As filed with the Securities and Exchange Commission on March 10, 1999
Registration No. 333-68541
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
HEMISPHERX BIOPHARMA, INC.
(Name of Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
(Primary Standard Industrial Classification Code Number)
52-0845822
(I.R.S. Employee Identification No.)
--------------------
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080
(Address and telephone number of principal executive offices and principal place
of business)
--------------------
William A. Carter, M.D., Chief Executive Officer
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
(215) 988-0080
(Name, address and telephone number of agent for service)
Copies of all communications to:
Michael H. Freedman, Esq.
Silverman, Collura, Chernis & Balzano, P.C.
381 Park Avenue South, Suite 1601
New York, New York 10016
(212) 779-8600
<PAGE>
Approximate date of proposed sale to the public: From time to time or at
one time after the effective date of this Registration Statement as determined
by the Selling Securityholders.
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 ("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. [ ]
================================================================================
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered(1) Per Share(2) Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock(3) 750,000 $6.50 $4,875,000 $1,477.27
- -----------------------------------------------------------------------------------------------------------
Common Stock(4) 250,000 $6.50 $1,625,000 $492.42
- -----------------------------------------------------------------------------------------------------------
TOTAL 1,000,000 $6,500,000 $1,969.70
===========================================================================================================
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, 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.
(2) Common stock price per share calculated in accordance with Rule 457(c) of
the Securities Act using the last sale price for the common stock on
December 7, 1998.
(3) Common stock held by selling securityholders.
(4) Common stock underlying warrants held by the selling securityholder.
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.
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DATED MARCH 10, 1999 SUBJECT TO COMPLETION
HEMISPHERX BIOPHARMA, INC.
1,000,000 shares of common stock
---------------------------------
Value Management and Research may sell up to 1,000,000 shares of
Hemispherx common stock, as described herein under "Plan of Distribution."
Hemispherx will not receive any proceeds from this offering.
--------------------------------
Please see the risk factors beginning on page 6 to read about certain
factors you should consider before buying shares of common stock.
-------------------------------
Hemispherx's common stock and class A warrants are listed on the American
Stock Exchange under the symbols HEB and HEB/WS, respectively. The reported last
sale price on the American Stock Exchange on March 9, 1999 was $5.4375 and
$2.0625, respectively.
The mailing address of our principal executive offices is 1617 JFK
Boulevard, Philadelphia, Pennsylvania 19103, and the 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 March ___, 1999
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<PAGE>
Hemispherx
Hemispherx is a pharmaceutical company that is using genetic technologies
to develop therapeutic products for the treatment of viral diseases and certain
cancers. Ampligen, our lead compound, is in advanced human clinical development
for various therapeutic indications. We have clinically evaluated Ampligen in
over 350 patients for different therapeutic indications. These clinical studies
show that the drug acts as an antiviral agent against a large number of
different viruses, including myalgic encephalomyelitis, also known as chronic
fatigue syndrome, HIV infection and hepatitis B, as well as a treatment for
certain cancers. Clinical trials conducted in the early 1990's indicate that
Ampligen may have potential in the treatment of metastatic renal cell cancer and
malignant melanoma. Ampligen appears to stimulate the immune system and is
generally well tolerated. We are currently conducting Phase III human clinical
trials for the therapeutic treatment of chronic fatigue syndrome. Phase III
trials are the final drug testing phase for approval by the U.S. Food and Drug
Administration.
We will continue our research and clinical efforts for the next several
years. We expect significant benefits as a result of certain revenues expected
from various cost recovery treatment programs, notably in Canada, Belgium and
the United States. Cost recovery treatment programs allow us to charge patients
for the cost of Ampligen even though the drug has yet to be approved by the Food
and Drug Administration. We are also pursuing similar programs in other
countries, especially within the European Union where our resources have been
substantially increased in order to pursue regulatory approvals. Over the years,
we have secured a significant patent estate consisting of more than 25 issued
U.S. patents and over 300 derivative international filings. Nine additional U.S.
patent filings are pending along with their international counterparts.
We require substantial resources to conduct the time-consuming research,
preclinical development, and clinical trials necessary to bring pharmaceutical
products to market and establish commercial production and marketing
capabilities. Accordingly, we may need to raise additional funds through
additional equity or debt financing, collaborative arrangements with corporate
partners, off balance sheet financing or from other sources in order to complete
the necessary clinical trials and the regulatory approval processes and begin
commercializing our products.
Manufacturing
In 1994, we entered into an agreement with Bioclones, Ltd., a subsidiary
of South African Breweries, Ltd., to co-develop various genetic drugs, including
Ampligen. The Bioclones agreement provided for the formation of Ribotech, Ltd.
Ribotech was formed in 1994 to produce the raw materials for manufacturing
Ampligen. Hemispherx and Bioclones
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<PAGE>
jointly own Ribotech. Ribotech presently has the capacity to produce the
materials required to treat approximately 2,000 patients per year. We are
planning to develop a new production plant. This facility will have the capacity
to produce the materials needed to treat up to 50,000 patients.
In the third quarter of 1998, we informed the Food and Drug Administration
of our intention to switch certain patients from the labor intensive
freeze-dried dosage form of Ampligen to the more convenient ready-to-infuse
liquid formulation for the treatment of patients in clinical trials. We
manufacture the liquid product more efficiently and the process allows greater
production volumes, although we will continue to produce the freeze-dried
product for further clinical development. We have initiated efforts to identify
and locate additional liquid formulation capacity in the U.S. and Europe, since
we anticipate that additional production capacity will be needed in the future.
Product Development
In the second quarter of 1998, we commenced a Phase III clinical study of
Ampligen for the treatment of chronic fatigue syndrome. We plan to enroll up to
230 patients with severely debilitating chronic fatigue syndrome. Chronic
fatigue syndrome patients who are not eligible for the Phase III trial in the
United States may seek treatment under the chronic fatigue syndrome cost
recovery treatment program now authorized by the Food and Drug Administration.
Treatment with cost recovery has been ongoing since mid-1997 under the auspices
of the Food and Drug Administration. Under this protocol, the enrolled patients
pay for the Ampligen administered, which totals about $7,000 for a 24 week
treatment course. Patients are also treated for chronic fatigue syndrome in
Belgium, Austria and Canada under similar chronic fatigue cost recovery
treatment programs.
Distribution/Marketing
In February 1998, we entered into an agreement with Kimberly Home Health Care,
Inc. which operates under the name Olsten Health Services. Olsten Health
Services will serve as a distributor of our products to U.S. patients enrolled
in the chronic fatigue syndrome cost recovery program and will maintain an
Ampligen inventory for use in treating these patients. In addition, Olsten
Health Services will initially provide up to $500,000 of support for other
clinical program efforts including identification of the potential medical and
economic benefits to patients receiving Ampligen. Olsten Health Services is able
to deliver treatment and services to chronic disease patients including infusion
services, home nursing and other medical services through a national network of
more than 500 locations.
We are exploring distribution and marketing relationships for the Western
European market. Negotiations are under way with a French multinational
pharmaceutical firm.
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We formed a wholly owned subsidiary in Europe, Hemispherx Biopharma Europe
NV/SA. This subsidiary is presently based in Antwerp and is pursuing chronic
fatigue clinical tests, related clinical treatments and new drug marketing
approval in Belgium and other European countries. In December 1998, we filed
final drug marketing approval documents for the European Union, consisting of 15
countries, for Ampligen's use for treatment of patients with chronic fatigue
syndrome.
Recent Developments
Subsidiary Spin-Off
Later in 1999, we intend to distribute to our shareholders at least 80% of
the issued and outstanding shares of common stock of Core Biotech Corp.
After the spin-off, Core Biotech intends to use genetic technologies,
including Ampligen and other products, to develop therapeutic products for the
treatment of viral hepatitis diseases. We will license or sublicense to Core
Biotech the technology for the products that will be used by Core Biotech.
The planned spin-off contemplates that shares of Core Biotech common stock
will be distributed to each of our shareholders as of the record date that we
establish for the distribution. In connection with the planned spin-off, we
expect to enter into several agreements with Core Biotech, including, but not
limited to,
(a) a separation and distribution agreement which will provide for,
among other things, the planned spin-off and the division between us
and Core Biotech of certain assets and liabilities;
(b) a tax allocation agreement allocating tax liabilities that relate to
the planned spin-off and to periods prior to the spin-off date;
(c) a services agreement providing for allocation of responsibilities
with respect to various services to be provided by us to Core
Biotech;
(d) an employee benefits agreement;
(e) a technology license agreement; and
(f) a reseach and development agreement.
These agreements are in the early stages of development and no final
determination as to structure has been made. Further, we have not determined
Core Biotech's capitalization, pro forma financial information, management or
inter-company transactions.
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Litigation
On September 14, 1998, VMW, Inc. filed a complaint against us in the
United States District Court, Southern District of New York. The complaint
alleges that we failed to fulfill our financial obligations to VMW, Inc. with
respect to a certain letter agreement pertaining to marketing services rendered.
VMW, Inc. claims damages of less than $100,000. We counterclaimed alleging
breach of contract by VMW and have demanded damages of approximately $25,000.
This case is currently in the discovery phase. We do not believe that the
complaint will have a material effect on our results of operations or our
financial position
Ell and Co., and the Northern Trust Company, as Trustee of the AT&T Master
Pension Trust filed a complaint against us in the Court of Chancery of the State
of Delaware in and for New Castle County on September 23, 1998. This complaint
alleges that we breached our contractual obligations as set forth in our
Certificate of Powers, Designations, Preferences and Rights of the Series E
Convertible Stock. The plaintiff seeks to enforce its rights to convert 1,500
shares of Series E Preferred Stock into 750,000 shares of freely traded common
stock and to recover damages for its inability to convert the preferred stock
when it requested to do so. We do not believe that the complaint will have a
material effect on our results of operations or our financial position.
Although we maintain that the 1,500 shares of Series E Preferred Stock had
been properly redeemed and, therefore, the plaintiff was not contractually able
to effect a proper conversion into common shares, we agreed, in December 1998,
to convert the plaintiff's preferred stock into common stock. Currently, the
claim is still in litigation.
We filed a complaint against Manual P. Asensio, Asensio and Company, Inc.
and others in the United States District Court for the Eastern District of
Pennsylvania on September 30, 1998. We allege the unlawful manipulation and
short selling by defendants of our common stock on the American Stock Exchange
on or about September 15, 1998 through the present. We allege, among other
things, that the defendants distributed materially false information concerning
us to the public, thereby damaging us and our shareholder equity.
Certain of the defendants have entered motions to dismiss all or part of
the case. In the meantime, all discovery is suspended pending the disposition of
the dismissal motions.
Use of proceeds
We will not receive proceeds from the resale of Value Management and
Research's common stock. We will receive $1,600,000 from the exercise of the
warrants, assuming all of the warrants are exercised. We intend to use these
proceeds for general corporate purposes. Pending use of the proceeds, they will
be invested in short term, interest bearing securities or money market funds.
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<PAGE>
Risk factors
You should carefully consider the following factors and other information
in this prospectus before deciding to invest in shares of common stock. This
prospectus contains forward-looking statements which can be identified by the
use of words such as "intend," "anticipate," "believe," "estimate," "project,"
or "expect" or other similar statements. These statements discuss future
expectations, contain projections of results of operations or of financial
condition, or state other "forward-looking" information. When considering these
statements, you should keep in mind the risk factors described below and other
cautionary statements in this prospectus. The risk factors described below and
other factors noted throughout this prospectus, including certain risks and
uncertainties, could cause our actual results to differ materially from those
contained in any forward-looking statement.
1. 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 and as of
December 31, 1998 our accumulated deficit was approximately $61,716,000. We have
not yet generated significant revenues from our products and may incur
substantial and increased losses in the future. We cannot assure you 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. In addition, substantial funding will be required to
spin-off Core Biotech Corp. We cannot assure you 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.
2. We have focused our efforts on the development of our lead product,
Ampligen, which has not yet been approved for full commercial use in the
United States or elsewhere.
Our principal development efforts are currently focused on Ampligen which
has not been approved by the U.S. Food and Drug Administration for commercial
use in the U.S. We plan on conducting additional trials and testing. If Ampligen
does not receive regulatory approval in the U.S. or elsewhere, our operations
will be significantly affected, unless one of our other products is successful.
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 trials 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. Further, we cannot assure you that Ampligen will be
commercially successful in any country that may approve its use.
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<PAGE>
3. Our future viability depends on regulatory approval of Ampligen, or one of
our other products.
Our products, including Ampligen, are subject to extensive regulation by
numerous governmental authorities in the U.S. and other countries, including,
but not limited to, the Food and Drug Administration in the U.S., the Health
Protection Branch of Canada's Department of Health and Welfare, a federal
regulatory agency in Canada, and the European Medical Evaluation Agency in
Europe. No regulatory agency has approved the full commercial sale of any of our
products. We do not expect to be profitable unless we receive final regulatory
approval and can successfully commercialize Ampligen or one of our other
products. 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 approvals in order to market our
products and receive product revenues or royalties.
4. Our operations depend on developing and protecting our patent estate and
proprietary rights.
We need to acquire enforceable patents covering the use of Ampligen or
other products for a particular disease in order to obtain exclusive rights for
the commercial sale of Ampligen. Our success depends, in large part, on our
ability to obtain patent protection for our products and to obtain and preserve
proprietary information and trade secrets. We have been issued certain patents
on the use of Ampligen alone and Ampligen in combination with certain other
drugs for the treatment of HIV. We have also been issued patents on the use of
Ampligen alone and 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. To
date, we have not been issued any patents in the U.S. for the use of Ampligen as
a sole treatment for any of the cancers which we have sought to target. Our
applications for U.S. patents for the use of Ampligen in the treatment of renal
cell carcinoma and lung cancer are currently pending. 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, including AZT, for a particular target indication prior to us.
5. We have limited manufacturing capacity.
We have never produced Ampligen or any other products in large commercial
quantities. Ampligen is currently produced only for use in clinical trials. Our
products must be manufactured in commercial quantities in compliance with
regulatory requirements and at
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acceptable costs. We have entered into an agreement with Bioclones, a
biopharmaceutical company which is associated with South African Breweries, Ltd.
The Bioclones agreement with Bioclones provides for the construction of a new
commercial manufacturing facility by Ribotech, Ltd., a company of which we own
24.9%. We have not commenced constructing this facility. A pilot facility in
South Africa is being expanded to provide an increased supply of Ampligen raw
material. The construction of the commercial facility is dependent upon the
regulatory status of Ampligen, or other products covered by our patents in
various global markets, and we cannot give assurances with respect to when, and
if, construction will be initiated or completed. 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.
6. We have limited marketing experience and may need to enter into third
party agreements to market and distribute our products.
We have limited marketing and sales capability. If we are unable to enter
into marketing agreements or third party distribution agreements for our
products, significant additional resources would be required to develop a sales
and distribution organization. Our agreement with Olsten Health Services offers
the potential to provide significant marketing and distribution capacity in the
United States while Bioclones, Ltd. will be responsible for fielding an adequate
sales force in South America, Africa, United Kingdom, Australia and New Zealand.
Nevertheless, we cannot assure you that we will be able to establish any
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, or that these arrangements will be successful. 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.
7. We may be subject to product liability claims from the use of Ampligen or
other of our products.
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 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. While we will continue to
attempt to take appropriate precautions, we cannot assure you that we will avoid
significant product liability exposure. We currently maintain worldwide product
liability insurance coverage.
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8. Members of our Scientific Advisory Board may have conflicting interests.
Our Scientific Advisory Board members are employed by other entities. They
may have commitments to or consulting or advisory contracts with other entities,
which may include our competitors, that may limit their availability to us. We
cannot assure you that a member will not reveal to outside sources, accidentally
or otherwise, proprietary data he or she receives from us. Since our business
depends in large part on our ability to keep our knowhow and proprietary rights
confidential, any revelation of this information to a competitor or other source
could have a material affect on our operations. We require each of our
Scientific Advisory Board members to sign a non-disclosure and non-competition
agreement with respect to proprietary data that he or she receives from us.
9. 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. The loss of Dr. Carter's services could have a material adverse effect
on our operations. While we have an employment agreement with Dr. William A.
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 key personnel, such as
Dr. David Strayer or Dr. Carol Smith, or the failure to recruit additional
personnel as needed could have a materially adverse effect on our ability to
achieve our objectives.
10. Restricted shares eligible for sale may depress the market price of our
common stock.
A significant number of our outstanding shares of common stock are
"restricted," as that term is defined under Rule 144 of the Securities Act. In
addition, we have issued warrants to purchase 2,080,000 shares of common stock
in reliance upon the provisions of Rule 701 of the Securities Act. All of these
Rule 701 shares are currently eligible for sale. Under Rule 144, in general, a
person may sell stock if the stock has been owned for at least one year. Rule
144 sales must be made under certain conditions, including, limitations as to
the amount of shares that may be sold in any three-month period. Rule 144 also
permits a sale, without any quantity limitation, by a person who is not an
affiliate of the issuer and who has satisfied a two-year holding period. We
cannot predict the effect that sales made under Rule 144 or Rule 701, sales made
in reliance on other exemptions under the securities laws or under registration
statements may have on any then prevailing market price. The sale, or
availability for sale, of these securities in the public market subsequent to
this prospectus, could affect the market price of the common stock and could
impair our ability to raise additional capital through the sale of our equity
securities or debt financing.
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11. We are susceptible to the Year 2000 risk.
State of Readiness
We are dependent upon computers to operate our business and therefore are
exposed to Year 2000 problems. In the spring of 1998, we initiated a Y2K
compliance program with the following objectives:
(a) updating and/or replacing aging hardware;
(b) establishing a new platform for data bases; and
(c) assuring company-wide Y2K compliance.
With the assistance of outside consultants, we learned that the computer
systems used for clinical and manufacturing purposes are not Y2K compliant. In
order to make these systems compliant, we elected to replace the computer
systems. We expect to have all computers and systems Y2K compliant by May 15,
1999 at a cost estimated between $150,000 and $200,000.
Our contingency plans are not complete at this time. We are confident that
our new computers and software will be online by May 15, 1999. Some thought is
being given to outsourcing the computer tasks as a contingency plan. We are
looking into suppliers that could provide this service. This approach, if
necessary, would be expensive.
In a worst case scenario, we would experience delays in accessing data on
patients enrolled in clinical trials. These delays could slow down regulatory
compliance and commercial approval of Ampligen by the Food and Drug
Administration. Our management of Ampligen production and inventories would be
slow and time consuming, which could delay shipments of Ampligen for clinical
trials. Our Y2K program is expected to significantly reduce our level of
uncertainty about the Y2K problem and, in particular, about the Y2K compliance
and readiness of our material external agents. We believe that, with the
implementation of new business systems and completion of our Y2K program as
scheduled, the possibility of significant interruptions or normal operations
should be reduced.
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Where you can find more information about Hemispherx
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our web site http://www.hemispherx.com or at the SEC's web site
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information 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 SEC will automatically update and supercede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 14, or 15(d) of the Securities Exchange Act
of 1934 until Value Management and Research sells all the shares. This
prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-68541).
(a) Annual Report on Form 10-K for its fiscal year ended December 31, 1998
(File No. 1-13441);
(b) The description of common stock contained in the 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.
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. Value Management and Research
will not make offers of 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 than the date on the front of those
documents.
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Resales by Selling Securityholders
This prospectus relates to the proposed resale by Value Management and
Research of 1,000,000 shares of common stock. The following table sets forth as
of March 1, 1999 certain information with respect to Value Management and
Research. Value Management and Research has no material relationship with us and
has not held any position or office with us during the past three years. We will
not receive any of the proceeds from the sale of the common stock. We believe,
based on information supplied by Value Management and Research, that Value
Management and Research has sole voting and investment power with respect to the
shares of common stock. Of the 1,000,000 shares of common stock owned by Value
Management and Research, 250,000 represent shares of common stock underlying
warrants. 200,000 of these warrants are exercisable, based on various vesting
criteria, during the five year period commencing April 30, 1998, at exercise
prices ranging from $4.00 to $10.00 per share and 50,000 are exercisable during
the five year period commencing July 10, 1998 at an exercise price of $4.00.
Securities Securities
Owned Prior Securities Owned
to Offering(1) Offered Herein After Offering
-------------- -------------- --------------
Name of Selling Common
Securityholder Stock Warrants Common Stock Amount %
- -------------- ----- -------- ------------ ------ -
Value Management and 750,000 250,000 1,000,000(2) 0 0
Research AG
Plan of Distribution
Value Management and Research may sell the shares of common stock from
time to time in one or more transactions on the American Stock Exchange, in
special offerings, exchange distributions, secondary distributions, negotiated
transactions, or a combination of these transactions. It may sell at market
prices at the time of sale, at prices related to the market price or at
negotiated prices.
Sales of the common stock may also be made pursuant to Rule 144 under the
Securities Act of 1933, as amended, where applicable. Value Management and
Research's shares may also be offered in one or more underwritten offerings, on
a firm commitment or best efforts basis. We will not receive proceeds from the
sale of Value Management and Research's common stock.
Under applicable rule and regulations under the Exchange Act, any person
engaged in the distribution of the common stock may not bid for or purchase
shares of common stock
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during a period which commences one business day, or 5 business days if our
public float is less than $25 million or our average daily trading volume is
less than $100,000, prior to the person's participation in the distribution,
subject to exceptions for certain passive market making activities. In addition
and without limiting the foregoing, Value Management and Research will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M which may
limit the timing of purchases and sales of common stock by Value Management and
Research.
We are bearing all costs relating to the registration of the shares of
common stock, other than fees and expenses, if any, of counsel or other advisors
to Value Management and Research. Any commissions, discounts or other fees
payable to broker-dealers in connection with any sale of the shares of common
stock will be borne by Value Management and Research.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock and class A warrants
is Continental Stock Transfer and Trust Co., 2 Broadway, New York, New York
10004.
Legal Matters
The legality of the common stock offered in this prospectus has been
passed upon for us by Silverman, Collura, Chernis & Balzano, P.C., 381 Park
Avenue South, Suite 1601, New York, New York 10016.
Experts
The consolidated financial statements of Hemispherx as December 31, 1998
and 1997, and for each of the years in the three year period ended December 31,
1998, have been incorporated by reference in this prospectus and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, and upon the authority of KPMG LLP as experts in
accounting and auditing.
13
<PAGE>
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 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.
14
<PAGE>
================================================================================
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
Hemispherx ................................................................ 2
Use of Proceeds ........................................................... 5
Risk Factors .............................................................. 6
Where you can find more
information about Hemispherx ............................................. 11
Resales by Selling Securityholders ........................................ 12
Plan of Distribution ...................................................... 12
Transfer Agent ............................................................ 13
Legal Matters ............................................................. 13
Experts ................................................................... 13
Disclosure of Commission Position ......................................... 14
--------------------
================================================================================
================================================================================
1,000,000 SHARES
OF COMMON STOCK
HEMISPHERX BIOPHARMA, INC.
----------
PROSPECTUS
----------
____________, 1999
================================================================================
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee $ 2,159.09
Printing $ 2,500*
Legal Fees and Expenses $10,000*
Accounting Fees and Expenses $ 2,500*
Miscellaneous Expenses (including travel
and promotional expenses) $ 1,000*
TOTAL $18,159*
*Estimated
The Selling Securityholders will not pay any portion of the foregoing
expenses of issuance and distribution.
Item 15. Indemnification of Directors and Officers.
The Restated Certificate of Incorporation of the Company provides as
follows:
No person who is or was a director of this Corporation shall be
personally liable to the Corporation or its stockholders for monetary
damages for the breach of any fiduciary duty as a director, unless, and
only to the extent that, such director is liable (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholder, (ii) for
acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction form
which the director derived an improper personal benefit.
Section 145 of the Delaware General Corporation Law gives Delaware
corporations the power to indemnify each of the Company's present and former
officers and directors under certain circumstances, if such person acted in good
faith and in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the corporation. The Company's Restated Certificate of
Incorporation generally requires the Company to indemnify directors and officers
to the fullest extent permissible under Delaware law.
The Company has entered into indemnification agreements with its current
directors and certain of its executive officers. These agreements have the
practical effect in certain cases of eliminating the ability of stockholders to
collect monetary damages from such individuals.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedule
(a) The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
(1)1.1 Form of Underwriting Agreement
(1)1.2 Form of Selected Dealer Agreement
(1)1.3 Form of Agreement Among Underwriters
(1)3.1 Amended and Restated Certificate of Incorporation of
Registrant, as amended, along with Certificates of
Designations, Rights and Preferences of Series A1, A2, B
and C Preferred Stock, as amended
(1)3.2 By-laws of Registrant, as amended
(2)3.3 Certificate of Designations of Series D Preferred Stock
(2)3.4 Certificate of Correction to Certificate of Designations of
Series D Preferred Stock
(3)3.5 Certificate of Designations of Series E Preferred Stock
(1)4.1 Specimen certificate representing Registrant's Common Stock
(1)4.2 Form of Class A Redeemable Warrant Certificate
(1)4.3 Form of Underwriter's Unit Option Purchase Agreement
(1)4.4 Form of Class A Redeemable Warrant Agreement with
Continental Stock Transfer and Trust Company
5.1 Opinion of Silverman, Collura & Chernis, P.C. with respect
to legality of the securities of the Registrant being
registered
(1)10.1 Registration Rights Agreement, dated as of May 9, 1989
(1)10.2 Subordination Agreement, dated as of September 18, 1992
(1)10.3 Series A1 and Series A2 Preferred Stock Purchase Agreement,
dated as of January 22, 1991
II-2
<PAGE>
(1)10.4 Sixth Amendment Agreement, dates as of March 31, 1994,
amending the Series A1 and Series A2 Preferred Stock
Purchase Agreement
(1)10.5 Seventh Amendment Agreement, dated as of January 1, 1995,
amending the Series A1 and Series A2 Preferred Stock
Purchase Agreement
(1)10.6 Form of Series C Preferred Stock Subscription Agreement,
dated as of June 22, 1993
(1)10.7 Form of Series C Debt Subscription Agreement, dates as of
June 30, 1993
(1)10.8 Form of Note issued with respect to Series C Debt
Subscription Agreement, dated as of June 30, 1993
(1)10.9 Form of Warrant issued with respect to Series C Debt
Subscription Agreement, dated as of June 30, 1993
(1)10.10 Cohn Restructuring Agreement, dated as of March 31, 1994
(1)10.11 Form of Warrant issued with respect to Cohn Restructuring
Agreement, dated as of March 31, 1994
(1)10.12 Note issued with respect to Cohn Restructuring Agreement,
dated as of March 31, 1994
(1)10.13 Letter Agreement, dated April 14, 1994 between the
Registrant and Maryann Charlap and Promissory Notes
(1)10.14 Letter Agreement, dated July 13, 1994 between Bridge
Ventures, Inc. and the Registrant
(1)10.15 Letter Agreement dated September 20, 1994 between Maryann
Charlap and Lloyd DeVos
(1)10.16 Letter Agreement, dated November 1, 1994 among the
Registrant, Bridge Ventures, Inc. and Myron Cherry
(1)10.17 Form of Bridge Loan Agreement and Promissory Note
(1)10.18 [Intentionally left blank]
(1)10.19 Form of Registration Rights Agreement issued pursuant to
1994 Common Stock Financing Subscription Agreement
II-3
<PAGE>
(1)10.20 Form of Proxy issued pursuant to 1994 Common Stock
Financing Subscription Agreement
(1)10.21 Standby Financing Agreement, dated June 2, 1995, as amended
September 20, 1995
(1)10.22 Tisch/Tsai Entities Stock Pledge Agreement, dated February
28, 1995
(1)10.23 Tisch/Tsai Entities Settlement Agreement, dated February
28, 1995
(1)10.24 Form of Promissory Note with Tisch/Tsai Entities
(1)10.25 Form of Warrant with Tisch/Tsai Entities
(1)10.26 Letter Agreement, dated May 4, 12995 between the Registrant
and Gerald Brauser
(1)10.27 Brauser Note, dated May 2, 1995
(1)10.28 1990 Stock Option Plan
(1)10.29 1992 Stock Option Plan
(1)10.30 1993 Employee Stock Purchase Plan
(1)10.31 Form of Confidentiality, Invention and Non-Compete
Agreement
(1)10.32 Form of Clinical Research Agreement
(1)10.33 Form of Collaboration Agreement
(1)10.34 Employment Agreement by and between the Registrant and John
R. Rapoza, dated May 18, 1992
(1)10.35 Employment Agreement by and between the Registrant and
James R. Owen, dated September 21, 1992
(1)10.36 Amended and Restated Employment Agreement by and between
the Registrant and Dr. William A. Cater, dated as of July
1, 1993
(1)10.37 Employment Agreement by and between Registrant and Harris
Freedman, dated August 1, 1994
(1)10.38 Employment Agreement by and between the Registrant and
Sharon Will, dated August 1 1994
II-4
<PAGE>
(1)10.39 License Agreement by and between the Registrant and the
Johns Hopkins University, dated December 31, 1980
(1)10.40 Technology Transfer, Patent License and Supply Agreement by
and between the Registrant, Pharmacia LKB Biotechnology
Inc., Pharmacio P-L Biochemicals Inc. and E.I. du Pont de
Nemours and Company, dated November 24, 1987
(1)10.41 Pharmaceutical Use Agreement, by and between the Registrant
and Temple University, dated August 3, 1988
(1)10.42 Assignment and Research Support Agreement by and between
the Registrant, Hahnemann University and Dr. David Strayer,
Dr. Isadore Brodsky and Dr. David Gillespie, dated June 30,
1989
(1)10.43 Lease Agreement between the Registrant and Red Gate III
Limited Partnership, dated November 1, 1989, relating to
the Registrant's Rockville, Maryland facility
(1)10.44 Fee Agreement between the Registrant and Choate, Hall &
Stewart, dated January 27, 1993
(1)10.45 Settlement and Release Agreement between the Registrant and
Lloyd DeVos, dated August 18, 1994
(1)10.46 Agreement between the Registrant and Bioclones
(Proprietary) Limited
(1)10.47 Licensing Agreement with Core BioTech Corp.
(1)10.48 Licensing Agreement with BioPro Corp.
(1)10.49 Licensing Agreement with BioAegean Corp.
(1)10.50 Letter Agreement, dated may 12, 1992, between the
Registrant and Dr. Werner E.G. Muller
(1)10.51 Amendment, dated August 3, 1995, to Agreement between the
Registrant and Bioclones (Proprietary) Limited (contained
in Exhibit 10.46)
(1)10.52 Agreement, dated July 16, 1995, between the Registrant,
Vernacular Communications, Inc. Gerald Souham, Mitchell L.
Reisman, Craig S. O'Keefe and Robert C. Conaboy
(1)10.53 Agreement, dated June 27, 1995, between the Registrant and
The Sage Group
II-5
<PAGE>
(1)10.54 Form of Indemnification Agreement
(1)10.55 Agreement, dated September 13, 1995, between the Registrant
and River Pharma Inc.
(2)10.56 Series D Preferred Stock Subscription Agreement, dated June
28, 1996
(2)10.57 Series D Preferred Stock Registration Rights Agreement,
dated June 28, 1996
(2)10.58 GFL Advantage Fund Limited Common Stock Purchase Warrant,
dated June 28, 1996
(3)10.59 Series E Preferred Stock Registration Rights Agreement
(4)10.60 Value Management & Research, AG Subscription Agreement
dated July 20, 1998
(1)11 Calculation of Earnings Per Share
(1)14.1 Material Foreign Patents
(1)21 Subsidiaries of the Registrant
23.1 Consent of Silverman, Collura, Chernis & Balzano, P.C.
(included in Exhibit 5.1)
23.2 Consent of KMPG LLP
(1) Incorporated by reference from the Company's Registration Statement on
Form S-1 (Registration No. 33-93314) declared effective by the Securities
and Exchange Commission on November 2, 1995.
(2) Incorporated by reference from the Company's Registration Statement on
Form S-1 (Registration No. 333-8941) declared effective by the Securities
and Exchange Commission on September 16, 1996.
(3) Incorporated by reference from the Company's Registration Statement on
Form S-1 (Registration No. 333-24983) declared effective by the Securities
and Exchange Commission on April 18, 1997.
(4) Previously filed herewith.
b. Financial Statement Schedules.
II-6
<PAGE>
All schedules are omitted from this Registration Statement because they
are not required or the required information is included in the Consolidated
Financial Statement or the Notes thereto.
Item 17. Undertakings.
(a) Rule 415 Offerings.
The undersigned issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the Registration Statement; and
(iii) Includes any additional or changed material information
on the plan of distribution.
provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) Request for acceleration of effective date.
(1) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the issuer
of expenses incurred or paid by a director, officer or controlling person of the
issuer in the successful defense of any action, suit or
II-7
<PAGE>
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the issuer 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 court.
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-8
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing this Amendment No. 2 to Form S-3 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Philadelphia, State of Pennsylvania, on March 8, 1999.
HEMISPHERX BIOPHARMA, INC.
By: s/William A. Carter
-------------------------------------
William A. Carter, President and CEO
In accordance with the requirements of the Securities Act, this
Registration statement was signed by the following persons in the capacities and
on the dates stated.
Signature Title Date
--------- ----- ----
Principal Executive Officer
and Chairman of the Board
and as Power of Attorney
s/William A. Carter for Members of the Board March 8, 1999
- ---------------------------
William A. Carter, M.D.
Principal Financial Officer and
s/Robert E. Peterson Principal Accounting Officer March 8, 1999
- ---------------------------
Robert E. Peterson
s/Richard Piani Director March 8, 1999
- ---------------------------
Richard C. Piani
s/Ransom W. Etheridge Director March 8, 1999
- ---------------------------
Ransom W. Etheridge
s/William Mitchell Director March 8, 1999
- ---------------------------
William Mitchell
February 2, 1999
Hemispherx Biopharma, Inc.
1617 JFK Boulevard
Philadelphia, Pennsylvania 19103
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Hemispherx Biopharma, Inc. ("Company"), a
Delaware corporation, pursuant to Registration Statement on Form S-3, as filed
with the Securities and Exchange Commission on December 8, 1998 ("Registration
Statement"), covering (i) 750,000 shares of the Company's common stock, $.001
par value ("Common Stock"); and (ii) 250,000 shares of Common Stock underlying
warrants.
In acting as counsel for the Company and arriving at the opinions as
expressed below, we have examined and relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein.
In connection with our examination we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, the
legal capacity of natural persons and the conformity to original documents of
all documents submitted to us as certified or photostated copies.
Based on the foregoing, and subject to the qualifications and limitations
set forth herein, it is our opinion that:
1. The Company has authority to issue the Common Stock in the manner
and under the terms set forth in the Registration Statement.
<PAGE>
Hemispherx Biopharma, Inc.
February 2, 1999
Page 2
2. The Common Stock has been duly authorized and is validly issued,
fully paid and non-assessable. The Common Stock underlying the warrants have
been duly authorized and when issued, delivered and paid for in accordance with
the warrants' terms terms, will be validly issued, fully paid and
non-assessable.
We express no opinion with respect to the laws other than those of the
State of New York and Federal Laws of the United States of America, and we
assume no responsibility as to the applicability thereto, or the effect thereon,
of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and its use as part of the Registration Statement.
We are furnishing this opinion to the Company in connection with the
Registration Statement. It is not to be used, circulated, quoted or otherwise
referred to for any other purpose.
Very truly yours,
SILVERMAN, COLLURA, CHERNIS
& BALZANO, P.C.
/s/ SILVERMAN, COLLURA, CHERNIS & BALZANO, P.C.
The Board of Directors
Hemispherx Biopharma, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "experts" in the prospectus.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 8, 1999
