,525 6,525
Lo Sui Sun 600 3,394 1,500 4,894 4,894
Au Yeung Chun Kit 500 2,828 1,250 4,078 4,078
Leung Shuk Lan 500 2,828 1,250 4,078 4,078
John Coonan 400 2,262 1,000 6,262 3,262
James M. Florsheim Trust 400 2,262 1,000 14,262 3,262
Gary C. Parks(3) 400 2,262 1,000 40,984 3,262
Michael Volpe 400 2,262 1,000 3,262 3,262
Pontikas Investment Trust 2,000 11,312 5,000 74,178 16,312
Specialized Capital Inc. 2,000 11,312 5,000 16,312 16,312
Leo S. Walsh 800 4,525 2,000 6,525 6,525
Scott Hess 600 3,394 1,500 4,894 4,894
---------------------------------------------------------------------------------------------------------------------
Totals 160,100 965,536 860,250 1,825,786
----------
(1) T. Stephen Thompson is the President, Chief Executive Officer and a
director of the Company. Mr. Thompson has agreed to forego the conversion
of his Preferred Stock into Common Stock until such time as a majority of
our stockholders vote to
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approve such conversion rights or until Mr. Thomson is no longer an
officer or director of the Company. The terms and conditions of conversion
of Mr. Thompson's shares of Preferred Stock are fully described in the
form of Amendment to the Subscription Agreement attached as Exhibit 4.6 to
the registration statement.
(2) Eric L. Sorkin and Frederick W. Wackerle are directors of the Company.
Messrs. Sorkin and Wackerle have agreed to forego the conversion of their
Preferred Stock into Common Stock until such time as a majority of our
stockholders vote to approve such conversion rights or until such director
is no longer officer or director of the Company. The terms and conditions
of conversion of Messrs. Sorkin's and Wackerle's shares of Preferred Stock
are fully described in the form of Amendment to the Subscription Agreement
attached as Exhibit 4.6 to the registration statement.
(3) Gary C. Parks is the Chief Financial Officer and Secretary of the Company.
Mr. Parks has agreed to forego the conversion of his Preferred Stock into
Common Stock until such time as a majority of our stockholders vote to
approve such conversion rights or until Mr. Parks is no longer an officer
or director of the Company. The terms and conditions of conversion of Mr.
Parks' shares of Preferred Stock are fully described in the form of
Amendment to the Subscription Agreement attached as Exhibit 4.6 to the
registration statement.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The following descriptions are summaries of the material terms of our
capital stock. You should refer to the applicable provisions of the Delaware
Law, our amended and restated Certificate of Incorporation, our Certificate of
Designation Series A Convertible Preferred Stock, our bylaws and, if applicable,
any prospectus supplement, for additional information about our capital stock.
See "Where You Can Find More Information."
Under our amended and restated certificate of incorporation, our
authorized capital stock consists of:
30,000,000 shares of common stock, par value $0.01 per share; and
5,000,000 shares of preferred stock, par value $0.01 per share.
As of April 1, 2002, we had 6,066,459 shares of Common Stock outstanding
(not including 905,536 shares of Common Stock reserved for conversion of Series
A Convertible Preferred Stock, 508,478 shares of Common Stock reserved for
exercise of outstanding options and 2,035,250 shares of Common Stock reserved
for exercise of outstanding warrants held by certain investors) and 160,100
shares of Preferred Stock outstanding. Of the Common Stock outstanding,
3,976,175 shares are freely tradable without restriction. All of the remaining
2,090,284 shares of Common Stock are restricted from resale except pursuant to
certain exceptions under the Securities Act of 1933, as amended. All of the
Preferred Stock is registered hereby, but, 14,400 shares of Preferred Stock held
by Messrs. Thompson, Sorkin, Wackerle and Parks are restricted from conversion
as stated above.
COMMON STOCK
Our Common Stock is traded on the NASDAQ SmallCap Market under the symbol
"IMMT." Each share of our Common Stock entitles the holder to one vote on all
matters on which holders are permitted to vote. There is no cumulative voting
for election of directors. Accordingly, the holders of a majority of the shares
voted can elect all of the nominees for director.
Subject to preferences that may be applicable to any outstanding preferred
stock, the holders of our Common Stock are entitled to dividends when, as and if
declared by the board of directors
S-22
out of funds legally available for that purpose. Upon liquidation, dissolution
or winding up, subject to preferences that may be applicable to any outstanding
preferred stock, the holders of our Common Stock are entitled to a pro rata
share in any distribution to stockholders. Our Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to our Common Stock. All outstanding shares
of our Common Stock are fully paid and nonassessable.
PREFERRED STOCK
Our preferred stock is not registered under the Securities Act. Each share
of Preferred Stock has a stated value of $25.00 and an initial conversion rate
of $4.42, subject to adjustment for dilution protection, which initially equals
5.6561 shares of Common Stock per share of Preferred Stock. Our Preferred Stock
earns a 6% per annum dividend payable, at the Company's option, in cash or
shares of Common Stock on each April 15th and October 15th so long as the
Preferred Stock remains outstanding. The Company has the right (i) to redeem
some or all (if not all, on a pro rata basis determined by the number of shares
held by each Preferred Shareholder) of the Preferred Stock any time after 30
days' notice at the stated value plus accrued and unpaid dividends or (ii) to
convert some or all (if not all, on a pro rata basis determined by the number of
shares held by each Preferred Shareholder) of the Preferred Stock into Common
Stock upon 30 day's notice any time after February 14, 2003 (x) at the stated
value plus accrued and unpaid dividends if the closing bid price for our Common
Stock exceeds $9.00 for 20 consecutive "trading days" (days the principal
exchange on which the Common Stock is listed or traded is open for business or,
if the Common Stock is no longer listed or traded on an exchange, business days)
within 180 days prior to notice of conversion or (y), if the requirements of (x)
are not met, at 110% of the stated value plus accrued and unpaid dividends.
Preferred Stockholders have the right to convert their Preferred Stock to Common
Stock during the above-mentioned 30 day notice periods.
PLAN OF DISTRIBUTION
We are registering the Shares on behalf of the Selling Stockholders. The
Selling Stockholders may, from time to time, effect the distribution of the
Shares described in this Prospectus in one or more transactions either (a) at a
fixed price or prices, which may be changed, (b) at market prices prevailing at
the time of sale, (c) at prices relating to the prevailing market prices or (d)
at negotiated prices. The Selling Stockholders may offer and sell the Shares
described in this Prospectus (i) through agents, (ii) through one or more
underwriters or dealers, (iii) through a block trade in which the broker or
dealer engaged to handle the block trade will attempt to sell the securities as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction, (iv) directly to one or more purchasers (through a
specific bidding or auction process or otherwise), (v) in "at the market
offerings," within the meaning of Rule 415(a)(4) of the Securities Act, (vi)
through a combination of any of these methods of sale, or (vii) at a fixed
exchange ratio in return for other of our securities.
To our knowledge, the Selling Stockholders have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the Shares, nor is there an underwriter or
coordinating broker acting in connection with the proposed sales of Shares by
the Selling Stockholders. Any Shares covered by this Prospectus that qualify
S-23
for sale pursuant to Rule 144 under the Securities Act may be sold under Rule
144 rather than pursuant to this Prospectus. We will pay all costs and expenses
incurred in connection with the registration of the Shares offered by this
Prospectus. Any brokerage commissions and similar selling expenses attributable
to the sale of Shares by the Selling Stockholders will be borne by the Selling
Stockholders.
We have agreed to indemnify the Selling Stockholders and the Selling
Stockholders' respective officers, directors, employees and agents, and each
person who controls such Selling Stockholders, in certain circumstances against
certain liabilities, including liabilities arising under the Securities Act, and
the Selling Stockholders have agreed to indemnify us and our directors and
officers in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act, in each case in connection with
their offering.
If any Selling Stockholders offer and sell Shares through an underwriter
or underwriters, then the Selling Stockholders will execute an underwriting
agreement with the underwriter or underwriters. The names of the specific
managing underwriter or underwriters, as well as any other underwriters, and the
terms of the transactions, including compensation of the underwriters and
dealers, which may be in the form of discounts, concessions or commissions, if
any, will be described in a prospectus supplement, if applicable, which will be
used by the underwriters to make resales of the Shares. If the Selling
Stockholders offer and sell the Shares through a dealer, then the Selling
Stockholders or an underwriter will sell the Shares to the dealer, as principal.
The dealer may then resell the Shares to the public at varying prices to be
determined by the dealer at the time of resale.
The Selling Stockholders, dealers acting in connection with the offering
and brokers executing sell orders on behalf of one more Selling Stockholder may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933.
In addition, any such broker or dealer may be required to deliver a copy of this
Prospectus to any person who purchases any of the Shares from or through such
broker or dealer.
LEGAL MATTERS
Legal matters in connection with the validity of the Shares offered hereby
will be passed upon for the Company by Cadwalader, Wickersham & Taft, New York,
New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
our Annual Report on Form 10-KSB/A (Amendment No. 1) for the year ended March
31, 2001 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report (which report expresses an unqualified opinion and
includes an explanatory paragraph regarding substantial doubt about our ability
to continue as a going concern), which is incorporated herein by reference, and
have been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
S-24
GLOSSARY
As used in this Prospectus, the following terms have the meanings set
forth below.
AIDS Acquired immune deficiency syndrome, a disease caused by a
virus.
DB289 The designation given to our lead dication.
Dication A chemical molecule with two positively charged ends that are
held together by a chemical linker. Dications bind to the DNA
of infectious organisms.
DNA A type of molecule made up of polymerized deoxyribonucleotides
linked together by phosphate bonds.
FDA U.S. Food and Drug Administration.
HCV Hepatitis C virus or HCV is one of the viruses that cause
acute and chronic hepatitis. Persons who are chronically
infected with hepatitis C are at an increased risk for the
development of cirrhosis and liver cancer.
HIV HIV is the human immunodeficiency virus most researchers
believe causes AIDS.
IND Investigational New Drug Application - a document required to
be filed with the FDA prior to performing clinical studies on
human subjects in the United States.
Leishmaniasis An infection caused by a protozoal parasite that affects the
skin and abdominal organs, causing ulcers or skin disorders
that resemble leprosy.
PCP Pneumocystis carinii pneumonia ("PCP") is a protozoal
infection of the lungs, and most common of the AIDS associated
diseases.
Phase I Clinical testing in which the safety and pharmacological
profile of a new drug is established in humans.
Phase II Clinical testing in which the effectiveness of a new drug is
established in humans. This includes establishing the dose
amount and frequency required to achieve a therapeutic effect,
the metabolic rate of the administered drug, and the toxicity
profile in specific patient populations.
TB A disease caused by bacteria, Mycobacterium tuberculosis, that
is transmitted by breathing in or eating infected droplets,
usually affecting the lungs, although infection of other organ
systems can occur.
Trypanosomiasis An infection caused by a protozoal parasite and transmitted
usually by insect bites. Also known as African Sleeping
Sickness.
S-25
================================================================================
IMMTECH INTERNATIONAL,
INC.
1,825,786 SHARES
COMMON STOCK
----------
PROSPECTUS
----------
APRIL 3, 2002
================================================================================
S-26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth our estimates of the expenses to be
incurred in connection with the offering of the Shares of Common Stock being
offered hereby:
SEC Registration Fee: $ 1,306.00
Printing expenses:* $ 1,000.00
Legal fees and expenses:* $50,000.00
Accounting fees and expenses:* $15,000.00
Miscellaneous expenses:* $ 6,000.00
----------
TOTAL: $73,306.00
==========
----------
* Estimated
We will pay all costs and expenses incurred in connection with the
registration of the Shares. Any brokerage commissions and similar selling
expenses attributable to the sale of Shares by the Selling Stockholders will be
borne by the Selling Stockholders.
Item 15. Indemnification of Directors and Officers.
Limitation of Director's Liability
Our Bylaws ("Bylaws") eliminate the liability of directors to the fullest
extent permissible under Delaware Law. Delaware Law permits a corporation to
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of certain fiduciary duties as a
director, provided that the director's liability may not be eliminated or
limited for: (a) breaches of the director's duty of loyalty to the corporation
or its shareholders; (b) acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law; (c) the payment of unlawful
dividends or unlawful stock repurchases or redemptions; or (d) transactions in
which the director received an improper personal benefit. A director's liability
may also not be limited for violation of, or otherwise relieve the corporation
or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of non-monetary remedies such as
injunctive relief or rescission.
Indemnification of Officers and Directors
Our Bylaws relating to indemnification require that we indemnify our
directors and executive officers to the fullest extent permitted under Delaware
Law, provided that we may modify the extent of such indemnification by
individual contracts with our directors and executive officers, and provided,
further, that we will not be required to indemnify any director or executive
officer in connection with a proceeding initiated by such person, with certain
exceptions. Delaware
1
Law, our Bylaws, as well as any indemnity agreements, may also permit
indemnification for liabilities arising under the Securities Act or the Exchange
Act.
The Board of Directors has been advised that, in the opinion of the
Securities and Exchange Commission, indemnification of liabilities arising under
the Securities Act is contrary to public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director or officer in the successful defense of
any action, suit or proceeding) is asserted by such director or officer in
connection with the Shares being registered hereby, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act, and such claim for indemnification will be governed by the final
adjudication of such issue.
Item 16. Exhibits and Financial Statement Schedules.
See Exhibit Index immediately following the Signature Page.
Item 17. Undertakings.
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, as amended;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering price may be reflected in the form of prospectus
filed with the Commission under Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by us pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in this Registration Statement.
2
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Company's Annual Report under Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference into this Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
as amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements of filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
hereunto duly authorized, on April 3, 2002.
IMMTECH INTERNATIONAL, INC.
By: /s/T. Stephen Thompson
-----------------------------------------------
T. Stephen Thompson
President, Chief Executive Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints T. Stephen Thompson his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
SIGNATURES TITLE
---------- -----
/s/ T. Stephen Thompson
-------------------------- President, Chief Executive Officer and Director
T. Stephen Thompson (Principal Executive Officer)
/s/ Gary C. Parks
-------------------------- Chief Financial Officer, Treasurer and Secretary
Gary C. Parks (Principal Financial and Accounting Officer)
/s/ Harvey R. Colten, M.D.
--------------------------
Harvey R. Colten, M.D. Director
/s/ Eric L. Sorkin
--------------------------
Eric L. Sorkin Director
/s/ Cecilia Chan
--------------------------
Cecilia Chan Executive Vice President and Director
/s/ Frederick W. Wackerle
--------------------------
Frederick W. Wackerle Director
By: /s T. Stephen Thompson
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T. Stephen Thompson
Attorney-In-Fact
Index to Exhibits
Exhibit Description
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4.1(1) Form of Common Stock Certificate
4.2(2) Certificate of Designation, Series A Convertible Preferred Stock
4.3(2) Form of Regulation D Subscription Agreement for February 14, 2002
and February 22, 2002 Private Placements
4.4(2) Form of Regulation S Subscription Agreement for February 14, 2002
Private Placements
4.5(2) Form of Warrant Agreement for February 14, 2002 and February 22,
2002 Private Placements
4.6(2) Form of Amendment to the Subscription Agreement
5.1(3) Opinion of Cadwalader, Wickersham & Taft
23.1(4) Consent of Deloitte & Touche LLP dated April 2, 2002
23.2(3) Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)
24.1(4) Powers of Attorney (included on signature page)
(1) Incorporated by reference to Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (Registration Statement No. 333-64393), as filed
with the Securities and Exchange Commission on March 30, 1999.
(2) Incorporated by reference to the Company's Current Report on Form 8-K, as
filed with the Securities and Exchange Commission on February 14, 2002.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-3 (Registration Statement No. 333-84326), as filed with the Securities
and Exchange Commission on March 14, 2002.
(4) Filed herewith.