As filed with the Securities and Exchange Commission on January 14, 2003
Registration No. 333-_____
========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
HEMISPHERX BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
52-0845822
(I.R.S. Employer Identification No.)
____________________
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
____________________
William A. Carter, M.D., Chief Executive Officer
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications to:
Richard Feiner, Esq.
Silverman Sclar Byrne Shin & Byrne P.C.
381 Park Avenue South, Suite 1601
New York, New York, 10016
(212) 779-8600
Fax (212) 779-8600
ii
Approximate date of proposed sale to the public: From time to time or at
one 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 ("Securities Act"), other than securities offered only in
connection with dividend or reinvestment plans, check the
following box.[X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.[ ]
If this form is a post-effective amendment filed pursuant to 462(c)
under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
_____________________________________________________________________
iii
CALCULATION OF REGISTRATION FEE
===========================================================================
Title of Each Proposed Proposed Amount of
Class of Maximum Maximum Registration
Securities to be Amount to be Offering Price Aggregate Fee
Registered (1) Registered (2) Per Share Offering Price
================ ============== ============== ============== ============
Common Stock (4) 5,000,000 $2.16(3) $10,800,000 $993.60
---------------------------------------------------------------------------
Common Stock(5) 499,996 (7) (7) (7)
---------------------------------------------------------------------------
Warrants (6) 499,996 (7) $ 8,133,304 $748.26
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Total
Registration Fee $1,741.86
===========================================================================
(1) This Registration Statement covers offers, sales and other
distributions of the securities listed in this table from time to time
at prices to be determined, as well as common stock issuable upon the
exercise of warrants so offered or sold.
(2) Pursuant to Rule 416 of the Securities Act of 1933, there are
also being registered an indeterminate number of additional shares of
common stock as may become issuable upon exercise of warrants to
prevent dilution resulting from stock splits, stock dividends or
similar transactions.
(3) Estimated solely for the purpose of computing the registration
fee in accordance with Rules 457(c) of the Securities Act by multiplying
(1) 5,000,000, the maximum number of shares of common stock of the
Registrant to be offered and issued by Hemispherx, by (2) $2.16 the
average of the high and low sales prices of the shares of common
stock of the Registrant reported on the American Stock Exchange on
January 10, 2003.
(4) Represents common stock offered by Hemispherx.
(5) Represents 499,992 shares of our common stock issuable upon
exercise of warrants held by selling stockholders.
(6) Warrants held by selling stockholders.
(7) Estimated solely for the purpose of computing the registration
fee in accordance with Rule 457(i) of the Securities Act.
iv
The Registrant hereby amends this registration statement on the date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until the registration statement shall become effective
on a date as the Securities and Exchange Commission, acting pursuant
to said Section 8(a), may determine.
1
The information in this prospectus is not complete and may be amended.
Neither we nor the selling stockholders may sell these securities until the
registration statement filed with the Securities and Exchange Commission
is effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where an offer
or sale is not permitted.
Subject to Completion
Preliminary Prospectus Dated January 14, 2003
HEMISPHERX BIOPHARMA, INC.
499,996 warrants and the common stock issuable upon exercise of
these warrants and 5,000,000 Shares of Common Stock
________________________________________
The selling stockholders or their transferees, pledgees, donees or
successors may sell, from time to time, in one or more transactions:
* 499,996 warrants to purchase shares of our common stock; and
* 499,996 shares of common stock issuable upon exercise of these warrants.
We may sell, from time to time, in one or more offerings up to
5,000,000 shares of our common stock. We will provide specific terms
of with regard to the offerings, including the offering prices, in
supplements to this prospectus. The supplements may also add, update or
change information contained in this prospectus. You should read this
prospectus and any supplements carefully before you invest.
We will not receive proceeds from the resale of our stockholder's
shares issuable upon exercises of their warrants; however, we will receive
proceeds from our sale of up to 5,000,000 shares of common stock and
from the exercise of our warrants by the selling stockholders or their
transferees, pledges, donees or successors, if and when they exercise
their warrants.
We may offer our shares directly or through underwriters, agents or
dealers. The supplements to this prospectus will describe the terms of any
particular plan of distribution, including any underwriting arrangements.
_________________________________________
Please see the risk factors beginning on page 4 to read about
certain factors you should consider before buying shares of common
stock.
_________________________________________
Hemispherx's common stock is listed on the American Stock
Exchange under the symbol HEB. The reported last sale price on the
American Stock Exchange on January 10, 2003 was $2.17.
2
The mailing address of our principal executive offices is 1617 JFK
Boulevard, Philadelphia, Pennsylvania, 19103, and our telephone number
is 215-988-0080.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined that this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is January 14, 2003
3
Prospectus Summary
Because this is a summary, it may not contain
all information that may be important to you. You
should read this entire prospectus, including the
information incorporated by reference and the financial
data and related notes, before making an investment
decision. When used in this prospectus, the terms
"we," "our" and "us" refer to Hemispherx and not to
the selling stockholders.
About Hemispherx
In the course of almost three decades, we have
established a strong foundation of laboratory, pre-
clinical and clinical data with respect to the
development of nucleic acids to enhance the natural
antiviral defense system of the human body and the
development of therapeutic products for the treatment
of chronic diseases. Our strategy is to obtain the
required regulatory approvals which will allow the
progressive introduction of Ampligenr (our proprietary
drug) for treating Myalgic Encephalomyelitis/ Chronic
Fatigue Syndrome ("ME/CFS"), HIV, Hepatitis C
("HCV") and Hepatitis B ("HBV") in the U.S., Canada
Europe and Japan. Ampligenr is currently in phase III
clinical trials in the U.S. for use in treatment of
ME/CFS and is in Phase IIb Clinical Trials in the U.S.
for the treatment of newly emerged multi-drug
resistant HIV, and for the induction of cell mediated
immunity in HIV patients that are under control using
potentially toxic drug cocktails.
Our proprietary drug technology utilizes
specifically configured ribonucleic acid ("RNA") and is
protected by more than 350 patents worldwide, with
over 80 additional patent applications pending to
provide further proprietary protection in various
international markets. Certain patents apply to the use
of Ampligenr alone and certain patents apply to the
use of Ampligenr in combination with certain other
drugs. Some compositions of matter patents pertain to
other new medications, which have a similar
mechanism of action.
We were incorporated in Maryland in 1966
under the name HEM Research, Inc., and originally
served as a supplier of research support products. Our
business was redirected in the early 1980's to the
development of nucleic acid pharmaceutical technology
and the commercialization of RNA drugs. We were
reincorporated in Delaware and changed our name to
HEM Pharmaceutical Corp., in 1991 and to Hemispherx
Biopharma, Inc., in June 1995. We have three
domestic subsidiaries `BioPro Corp., BioAegean Corp.,
and Core BioTech Corp., all of which are incorporated
in Delaware. Our foreign subsidiaries include
Hemispherx Biopharma Europe N.V./S.A. established in
Belgium in 1998 and Hemispherx Biopharma Europe
S.A. incorporated in Luxembourg in 2002. Our
4
principal executive offices are located at One Penn
Center, 1617 JFK Boulevard, Philadelphia,
Pennsylvania 19103, and its telephone number is 215-
988-0080.
Recent Developments
On March 20, 2002, our European Subsidiary
Hemispherx Biopharma Europe, S.A. ("Hemispherx,
S.A.") entered into a Sales and Distribution agreement
with Laboratorios Del Dr. Esteve S.A. ("Esteve").
Pursuant to the terms of the agreement, Esteve was
granted the exclusive right to market Ampligenr in
Spain, Portugal and Andorra for the treatment of
Myalgic/Chronic Fatigue Syndrome ("ME/CFS"). In
addition to other terms and other projected payments,
Esteve paid an initial and non-refundable fee of
625,000 Euros (approximately $545,000) to
Hemispherx S.A. on April 24, 2002. Esteve is to pay a
fee of 1,000,000 Euros after U.S. Food and Drug
Administration approval of Ampligenr for the treatment
of ME/CFS and a fee of 1,000,000 Euros upon Spain's
approval of the final marketing authorization for using
Ampligenr for the treatment of ME/CFS. Also, Esteve
purchased 1,000,000 Euros of Hemispherx S.A.'s
convertible preferred equity certificates. These
securities pay a 7% dividend and were to be converted
into 1.14% of the outstanding common stock of
Hemispherx S.A. upon the earlier of the completion of
an initial public offering ("IPO") on a European stock
exchange or September 30, 2003. However, at our
request, on January 10,2003, Esteve agreed to
convert the preferred equity certificates into our
common stock. The conversion rate will be 300 shares
of our common stock for each 1,000 Euros convertible
preferred certificate.
Risk Factors
Special Note Regarding Forward-Looking Statements
Certain statements in this document constitute
"forwarding-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and
Exchange Act of 1995 (collectively, the "Reform Act").
Certain, but not necessarily all, of such forward-looking
statements can be identified by the use of forward-
looking terminology such as "believes," "expects,"
"may," "will," "should," or "anticipates" or the
negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy
that involve risks and uncertainties. All statements
other than statements of historical fact, included in this
prospectus regarding our financial position, business
strategy and plans or objectives for future operations
are forward-looking statements. Without limiting the
broader description of forward-looking statements
above, we specifically note that statements regarding
potential drugs, their potential therapeutic effect, the
possibility of obtaining regulatory approval, our ability
5
to manufacture and sell any products, market
acceptance or our ability to earn a profit from sales or
licenses of any drugs or our ability to discover new
drugs in the future are all forward-looking in nature.
Such forward-looking statements involve known
and unknown risks, uncertainties and other factors,
including but not limited to, the risk factors discussed
below, which may cause the actual results,
performance or achievements of Hemispherx and its
subsidiaries to be materially different from any future
results, performance or achievements expressed or
implied by such forward-looking statements and other
factors referenced in this prospectus. We do not
undertake and specifically declines any obligation to
publicly release the results of any revisions which may
be made to any forward-looking statement to reflect
events or circumstances after the date of such
statements or to reflect the occurrence of anticipated
or unanticipated events.
The following cautionary statements identify
important factors that could cause our actual result to
differ materially form those projected in the forward-
looking statements made in this Prospectus. Among
the key factors that have a direct bearing on our
results of operations are:
No assurance of successful product development of
Ampligen
The development of Ampligen and our other
products is subject to a number of significant risks.
Ampligen may be found to be ineffective or to have
adverse side effects, fail to receive necessary
regulatory clearances, be difficult to manufacture on a
commercial scale, be uneconomical to market or be
precluded from commercialization by proprietary right
of third parties. Our products are in various stages of
clinical and pre-clinical development and, require
further clinical studies and appropriate regulatory
approval processes before any such products can be
marketed. We do not know when, or if ever,
Ampligen or our other products will be generally
available for commercial sale for any indication.
Generally, only a small percentage of potential
therapeutic products are eventually approved by the
U.S. Food and Drug Administration ("FDA") for
commercial sale.
Our drug and related technologies are investigational
and subject to regulatory approval.
All of our drugs and associated technologies are
investigational and must receive prior regulatory
approval by appropriate regulatory authorities for
general use and are currently legally available only
through clinical trials with specified disorders. Our
principal development efforts are currently focused on
Ampligen, which has not been approved for
commercial use. Our products, including Ampligen,
6
are subject to extensive regulation by numerous
governmental authorities in the U.S. and other
countries, including, but not limited to, the FDA in the
U.S., the Health Protection Branch("HPB ") of Canada,
and the European Medical Evaluation Agency ("EMEA")
in Europe. Obtaining regulatory approvals is a rigorous
and lengthy process and requires the expenditure of
substantial resources. In order to obtain final regulatory
approval of a new drug, we must demonstrate to the
satisfaction of the regulatory agency that the product
is safe and effective for its intended uses and that we
are capable of manufacturing the product to the
applicable regulatory standards. We require regulatory
approval in order to market Ampligen or any other
proposed product and receive product revenues or
royalties. We cannot assure you that the drug will
ultimately be demonstrated to be safe or efficacious. In
addition, while Ampligen is authorized for use in
clinical trials in the United States and other countries,
we cannot assure you that additional clinical trial
approvals will be authorized in the United States or in
other countries, in a timely fashion or at all, or that we
will complete these clinical trials. If Ampligen or one
of our other products does not receive regulatory
approval in the U.S. or elsewhere, our operations will
be materially adversely effected.
We may continue to incur substantial losses and our
future profitability is uncertain.
We began operations in 1966 and last reported
net profit from 1985 through 1987. Since 1987, we
have incurred substantial operating losses, as we
pursued our clinical trial effort and expanded our
efforts in Europe. As of September 30, 2002 our
accumulated deficit was approximately $97,662,000.
We have not yet generated significant revenues from
our products and may incur substantial and increased
losses in the future. We cannot assure that we will
ever achieve significant revenues from product sales or
become profitable. We require, and will continue to
require, the commitment of substantial resources to
develop our products. We cannot assure that our
product development efforts will be successfully
completed or that required regulatory approvals will be
obtained or that any products will be manufactured
and marketed successfully, or profitability.
We will require additional financing which may not be
available.
The development of our products will require the
commitment of substantial resources to conduct the
time-consuming research, preclinical development, and
clinical trials that are necessary to bring pharmaceutical
products to market. Based on our current operating
plan, we anticipate receipt of limited revenues and
proceeds from the sales of Ampligen under the Cost
Recovery Clinical Programs and holders of non-public
warrants exercising their warrants from time to time.
We believe these proceeds and the cash on hand will
be sufficient to meet our capital requirements through
May, 2003. We will need to raise substantial additional
7
funds through additional equity or debt financing or
from other sources in order to complete the necessary
clinical trials and the regulatory approval processes and
begin commercializing its products. In this regard, we
have registered 5,000,000 shares for sale pursuant to
the registration statement that contains this
prospectus. There can be no assurances that we will
raise adequate funds from the sale of these shares or
that our non-public warrants will be exercised or that
we will raise any proceeds from other possible equity
financing, which may have a material effect on our
ability to develop our products. Moreover, should the
value of our common equity securities owned by non-
affiliates fall below $75,000,000, we will not be able
to sell the above mentioned shares that we have
registered.
No regulatory agency has approved the full commercial
sale of any of our products.
We cannot assure you that Ampligen or any of
our products being developed will ultimately be
demonstrated to be safe or efficacious. While
Ampligen is authorized for use in clinical trials in the
United States and various other countries, we cannot
assure you that additional clinical trial approvals will be
authorized in the United States, or in other countries in
a timely fashion or at all or that we will complete these
clinical trials. If Ampligen or one of our other products
does not receive regulatory approval in the United
States or elsewhere, our operations will be significantly
affected.
We may not be profitable unless we can protect our
patents and/or receive approval for additional pending
patents.
We need to preserve and acquire enforceable
patents covering the use of Ampligen for a particular
disease in order to obtain exclusive rights for the
commercial sale of Ampligen for such disease. Our
success depends, in large part, on our ability to
preserve and obtain patent protection for our products
and to obtain and preserve our trade secrets and
expertise. We have been issued certain patents
including those on the use of Ampligen and
Ampligen in combination with certain other drugs for
the treatment of HIV. We also have been issued
patents on the use of Ampligen in combination with
certain other drugs for the treatment of chronic
hepatitis B virus, chronic hepatitis C virus, and a patent
which affords protection on the use of Ampligen in
patients with chronic fatigue syndrome. We have not
yet been issued any patents in the United States for
the use of Ampligen? as a sole treatment for any of
the cancers which we have sought to target. We
cannot assure you that any of these applications will
be approved or that our competitors will not seek and
obtain patents regarding the use of Ampligen in
combination with various other agents, for a particular
target indication prior to us. If we cannot protect our
patents covering the use of Ampligen for a particular
8
disease, or obtain additional pending patents, we may
not be able to successfully market Ampligen.
The patent position of biotechnology and
pharmaceutical firms is highly uncertain and involves
complex legal and factual questions.
To date, no consistent policy has emerged
regarding the breadth of protection afforded by
pharmaceutical and biotechnology patents. There can
be no assurance that new patent applications relating
to our products or technology will result in patents
being issued or that, if issued, such patents will afford
meaningful protection against competitors with similar
technology. It is generally anticipated that there may
be significant litigation in the industry regarding patent
and intellectual property rights. Such litigation could
require substantial resources from us and we may not
have the financial resources necessary to enforce the
patent rights that we hold. No assurance can be made
that our patents will provide competitive advantages
for our products or will not be successfully challenged
by competitors. No assurance can be given that
patents do not exist or could not be filed which would
have a materially adverse effect on our ability to
market our products or to obtain or maintain any
competitive position the we may achieve with respect
to our products. Our patents also may not prevent
others from developing competitive products using
related technology.
There can be no assurance that we will be able to
obtain necessary licenses if we cannot enforce patent
rights we may hold.
If we cannot enforce the patent rights we
currently hold we may be required to obtain licenses
from others to develop, manufacture or market our
products. There can be no assurance that we would be
able to obtain any such licenses on commercially
reasonable terms, if at all. We currently license certain
proprietary information from third parties, some of
which may have been developed with government
grants under circumstances where the government
maintained certain rights with respect to the
proprietary information developed. No assurances can
be given that such third parties will adequately enforce
any rights they may have or that the rights, if any,
retained by the government will not adversely affect
the value of our license. Certain of our know-how and
technology is not patentable, particularly the
procedures for the manufacture of our drug product
which are carried out according to standard operating
procedure manuals.
9
We may not be profitable unless we can produce
Ampligen or other products in commercial quantities
at costs acceptable to us.
We have never produced Ampligen or any other
products in large commercial quantities. Ampligen is
currently produced for use in clinical trials. We must
manufacture our products in compliance with
regulatory requirements in large commercial quantities
and at acceptable costs in order for us to be profitable.
We intend to utilize third-party manufacturers and/or
facilities if and when the need arises or, if we are
unable to do so, to build or acquire commercial-scale
manufacturing facilities. If we cannot manufacture
commercial quantities of Ampligen or enter into third
party agreements for its manufacture at costs
acceptable to us, our operations will be significantly
affected.
If our distributors do not market our product
successfully, we may not
generate significant revenues or become profitable.
We have limited marketing and sales capability.
We need to enter into marketing agreements and third
party distribution agreements for our products in order
to generate significant revenues and become profitable.
To the extent that we enter into co-marketing or other
licensing arrangements, any revenues received by us
will be dependent on the efforts of third parties, and
there is no assurance that these efforts will be
successful. Our agreement with Gentiva Health
Services offers the potential to provide significant
marketing and distribution capacity in the United
States while licensing and marketing agreements with
certain foreign firms should provide an adequate sales
force in South America, Africa, United Kingdom,
Australia and New Zealand, Canada, Austria, Spain and
Portugal.
We cannot assure that our domestic or our
foreign marketing partners will be able to successfully
distribute our products, or that we will be able to
establish future marketing or third party distribution
agreements on terms acceptable to us, or that the cost
of establishing these arrangements will not exceed any
product revenues. The failure to continue these
arrangements or to achieve other such arrangements on
satisfactory terms could have a materially adverse
effect on us.
Ampligen safety profile and Scientific Literature.
We believe that Ampligen has been generally
well tolerated with a low incidence of clinical toxicity,
particularly given the severely debilitating or life
threatening diseases that have been treated. A mild
flushing reaction has been observed in approximately
15% of patients treated in our various studies. This
reaction is occasionally accompanied by erythema, a
tightness of the chest, tachycardia, anxiety, shortness
of breath, subjective reports of ''feeling hot,'' sweating
10
and nausea. The reaction is usually infusion-rate related
and can generally be controlled by slowing the infusion
rate. Other adverse side effects include liver enzyme
level elevations, diarrhea, itching, urticaria (swelling of
the skin), bronchospasm, hypotension, photophobia,
rash, bradycardia, transient visual disturbances,
transient arrhythmias, decreased visual activity in
platelets and white blood cell counts, anemia, dizziness,
confusion, elevation of kidney function tests, occasional
temporary hair loss and various flu-like symptoms,
including fever, chills, fatigue, muscular aches, joint
pains, headaches, nausea and vomiting. These flu-like
side effects typically subside within several months.
One or more of the potential side effects might deter
usage of Ampligen in certain clinical situations and
therefore, could adversely effect potential revenues and
physician/patient acceptability of our product.
There is no assurance that successful manufacture of a
drug on a limited scale basis for investigational use will
lead to a successful transition to commercial, large-
scale production.
Small changes in methods of manufacturing may
affect the chemical structure of Ampligen and other
RNA drugs, as well as their safety and efficacy.
Changes in methods of manufacture, including
commercial scale-up may affect the chemical structure
of Ampligen? and, can, among other things, require
new clinical studies and affect orphan drug status,
particularly, market exclusivity rights , if any, under the
Orphan Drug Act. The transition from limited
production of pre-clinical and clinical research quantities
to production of commercial quantities of our products
will involve distinct management and technical
challenges and will require additional management and
technical personnel and capital to the extent such
manufacturing is not handled by third parties. There
can be no assurance that our manufacturing will be
successful or that any given product will be determined
to be safe and effective, capable of being manufactured
economically in commercial quantities or successfully
marketed.
Rapid technological change may render our products obsolete
or non-competitive.
The pharmaceutical and biotechnology industries
are subject to rapid and substantial technological
change. Technological competition from pharmaceutical
and biotechnology companies, universities,
governmental entities and others diversifying into the
field is intense and is expected to increase. Most of
these entities have significantly greater research and
development capabilities than us, as well as substantial
marketing, financial and managerial resources, and
represent significant competition for us. There can be
no assurance that developments by others will not
render our products or technologies obsolete or
noncompetitive or that we will be able to keep pace
with technological developments.
11
Our products are subject to substantial competition.
Competitors have developed or are in the process
of developing technologies that are, or in the future may
be, the basis for competitive products. Some of these
products may have an entirely different approach or
means of accomplishing similar therapeutic effects to
products being developed by us. These competing
products may be more effective and less costly than our
products. In addition, conventional drug therapy,
surgery and other more familiar treatments will offer
competition to our products. Furthermore, many of our
competitors have significantly greater experience than
us in pre-clinical testing and human clinical trials of
pharmaceutical products and in obtaining FDA, HPB and
other regulatory approvals of products. Accordingly, our
competitors may succeed in obtaining FDA,HPB or other
regulatory product approvals more rapidly than us. If
any of our products receive regulatory approvals and we
commence commercial sales of our products, we will
also be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which we
have limited experience. Our competitors may possess
or obtain patent protection or other intellectual property
rights that prevent, limit or otherwise adversely affect
our ability to develop or exploit our products.
We have limited manufacturing experience and capacity.
Ampligen is currently produced only in limited
quantities for use in our clinical trials and we are
dependent upon certain third party suppliers for key
components of our products and for substantially all of the
production process. The failure to continue these
arrangements or to achieve other such arrangements on
satisfactory terms could have a material adverse affect on
us. Also, to be successful, our products must be
manufactured in commercial quantities in compliance with
regulatory requirements and at acceptable costs. To the
extent we are involved in the production process, our
current facilities are not adequate for the production of our
proposed products for large-scale commercialization, and
we currently do not have adequate personnel to conduct
commercial-scale manufacturing. We intend to utilize
third-party facilities if and when the need arises or, if we
are unable to do so, to build or acquire commercial-scale
manufacturing facilities. We will need to comply with
regulatory requirements for such facilities, including those of
the FDA and HPB pertaining to current Good Manufacturing
Practices ("cGMP") regulations. There can be no assurance
that such facilities can be used, built, or acquired on
commercially acceptable terms, or that such facilities, if
used, built, or acquired, will be adequate for our long-term
needs.
We may be subject to product liability claims from the use
of Ampligen or other of our products which could negatively
affect our future operations.
We face an inherent business risk of exposure to
product liability claims in the event that the use of
Ampligen or other of our products results in adverse
12
effects. This liability might result from claims made
directly by patients, hospitals, clinics or other
consumers, or by pharmaceutical companies or others
manufacturing these products on our behalf. Our future
operations may be negatively effected from the
litigation costs, settlement expenses and lost product
sales inherent to these claims. While we will continue
to attempt to take appropriate precautions, we cannot
assure that we will avoid significant product liability
exposure. Although we currently maintain worldwide
product liability insurance coverage, there can be no
assurance that this insurance will provide adequate
coverage against product liability claims. A successful
product liability claim against us in excess of our
insurance coverage or for which coverage is not
provided could have a negative effect on our business
and financial condition.
Members of our Scientific Advisory Board may have conflicting
interests and may disclose data and technical know how to our
competitors.
All of our Scientific Advisory Board members are
employed by other entities, which may include our
competitors. Although we require each of our Scientific
Advisory Board members to sign a non-disclosure and
non-competition agreement with respect to the data and
information that he or she receives from us, we cannot
assure you that members will abide by them. If a
member were to reveal this information to outside
sources, accidentally or otherwise, our operations could
be negatively effected. Since our business depends in
large part on our ability to keep our technical expertise
confidential, any revelation of this information to a
competitor or other source could have an adverse effect
on our operations.
There is no guarantee that our trade secrets will not be
disclosed or known by our competitors.
To protect our rights, we require certain
employees and consultants to enter into confidentiality
agreements with us. There can be no assurance that
these agreements will not be breached, that we would
have adequate and enforceable remedies for any
breach, or that any trade secrets of ours will not
otherwise become known or be independently
developed by competitors.
The loss of Dr. Carter's services could hurt our chances
for success.
Our success is dependent on the continued
efforts of Dr. William A. Carter because of his position
as a pioneer in the field of nucleic acid drugs, his being
the co-inventor of Ampligen, and his knowledge of our
overall activities, including patents, clinical trials,
corporate relationships and relationships with
governmental agencies which regulate our business.
The loss of Dr. Carter's services could have a material
adverse effect on our operations and chances for
success. While we have an employment agreement
13
with Dr. Carter, and have secured key man life
insurance in the amount of $2 million on the life of Dr.
Carter, the loss of Dr. Carter or other personnel, or the
failure to recruit additional personnel as needed could
have a materially adverse effect on our ability to
achieve our objectives.
Uncertainty of health care reimbursement for our products.
Our ability to successfully commercialize our
products will depend, in part, on the extent to which
reimbursement for the cost of such products and related
treatment will be available from government health
administration authorities, private health coverage
insurers and other organizations. Significant uncertainty
exists as to the reimbursement status of newly
approved health care products, and from time to time
legislation is proposed, which, if adopted, could further
restrict the prices charged by and/or amounts
reimbursable to manufacturers of pharmaceutical
products. We cannot predict what, if any, legislation
will ultimately be adopted or the impact of such
legislation on us. There can be no assurance that third
party insurance companies will allow us to charge and
receive payments for products sufficient to realize an
appropriate return on our investment in product
development.
There are risks of liabilities associated with handling and
disposing of Hazardous materials.
Our business involves the controlled use of
hazardous materials, carcinogenic chemicals and various
radioactive compounds. Although we believe that our
safety procedures for handling and disposing of such
materials comply in all material respects with the
standards prescribed by applicable regulations, the risk
of accidental contamination or injury from these
materials cannot be completely eliminated. In the event
of such an accident or the failure to comply with
applicable regulations, we could be held liable for any
damages that result, and any such liability could be
significant. We do not maintain insurance coverage
against such liabilities.
The market price of our stock may be adversely
affected by market volatility.
The market price of our common stock has been
and is likely to be volatile. In addition to general
economic, political and market conditions, the price and
trading volume of our stock could fluctuate widely in
response to many factors, including:
* announcements of the results of clinical trials by us or
our competitors;
* adverse reactions to products;
14
* governmental approvals, delays in expected
governmental approvals or withdrawals of any prior
governmental approvals or public or regulatory agency
concerns regarding the safety or effectiveness of our
products;
* changes in U.S. or foreign regulatory policy during the
period of product development;
* developments in patent or other proprietary rights,
including any third party challenges of our intellectual
property rights;
* announcements of technological innovations by us or
our competitors;
* announcements of new products or new contracts by
us or our competitors;
* actual or anticipated variations in our operating results
due to the level of development expenses and other
factors;
* changes in financial estimates by securities analysts and
whether our earnings meet or exceed the estimates;
* conditions and trends in the pharmaceutical and other
industries;
* new accounting standards; and
* the occurrence of any of the risks described in these
"Risk Factors."
Our common stock is listed for quotation on the
American Stock Exchange. For the 12-month period
ended December 31, 2002, the price of our common
stock has ranged from $0.74 to $4.95. We expect the
price of our common stock to remain volatile. The
average daily trading volume in our common stock
varies significantly. Our relatively low average volume
and low average number of transactions per day may
affect the ability of our stockholders to sell their shares
in the public market at prevailing prices and a more
active market may never develop.
In the past, following periods of volatility in the market
price of the securities of companies in our industry,
securities class action litigation has often been
instituted against companies in our industry. If we face
securities litigation in the future, even if without merit
or unsuccessful, it would result in substantial costs and
a diversion of management attention and resources,
which would negatively impact our business.
Provisions of our Certificate of Incorporation and
Delaware law could defer a
change of our management which could discourage or
delay offers to acquire us.
Provisions of our Certificate of Incorporation and
Delaware law may make it more difficult for someone to
acquire control of us or for our stockholders to remove
existing management, and might discourage a third
party from offering to acquire us, even if a change in
control or in management would be beneficial to our
stockholders. For example, our Certificate of
Incorporation allows us to issue shares of preferred
stock without any vote or further action by our
stockholders. Our Board of Directors has the authority
to fix and determine the relative rights and preferences
15
of preferred stock. Our Board of Directors also has the
authority to issue preferred stock without further
stockholder approval. As a result, our Board of Directors
could authorize the issuance of a series of preferred
stock that would grant to holders the preferred right to
our assets upon liquidation, the right to receive dividend
payments before dividends are distributed to the holders
of common stock and the right to the redemption of the
shares, together with a premium, prior to the
redemption of our common stock. In addition, our Board
of Directors, without further stockholder approval, could
issue large blocks of preferred stock.
Because the risk factors referred to above could
cause actual results or outcomes to differ materially
from those expressed in any forward-looking
statements made by us, you should not place undue
reliance on any such forward-looking statements.
Further, any forward-looking statement speaks only as
of the date on which it is made and we undertake no
obligation to update any forward-looking statement or
statements to reflect events or circumstances after the
date on which such statement is made or reflect the
occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible for us
to predict which will arise. In addition, we cannot
assess the impact of each factor on our business or
the extent to which any factor, or combination of
factors, may cause actual results to differ materially
from those contained in any forward-looking
statements. Our research in clinical efforts may
continue for the next several years and we may
continue to incur losses due to clinical costs incurred in
the development of Ampligen for commercial
application. Possible losses may fluctuate from quarter
to quarter as a result of differences in the timing of
significant expenses incurred and receipt of licensing
fees and/or cost recovery treatment revenues in
Europe, Canada and in the United States.
Legal Proceedings
On September 30, 1998, we filed a multi-count
complaint against Manuel P. Asensio, Asensio &
Company, Inc. ("Asensio"). The action included claims
of defamation, disparagement, tortuous interference
with existing and prospective business relations and
conspiracy, arising out of the Asensio's false and
defamatory statements. The complaint further alleged
that Asensio defamed and disparaged us in furtherance
of a manipulative, deceptive and unlawful short-selling
scheme in August and September, 1998. In 1999,
Asensio filed an answer and counterclaim alleging that
in response to Asensio's strong sell recommendation
and other press releases, we made defamatory
statements about Asensio. We denied the material
allegations of the counterclaim. In July 2000, following
dismissal in federal court for lack of subject matter
jurisdiction, we transferred the action to the
Pennsylvania State Court. In March 2001, the
defendants responded to the complaints as amended
16
and a trial commenced on January 30, 2002. A jury
verdict disallowed the claims against the defendants
for defamation and disparagement and the court
granted us a directed verdict on the counterclaim. On
July 2, 2002 the Court entered an order granting us a
new trial against Asensio for defamation and
disparagement. Thereafter, Asensio appealed the
granting of a new trial. This appeal is now pending in
the Superior Court of Pennsylvania.
In June 2002, a former ME/CFS clinical trial
patient and her husband filed a claim in the Superior
Court of New Jersey, Middlesex County, against us,
one of our clinical trial investigators and others alleging
that she was harmed in the ME/CFS clinical trial as a
result of negligence and breach of warranties. We
believe the claim is without merit and we are defending
the claim against us through our product liability
insurance carrier.
In June 2002, a former ME/CFS clinical trial
patient in Belgium filed a claim in Belgium, against
Hemispherx Biopharma Europe, NV/SA, our Belgian
subsidiary, and one of our clinical trial investigators
alleging that she was harmed in the Belgium ME/CFS
clinical trial as a result of negligence and breach of
warranties. We believe the claim is without merit and
we are defending the claim against us through our
product liability insurance carrier.
In July 2002, we filed suit against Federal
Insurance Company ("Federal") seeking (1) a judicial
order declaring our rights and the obligations of Federal
under the insurance policy Federal sold to us (2)
monetary damage for breach of contract resulting from
Federal's refusal to fully defend us in connection with
the Asensio litigation (3) monetary damages to
compensate us for Federal's breach of its fiduciary duty
faith and dealing and (4) monetary damages, interest,
costs, and attorneys fees to compensate us for
Federal's violation of the Pennsylvania Bad Faith
Statute. Our suit against Federal is now pending in the
United States District Court for the Eastern District of
Pennsylvania.
Dividend Policy
We have not paid any cash dividends since our
inception and do not anticipate paying cash dividends
in the foreseeable future.
Selling Stockholders
This prospectus relates to the proposed sale by
us, agent or agents designated by us, or certain
stockholders of
* 499,996 warrants owned by the selling stockholders
17
* 499,996 shares of common stock underlying the selling
stockholders' warrants and,
* although not set forth in this part of the
prospectus, this prospectus also relates to the
registration of the sale by us of 5,000,000 shares of
common stock.
The following table sets forth as of the date of
this prospectus certain information with respect to the
selling stockholders. The information is based on
information provided by or on behalf of the selling
stockholders which include our Officers, Directors and
Employees. The selling stockholders may offer all,
some or none of their warrants and/or shares of our
common stock.
We will not receive any of the proceeds from the
sale of the warrants or the resale of the shares of
common stock underlying the warrants, which are
included in this registration statement, for which this
prospectus forms a part. We will however receive
proceeds from our sale of shares of common stock and
from the exercise of warrants, which are included in
this registration statement, for which this prospectus
forms a part. We believe, based on information
supplied by the selling stockholders, that each of them
has sole voting and investment power with respect to
the shares of common stock owned by them or to be
owned by them upon exercise of their warrants.
For purposes of estimating the number of shares
of common stock to be registered for resale by this
prospectus, we include 499,996 shares, representing
100% of the shares of common stock issuable upon
the exercise of the selling stockholder's warrants,
without regard to any limitation on exercise. The
fourth and fifth column below assumes the sale of all
of the shares offered by each selling stockholder.
Beneficial ownership is determined in
accordance with the rules of the Securities and
Exchange Commission and generally includes voting or
investment power with respect to securities. It also
includes shares of common stock which such person
has the right to acquire within 60 days. Percentage
calculations are based upon 32,623,476 shares of our
common stock outstanding as of the date of the
Prospectus.
18
Securities Securities
Owned Prior Securities Owned
To Offering Offered(1) After Offering
=========== ================= ==================== ================= ===
Common
Name of Stock
Selling Common Underlying Common
Stockholder Stock Warrants Warrants Warrants Stock Warrants %
----------- ------ --------- --------- ---------- ------ --------- ---
Lawrence
Zaslow --- 233,332 158,332(2) 158,332 0 75,000(3) *
Peter
Adolph --- 258,332 158,332(2) 158,332 0 100,000(3) *
Mark
Komorsky --- 258,332 158,332(2) 158,332 0 100,000(3) *
Paul
Michaels --- 100,000 25,000(4) 25,000 0 75,000(3) *
---------------------------------------------------------------------------
(1) Assumes the sale of all securities offered.
(2) Consists of (i) 25,000 warrants exercisable at
$12.00 per share expiring May 31, 2005, (ii) 33,333
warrants exercisable at $10.00 per share, (iii) 33,333
warrants exercisable at $12.00 per share, (iv) 33,333
warrants exercisable at $14.00 per share and (v)
33,333 warrants exercisable at $16.00 per share with
all expiring on April 5, 2005.
(3) Unexercised warrants which were previously registered.
(4) Consists of 25,000 warrants exercisable at
$12.00 per share and expiring on May 31, 2005.
Use Of Proceeds
Proceeds from the sale of up to 5,000,000 shares of
the common stock owned by us and the proceeds from
stockholders exercising some or all of the 499,996
warrants will be used to fund our research and
development efforts and possible acquisitions.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports,
proxy statements and other information with the
Securities and Exchange Commission. You may read
and copy any document we file at the Securities and
Exchange Commission's public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549. Please
19
call the Securities and Exchange Commission at 1-800-
SEC-0330 for further information on the public
reference rooms. Many of our Securities and Exchange
Commission filings are also available to the public from
the Securities and Exchange Commission's Website at
"http://www.sec.gov."
We have filed with the Securities and Exchange
Commission a registration statement (which contains
this prospectus) on Form S-3 under the Securities Act
of 1933. The registration statement relates to the
securities offered by us and by the selling
stockholders. This prospectus does not contain all of
the information set forth in the registration statement
and the exhibits and schedules to the registration
statement. Please refer to the registration statement
and its exhibits and schedules for further information
with respect to us, the common stock and the
warrants. Statements contained in this prospectus as
to the contents of any contract or other document are
not necessarily complete and, in each instance, we
refer you to the copy of that contract or document
filed as an exhibit to the Registration Statement. You
may read and obtain a copy of the registration
statement and its exhibits and schedules from the SEC,
as described in the preceding paragraph.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by
reference" the information that we file with them,
which means that we can disclose important
information to you by referring you to those
documents. The information incorporated by reference
is considered to be part of this prospectus, and later
information that we file with the Commission will
automatically update and supercede this information.
We incorporate by reference the following documents
and any future filing made with the Commission under
Sections 13(a), 14 or 15(d) of the Securities Exchange
Act of 1934 until we and the selling stockholders sell
all the securities included in this prospectus:
(a) Our annual report on Form 10-K for our fiscal year
ended December 31, 2001.
(b) Our quarterly report on Form 10-Q for the quarterly
period ended March 31, 2002.
(c) Our quarterly report on Form 10-Q for the quarter
ended June 30, 2002.
(d) Our quarterly report on Form 10-Q for the quarterly
period ended September 30, 2002.
(e) Our registration statement on Form 8-A filed with the
Commission on November 20, 2002.
20
(f) Our proxy statement on schedule 14A for our
2002 annual meeting.
(g) A description of our common stock contained in our
registration statement on Form S-1, File No. 33-
93314, and any amendment or report filed for the
purpose of updating this description filed subsequent
to the date of this prospectus and prior to the
termination of this offering.
(h) all other reports filed by us with the SEC since
December 31, 2001 pursuant to sections 13(a) and
15(d) of the Securities Exchange Act of 1934.
You may request a copy of these filings, at no
cost, by writing or telephoning us at the following
address: Hemispherx Biopharma, Inc., 1617 JFK
Boulevard, Philadelphia, Pennsylvania 19103,
telephone number 215-988-0080.
You should rely only on the information
incorporated by reference or provided in this
prospectus or any supplement. We have not
authorized anyone else to provide you with different
information. We and the selling stockholders will not
make offers to these shares in any state where the
offer is not permitted. You should not assume that the
information in this prospectus or any supplement is
accurate as of any date other that the date on the
front of those documents.
Description of Securities
The following section does not purport to be
complete and is qualified in all respects by reference to
the detailed provisions of our certificate of
incorporation and by-laws, as amended, copies of
which have been filed with the Securities and
Exchange Commission.
Our authorized capital stock consist of: (i)
50,000,000 shares of common stock, $.001 par
value; and (ii) 5,000,000 shares of preferred stock,
..01 par value. 32,623,476 shares of common stock
were issued and outstanding as of the date of this
prospectus. As of this date, there were approximately
331 record holders of our common stock not including
holders in street name. We estimate that there are
some 3,300 holders if you include shares held in street
name.
Common Stock
Shares of our common stock are entitled to one
vote per share, either in person or by proxy, on all
matters that may be voted upon by the owners of our
shares at meetings of our stockholders. There is no
provision for cumulative voting with respect to the
election of directors by the holders of common stock.
21
Therefore, the holder of more than 50% of our shares
of outstanding common stock can, if they choose to
do so, elect all of our directors. In this event, the
holders of the remaining shares of common stock will
not be able to elect any directors.
The holders of common stock:
* have equal rights to dividends from funds
legally available therefore, when and if declared by our
board of directors;
* are entitled to share ratably in all of our
assets available for distribution to holders of common
stock upon liquidation, dissolution or winding up of our
affairs; and
* do not have preemptive rights, conversion
rights, or redemption of sinking fund provisions.
The outstanding shares of our common stock
are duly authorized, validly issued, fully paid and
nonassessable.
Preferred Stock.
Under our certificate of incorporation, as
amended, our board of directors is authorized, subject
to certain limitations prescribed by law, without further
stockholder approval, from time to time to issue up to
an aggregate of 5,000,000 shares of preferred stock.
At this time, there are no preferred shares outstanding.
Warrants.
We have issued the warrants to the selling
stockholders at various times and over a period of
years primarily in private unregistered transactions.
The warrants are similar in form, terms and conditions.
Generally, the warrants materially differ from each
other only in the exercise price, duration of the
exercise period, and commencement and expiration
dates.
The applicable prospectus supplement will
describe, where applicable, the terms of each warrant
in respect to which this prospectus is being delivered.
22
Plan of Distribution
By Selling Stockholders
The shares of our common stock offered by this
prospectus may be sold from time to time by the
selling stockholders, to purchasers directly by them in
one or more transactions at a fixed price, which may
be changed, or at varying prices determined at the time
of sale or at negotiated prices. Such prices will be
determined by the holders of such securities or by
agreement between such holders and underwriters or
dealers who may receive fees or commissions in
connection with such sales.
Each of the selling stockholders, may from time
to time, offer shares of our common stock beneficially
owned by them through underwriters, dealers or
agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions
from the selling stockholders and the purchasers of the
shares for whom they may act as agent. Each of the
selling stockholders will be responsible for payment of
commissions, concessions and discounts of
underwriters, dealers or agents. The aggregate
proceeds to the selling stockholders, from the sale of
the shares of our common stock offered by them will
be the purchase price of such shares less discounts
and commissions, if any. Each of the selling
stockholders reserves the right to accept and, together
with their agents, from time to time to reject, in whole
or in part, any proposed purchase of shares to be made
directly or through agents. Alternatively, the selling
stockholders may sell all or a portion of the shares of
our common stock beneficially owned by them and
offered from time to time on any exchange on which
the securities are listed on terms to be determined at
the times of such sales. The selling stockholders may
also make private sales directly or through a broker or
brokers.
From time to time, the selling stockholders may
transfer, pledge, donate or assign shares of our
common stock to lenders or others, and each of such
persons will be deemed to be a "selling stockholder"
for purposes of this prospectus. The number of shares
beneficially owned by a selling stockholder who
transfers, pledges, donates or assigns shares of our
common stock will decrease as and when they take
such actions. The plan of distribution for shares sold
under this prospectus will otherwise remain
unchanged, except that the transferees, pledgees,
donees other successors will be selling stockholders
under this prospectus and may sell their shares in the
same manner as the selling stockholders.
A selling stockholder may enter into hedging
transactions with broker-dealers, and the broker
dealers may engage in short sales of the shares of our
common stock in the course of hedging the positions
they assume with such selling stockholder, including in
connection with distribution of the shares of our
23
common stock by such broker-dealers. In addition, a
selling stockholder may, from time to time, sell short
the shares of our common stock, and in such
instances, this prospectus may be delivered in
connection with such short sales and the shares
offered may be used to cover such short sales. The
selling stockholders may also enter into option or other
transactions with broker-dealers that involve the
delivery of the shares of our common stock to the
broker-dealer, who may then resell or otherwise
transfer such shares. The selling stockholders may
also loan or pledge the shares to a broker-dealer and
the broker-dealer may sell the shares as loaned or upon
a default may sell or otherwise transfer the pledged
shares.
The selling stockholders and any underwriters,
dealers or agents that participate in the distribution of
the shares of our common stock offered by this
prospectus may be deemed to be underwriters within
the meaning of the Securities Act, and any discounts,
commissions or concessions received by them and any
provided pursuant to the sale of shares by them might
be deemed to be underwriting discounts and
commissions under the Securities Act.
In addition, any securities covered by this
prospectus, which qualify for sale pursuant to Rule
144 or Rule 144A of the Securities act, may be sold
under Rule 144 or Rule 144A rather than pursuant to
this prospectus. There is no assurance that any selling
stockholder will sell any or all of the shares of our
common stock described in this prospectus, and any
selling stockholder may transfer, devise or gift such
securities by other means not described in this
prospectus.
If necessary, the specific shares of our common
stock to be sold in this prospectus, the names of the
selling stockholders, the respective purchase prices
and public offering prices, the names of any agent,
dealer or underwriter, and any applicable commissions
or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement
or, if appropriate, a post-effective amendment to the
registration statement of which this prospectus is a
part.
We will pay substantially all of the expenses
incurred by the selling stockholders and us incident to
the offering and sale of the shares of our common
stock issuable upon exercise of the warrants, excluding
any underwriting discounts or commissions. We will
not receive proceeds from the resale of our
stockholders' shares issuable upon exercise of our
warrants; however, we may receive proceeds from our
sale of our securities and from the exercise of our
warrants.
By us
We may sell the shares offered by us pursuant
to this prospectus (Offered Shares) in one or more
series in any of three ways: (1) through underwriters or
24
dealers; (2) through agents; or (3) directly to a limited
number of purchasers or to a single purchaser.
THROUGH UNDERWRITERS OR DEALERS. If
underwriters are used in the sale, the Offered Shares
may be acquired by the underwriters for their own
account and may be resold from time to time in one or
more transactions, including negotiated transactions,
at varying prices determined at the time of the sale.
The Offered Shares may be offered to the public either
through underwriting syndicates represented by one or
more managing underwriters or directly by one or more
managing underwriters. The underwriter or
underwriters with respect to Offered Shares will be
named in the prospectus supplement relating to such
offering and, if an underwriting syndicate is used, the
managing underwriter or underwriters will be set forth
on the cover page of such prospectus supplement.
Such prospectus supplement shall state the obligations
of the underwriters to purchase the Offered Securities,
whether such purchases will be subject to certain
conditions precedent, and whether the underwriters
will be obligated to purchase all of the Offered Shares
if any are purchased.
THROUGH AGENTS. Offered Shares may be sold
through agents designated by us from time to time. A
prospectus supplement will set forth the name of any
agent involved in the offer or sale of the Offered
Shares in respect of which such prospectus
supplement is delivered as well as any commissions
payable by us to such agent. Unless otherwise
indicated in such prospectus supp*lement, any such
agent will be acting on a reasonable best efforts basis
for the period of its appointment.
DIRECTLY. We may sell the Offered Shares directly to
one or more purchasers. In this case, no underwriters
or agents would be involved.
GENERAL INFORMATION. The prospectus
supplement with respect to the Offered Shares will set
forth the terms of the offering of such Offered Shares,
including:
* the name or names of any underwriters, dealers
or agents;
* the purchase price of such Offered Shares and
the proceeds to us from such sale;
* any underwriting discounts, agents'
commissions and other items constituting underwriting
compensation;
* any initial public offering price; and
25
* any discounts or concessions allowed or
reallowed or paid to dealers.
Any initial public offering price and any
discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
Agents, underwriters and dealers may be
entitled under agreements entered into with us to
indemnification by us against certain civil liabilities,
including certain liabilities under the Securities Act of
1933 or to contribution by us with respect to
payments which such agents, underwriters and dealers
may be required to make in respect thereof.
Transfer Agent and Registrar
The transfer agent and registrar for our common
stock and warrants is Continental Stock Transfer and
Trust Co., 17 Battery Place, 8th Floor, New York, New
York 10004.
Legal Matters
The validity of the warrants and the common
stock offered in this prospectus has been passed upon
for us by Silverman Sclar Byrne Shin & Byrne P.C.,
381 Park Avenue South, Suite 1601, New York, New
York 10016.
Experts
The consolidated financial statements incorporated by
reference in this prospectus have been audited by BDO
Seidman, LLP independent certified public accountants,
to the extent and for the periods set forth in their report
incorporated herein by reference and, are incorporated
herein in reliance upon such report given upon the
authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Hemispherx
Biopharma, Inc as of December 31, 1999 and for the year
ended December 31, 1999, have been incorporated by
reference herein in reliance upon the report of KPMG LLP,
independent accountants, incorporated by reference herein,
and upon the authority of said firm as experts
in accounting and auditing.
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to our
directors, officers, and controlling persons, we have
been advised that in the opinion of the Commission
this indemnification is against public policy as
expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim for
indemnification against these liabilities, other than our
26
payment of expense incurred or paid by one of our
directors, officers, or controlling persons in the
successful defense of any action, suit or proceeding, is
asserted by that director, officer or controlling person
in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter
has been settled by a controlling precedent, submit to
a court of appropriate jurisdiction the question whether
this indemnification by us is against public policy as
expressed in the Securities Act and will be governed
by the final adjudication of these issues.
===============================================================
27
No dealer, salesman or any other person is authorized to give
any information or to represent anything not contained in this
prospectus. You must not rely on any unauthorized information
or representations. This prospectus is an offer to sell these
securities and it is not a solicitation of an offer to buy these
securities in any state where the offer or sale is not permitted.
The information contained in this Prospectus is current only as
of this date.
TABLE OF CONTENTS
Page
Prospectus Summary.............................3
About Hemispherx...............................3
Recent Developments............................4
Risk Factors ..................................4
Legal Proceedings.............................15
Dividend Policy...............................16
Selling Stockholders .........................16
Use of Proceeds...............................18
Where you can find More information ..........18
Information Incorporated By Reference.........19
Description of Securities.....................20
Plan of Distribution .........................22
Transfer Agent ...............................25
Legal Matters ................................25
Experts ......................................25
Disclosure of theCommissions Position ........25
===============================================================
===============================================================
499,996 WARRANTS, AND
499,996 SHARES OF COMMON STOCK
UNDERLYING THE WARRANTS
5,000,000 SHARES OF COMMON STOCK
HEMISPHERX BIOPHARMA, INC.
____________________________
PROSPECTUS
____________________________
January 14, 2003
____________________________
28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION.
SEC Filing Fees.........................................$ 1,741.86
American Stock Exchange Listing Fee*....................$17,500.00
Printing and Engraving Expenses*....................... $ 2,500.00
Accounting Fees and Expenses*......................... $10,000.00
Legal Fees and Expenses*................................$12,500.00
Transfer Agent and Registrar Fees*......................$ 1,500.00
Miscellaneous*..........................................$ 1,500.00
Total Expenses*........................................$47,241.86
---------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Amended and Restated Certificate of Incorporation
limits the liability of directors to the maximum extent
permitted by Delaware law. Delaware law provides that
directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as
directors, except for liability for (i) any breach of their duty
of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) unlawful
payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware
General Corporation Law or (iv) any transaction from which
the director derives an improper personal benefit.
29
ITEM 16. EXHIBITS.
Exhibit No. Description
5.1 Opinion of Silverman Sclar Byrne Shin & Byrne PC,
legal counsel.
23.1 Consent of BDO Seidman, LLP, independent certified
public accountants.
23.2 Consent of KPMG LLP, independent certified public
accountants.
23.3 Consent of Silverman Sclar Byrne Shin & Byrne PC, legal
counsel (included in Exhibit 5.1).
24.1 Powers of Attorney (included in Signature Pages to this
Registration Statement on Form S-3).
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) We, the undersigned Registrant hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to the Registrant
Statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
30
(ii) Reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) that
individually or in the aggregate represent a fundamental
change in the information set forth in the Registration
Statement; and
(iii) Include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (i) and (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 with or furnished to the Commission by the
Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at 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.
31
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Philadelphia, Commonwealth
of Pennsylvania, on the 8 th day of January, 2003.
HEMISPHERX BIOPHARMA, INC.
(Registrant)
By: /s/ William A. Carter
-----------------------------
William A. Carter, M.D.,
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints
William A. Carter acting alone, his true and lawful attorney-
in-fact and agent, with full power of substitution and
resubstitution, for such person in his name, place and stead,
in any and all capacities, in connection with the Registrant's
Registration Statement on Form S-3 under the Securities
Act of 1933, including, without limiting the generality of the
foregoing, to sign the Registration Statement in the name
and on behalf of the Registrant or on behalf of the
undersigned as a director or officer of the Registrant, and
any and all amendments or supplements to the Registration
Statement, including any and all stickers and post-effective
amendments to the Registration Statement, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorney-
in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the
following persons in the capacities indicated on the dates
indicated.
Signature Title Date
/s/ William A. Carter Chairman of the Board, January 8, 2003
---------------------- Chief Executive Officer
William A. Carter, M.D. (Principal Executive)
and Director
/s/ Richard Piani Director January 8, 2003
----------------------
Richard Piani
/s/ Robert E. Peterson Chief Financial Officer January 8, 2003
---------------------- and Chief Accounting
Robert E. Peterson Officer
32
/s/ Ransom Etheridge Secretary And Director January 8, 2003
-------------------
Ransom Etheridge
/s/ William Mitchell Director January 8, 2003
---------------------
William Mitchell,M.D.,Ph.D.
/s/ Iraj-Eqhbal Kiani Director January 8, 2003
-----------------------
Iraj-Eqhbal Kiani, M.D.
33
Hemispherx Biopharma, Inc.
Form S-3
Index to Exhibits
Exhibit No. Description
5.1 Opinion of Silverman Sclar Byrne Shin & Byrne PC,
legal counsel.
23.1 Consent of BDO Seidman, LLP, independent certified
public accountants.
23.2 Consent of KPMG LLP, independent certified public
accountants.
23.3 Consent of Silverman Sclar Byrne Shin & Byrne PC, legal
counsel (included in Exhibit 5.1).
24.1 Powers of Attorney (included in Signature Pages to this
Registration Statement on Form S-3).
Exhibit 5.1
SILVERMAN SCLAR BYRNE SHIN & BYRNE P.C.
381 Park Avenue South, Suite 1601
New York, New York 10016
Tel. No. (212) 779-8600
Telecopy Number - (212) 779-8858
January 14, 2003
Board of Directors
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, PA 19103
Re: Hemispherx Biopharma, Inc.-Registration Statement on Form S-3
Gentlemen:
We have acted as counsel for Hemispherx Biopharma,
Inc., a Delaware corporation (the "Company"), in connection
with the preparation of the registration statement on Form S-3,
and any amendments thereto (the "Registration Statement"), as
filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the
"Securities Act"), on January 14, 2003, for the registration
under the Act of up to (i) 5,000,000 shares (the "Shares") of
the Company's common stock, par value $0.001 per share (the
"Common Stock"); (ii) 499,996 shares of Common Stock
issuable upon the exercise of certain warrants (the "Warrant
Shares") issued by the Company and (iii) 499,966 Common
Stock purchase warrants (the "Warrants"). The Shares are to
be offered by the Company and the Warrants and Warrant
Shares are to be offered for resale on a delayed or continuous
basis pursuant to Rule 415 promulgated under the Securities
Act by the selling stockholders of the Company named in the
Registration Statement.
In rendering this opinion, we have relied upon, among
other things, our examination of certain records of the
Company, including without limitation, the Company's
Certificate of Incorporation, as amended and restated, the
Company's Bylaws, as amended and restated, and resolutions
of the Board of Directors. We have also examined certificates
of the Company's officers and of public officials, and have
reviewed such questions of law and made such other inquiries,
as we have deemed necessary or appropriate for the purpose of
rendering this opinion. As to various questions of fact material
to this opinion, we have also relied upon representations and
warranties of the Company and upon such certificates and
other instruments of officers of the Company and public
officials furnished to us by the Company, in each case without
independent investigation or verification.
In addition, without any independent investigation or
verification, we have assumed (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to
us as originals and the conformity with the original documents
of all documents submitted to us as certified, conformed or
photostatic copies, (iii) the authority of all persons signing any
document other than the officers of the Company, where
applicable, signing in their capacity as such, (iv) the
enforceability of all the documents we have reviewed in
accordance with their respective terms against the parties
thereto and (v) the truth and accuracy of all matters of fact set
forth in all certificates and other instruments furnished to us.
Based on and subject to the assumptions, qualifications
and limitations set forth herein, we are of the opinion that:
1. The Shares have been duly and validly authorized
for issuance and, when issued and delivered in the manner
described in the Registration Statement against full payment
of the consideration set forth therein, will be validly issued,
fully paid and nonassessable.
2. The Warrant Shares have been duly authorized for
issuance pursuant to the Warrants, and when issued and
delivered in the manner described in the Warrants against full
payment of the consideration set forth therein, will be validly
issued, fully paid and nonassessable.
3. The Warrants have been duly authorized and issued.
We do not express any opinion as to the laws of other
states or jurisdictions other than the laws of the State of New
York, the General Corporation Law of the State of Delaware
and the federal law of the United States. No opinion is
expressed as to the effect that the law of any other jurisdiction
may have upon the subject matter of the opinion expressed
herein under conflicts of law principles, rules and regulations
or otherwise.
This opinion is limited to the specific issues addressed
herein, and no opinion may be inferred or implied beyond that
expressly stated herein. We assume no obligation to revise or
supplement this opinion should the present laws of the State of
New York or the state Constitution or the General Corporation
Law of the State of Delaware be changed by legislative action,
judicial decision or otherwise.
We hereby consent to the filing of this opinion with the
Commission as Exhibit 5.1 to the Registration Statement and
the reference to us under the heading "Legal Matters" in the
prospectus included in Part I of the Registration Statement. In
giving this consent, we do not admit that we are within the
category of persons whose consent is required by Section 7 of
the Securities Act or the rules and regulations promulgated
thereunder by the Commission.
This opinion is furnished to you in connection with the
filing of the Registration Statement and is not to be used,
circulated, quoted or otherwise relied upon for any other
purposes.
Very truly yours,
/s/ Silverman Sclar Byrne Shin & Byrne P.C.
------------------------------------------------------
Silverman Sclar Byrne Shin & Byrne P.C.
Exhibit 23.1
Hemispherx Biopharma, Inc.
Philadelphia, PA
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
March 15, 2002, except for Note 18 which is as of March 20, 2002,
relating to the consolidated financial statements of Hemispherx
Biopharma, Inc. and subsidiaries appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001.
We also consent to the reference to us under the caption "Experts"
in the Prospectus.
/s/ BDO Seidman, LLP
Philadelphia, PA
January 14, 2003
Exhibit 23.2
The Board of Directors
Hemispherx Biopharma, Inc.
We consent to use of our report dated February 19, 2000
except as to the seventh paragraph of Note 15, which is
as of March 6, 2000 and as to Note 1, which is as of
March 30, 2001 relating to the 1999 statement of
operations which is incorporated by reference herein.
In addition, we consent to the use of our firm under the
heading "Experts" in the prospectus.
/s/ KPMG, LLP
Philadelphia, Pennsylvania
January 14,2003