As
filed with the Securities and Exchange Commission on August 23,
2006
Registration
No. 333-
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________________
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________________
BIOSANTE
PHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
58-2301143
(I.R.S.
Employer
Identification
Number)
|
_______________________
111
Barclay Boulevard
Lincolnshire,
Illinois 60069
(847)
478-0500
(Address,
including zip code, and telephone number, including area code, of registrant’s
principal executive offices)
_______________________
Phillip
B. Donenberg
Chief
Financial Officer, Treasurer and Secretary
BioSante
Pharmaceuticals, Inc.
111
Barclay Boulevard
Lincolnshire,
Illinois 60069
(847)
478-0500
(Name,
address, including zip code, and telephone number, including area code, of
agent
for service)
_______________________
Copy
to:
Amy
E. Culbert, Esq.
Oppenheimer
Wolff & Donnelly LLP
45
South Seventh Street, Suite 3300
Minneapolis,
Minnesota 55402
(612)
607-7287
_______________________________________
Approximate
date of commencement of proposed sale to the public:
From
time to time after this registration statement becomes
effective.
_______________________________________
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box: o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or 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. o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes or securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
CALCULATION
OF REGISTRATION FEE
|
Title
of each class of
securities
to be registered
|
Amount
to be registered (1)
|
Proposed
maximum offering price per unit (2)
|
Proposed
maximum aggregate offering price (2)
|
Amount
of registration fee
|
|
Common
Stock, par value $0.0001 per share
|
5,147,520
|
$2.01
|
$10,346,515
|
$1,107.08
|
(1) The
amount to be registered hereunder consists of an aggregate of 5,147,520 shares
of common stock to be sold by the selling stockholders named in this
registration statement. Of the shares of common stock, 3,812,978 shares are
currently outstanding and 1,334,542 shares are issuable upon the exercise of
warrants. In addition, pursuant to Rule 416 under the Securities Act of 1933,
this registration statement includes an indeterminate number of additional
shares that may be offered and sold to prevent dilution resulting from stock
splits, stock dividends or similar transactions.
(2) Estimated
solely for the purpose of calculating the amount of the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based upon the average
of the high and low sale prices of the registrant’s common stock on August 21,
2006, as reported by the American Stock Exchange.
The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
may
determine.
|
The
information in this prospectus is not complete and may be changed.
We may
not sell these securities until the Securities and Exchange Commission
declares our registration statement effective. This prospectus is
not an
offer to sell these securities and is not soliciting an offer to
buy these
securities in any state where the offer or sale is not
permitted.
|
Subject
to Completion, dated August 23, 2006
PRELIMINARY
PROSPECTUS
5,147,520
Shares
Common
Stock
___________________
Selling
stockholders of BioSante Pharmaceuticals, Inc. are offering an aggregate of
5,147,520 shares of common stock. These shares may be offered from time to
time
by the selling stockholders through public or private transactions, on or off
the American Stock Exchange, at prevailing market prices or at privately
negotiated prices. BioSante will not receive any proceeds from the sale of
shares offered by the selling stockholders.
The
shares of common stock offered will be sold as described under the heading
“Plan
of Distribution,” beginning on page 25.
Our
common stock is listed on the American Stock Exchange under the symbol “BPA.” On
August 21, 2006, the last sale price of our common stock on the American Stock
Exchange was $1.99 per share.
___________________
The
common stock offered involves a high degree of risk. We refer you to “Risk
Factors,” beginning on page 9.
___________________
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal offense.
___________________
The
date
of this prospectus is
,
2006
TABLE
OF CONTENTS
|
Page
|
|
| WHERE YOU CAN FIND MORE INFORMATION |
3
|
| INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE |
3
|
| CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS |
5
|
| SUMMARY |
6
|
| RISK FACTORS |
9
|
| USE OF PROCEEDS |
21
|
| SELLING STOCKHOLDERS |
22
|
| PLAN OF DISTRIBUTION |
26
|
| LEGAL MATTERS |
28
|
| DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES |
28
|
| EXPERTS |
29
|
____________________
In
this prospectus, references to “BioSante,” the
“company,” “we,”
“our” or “us,” unless
the context otherwise requires, refer to BioSante Pharmaceuticals,
Inc.
We
own or have the rights to use various trademarks, trade names or service marks,
including BioSante®,
BioVant™, NanoVant™, CAP-Oral™, BioAir™, Bio-E-Gel®,
Bio-E/P-Gel™, LibiGel®,
LibiGel-E/T™ and Bio-T-Gel™.
____________________
You
should rely only on the information contained in this prospectus. We have not
authorized any other person to provide you with different information. This
prospectus may only be used where it is legal to sell these securities. The
information in this prospectus is accurate as of the date on the front cover.
You should not assume that the information contained in this prospectus is
accurate as of any other date.
____________________
This
prospectus does not constitute an offer to sell, or a solicitation of an offer
to purchase, the securities offered by this prospectus or the solicitation
of a
proxy, in any jurisdiction to or from any person to whom or from whom it is
unlawful to make an offer, solicitation of an offer or proxy solicitation in
that jurisdiction.
WHERE
YOU CAN FIND MORE INFORMATION
We
have
filed a registration statement on Form S-3 with the SEC for the common stock
offered by the selling stockholders under this prospectus. This prospectus
does
not include all of the information contained in the registration statement.
You
should refer to the registration statement and its exhibits for additional
information that is not contained in this prospectus. Whenever we make reference
in this prospectus to any of our contracts, agreements or other documents,
you
should refer to the exhibits attached to the registration statement for copies
of the actual contract, agreement or other document.
We
file
reports, proxy statements and other information with the Securities and Exchange
Commission. Copies of our reports, proxy statements and other information may
be
inspected and copied at the following public reference facility maintained
by
the SEC:
|
100
F Street, N.E, Washington,
D.C. 20549
|
Copies
of
these materials also can be obtained by mail at prescribed rates from the Public
Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549 or
by
calling the SEC at 1-800-SEC-0330. The SEC maintains a web site that contains
reports, proxy statements and other information regarding us. The address of
the
SEC web site is http://www.sec.gov.
Our
common stock is listed on the American Stock Exchange. Reports and other
information concerning BioSante may also be inspected at the offices of the
American Stock Exchange, 86 Trinity Place, Seventh Floor, New York, NY 10006
or
on the American Stock Exchange website at http://www.amex.com.
We
also
file annual audited and interim unaudited financial statements, proxy statements
and other information with the Ontario, Alberta and British Columbia Securities
Commissions. Copies of these documents that are filed through the System for
Electronic Document Analysis and Retrieval “SEDAR” of the Canadian Securities
Administrators are available at its web site http://www.sedar.com.
In
addition, we maintain a web site that contains information regarding our
company, including copies of reports, proxy statements and other information
we
file with the SEC. The address of our web site is www.biosantepharma.com.
Our web
site, and the information contained on that site, or connected to that site,
are
not intended to be part of this prospectus.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC
allows us to “incorporate by reference” into this prospectus the information
contained in the documents we file with the SEC, 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 update and
supersede this information. We are incorporating by reference the following
documents into this prospectus:
| · |
our
Annual Report on Form 10-K for the year ended December 31,
2005;
|
| · |
our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006
and
June 30, 2006;
|
| · |
our
Current Reports on Form 8-K filed on February 1, 2006, February 17,
2006,
March 22, 2006, May 26, 2006, June 12, 2006, July 10, 2006 and July
24,
2006; and
|
3
| · |
the
description of our common stock contained in our registration statement
on
Form 8-A and any amendments or reports filed for the purpose of updating
such description.
|
We
are
also incorporating by reference any future filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
after
the date of this prospectus and prior to the termination of the offering of
the
securities to which this prospectus relates. In no event, however, will any
of
the information that we “furnish” to the SEC in any Current Report on Form 8-K
or any other report or filing be incorporated by reference into, or otherwise
included in, this prospectus.
You
may
request of copy of these filings, at no cost, by writing to Phillip B.
Donenberg, Chief Financial Officer, Treasurer and Secretary, BioSante
Pharmaceuticals, Inc., 111 Barclay Boulevard, Lincolnshire, Illinois 60069,
by
telephone at (847) 478-0500 ext. 101 or by email at
donenber@biosantepharma.com.
4
CAUTIONARY
STATEMENT CONCERNING
FORWARD-LOOKING
STATEMENTS
This
prospectus, including the documents that we incorporate by reference, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended,
and are subject to the safe harbor created by those sections. All statements
other than statements of historical facts included in or incorporated by
reference into this prospectus that address activities, events or developments
that we expect, believe or anticipate will or may occur in the future are
forward-looking statements including, in particular, the statements about our
plans, objectives, strategies and prospects regarding, among other things,
our
financial condition, results of operations and business. We have identified
some
of these forward-looking statements with words like “believe,” “may,” “could,”
“might,” “possible,” “potential,” “project,” “will,” “should,” “expect,”
“intend,” “plan,” “predict,” “anticipate,” “estimate,” “approximate,”
“contemplate” or “continue” and other words and terms of similar meaning. Our
forward-looking statements generally relate to:
| · |
the
timing of the commencement and completion of our clinical trials
and other
regulatory status of our proposed
products;
|
| · |
our
spending capital on research and development programs, pre-clinical
studies and clinical trials, regulatory processes, establishment
of
marketing capabilities and licensure or acquisition of new
products;
|
| · |
whether
and how long our existing cash will be sufficient to fund our
operations;
|
| · |
our
need and ability to raise additional capital through future equity
and
other financings; and
|
| · |
our
substantial and continuing losses.
|
Forward-looking
statements involve risks and uncertainties. These uncertainties include factors
that affect all businesses as well as matters specific to us. Some of the
factors known to us that could cause our actual results to differ materially
from what we have anticipated in our forward-looking statements are described
under the heading “Risk Factors” included elsewhere in this
prospectus.
We
wish
to caution readers not to place undue reliance on any forward-looking statement
that speaks only as of the date made and to recognize that forward-looking
statements are predictions of future results, which may not occur as
anticipated. Actual results could differ materially from those anticipated
in
the forward-looking statements and from historical results, due to the risks
and
uncertainties described under the heading “Risk Factors” included elsewhere in
this prospectus, as well as others that we may consider immaterial or do not
anticipate at this time. Although we believe that the expectations reflected
in
our forward-looking statements are reasonable, we do not know whether our
expectations will prove correct. Our expectations reflected in our
forward-looking statements can be affected by inaccurate assumptions we might
make or by known or unknown risks and uncertainties, including those described
below under the heading “Risk Factors” included elsewhere in this prospectus.
The risks and uncertainties described under the heading “Risk Factors” included
elsewhere in this prospectus are not exclusive and further information
concerning us and our business, including factors that potentially could
materially affect our financial results or condition, may emerge from time
to
time. We assume no obligation to update forward-looking statements to reflect
actual results or changes in factors or assumptions affecting such
forward-looking statements. We advise you, however, to consult any further
disclosures we make on related subjects in our annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K we file
with or furnish to the Securities and Exchange Commission.
5
SUMMARY
Our
Company
We
are a
development stage biopharmaceutical company that is developing a pipeline of
hormone therapy products to treat men and women. We also are engaged in the
development of our proprietary calcium phosphate nanotechnology, or CaP,
primarily for vaccine adjuvants or immune system boosters and drug delivery
systems.
Our
hormone therapy products, most of which we license on an exclusive basis from
Antares Pharma, Inc., address a variety of hormone therapies for symptoms that
affect both men and women. Symptoms addressed by these hormone therapies include
impotence, lack of sex drive, muscle weakness and osteoporosis in men and
menopausal symptoms in women including hot flashes, vaginal atrophy, decreased
libido and osteoporosis. The products are gel formulations of testosterone,
estradiol, a combination of estradiol and testosterone and a combination of
estradiol and progestogen.
The
gels
are designed to be quickly absorbed through the skin after application on the
arms, shoulders, abdomen or thighs, delivering the hormone to the bloodstream
evenly and in a non-invasive, painless manner. The gels are formulated to be
applied once per day and to be absorbed into the skin without a trace of
residue.
The
following is a list of our hormone therapy gel products:
| · |
Bio-E-Gel
- once daily transdermal bioidentical estrogen gel in development
for
treatment of menopausal symptoms in
women.
|
| · |
LibiGel
- once daily transdermal bioidentical testosterone gel in development
for
treatment of female sexual dysfunction
(FSD).
|
| · |
Bio-E/P-Gel
- once daily transdermal combination gel of bioidentical estrogen
and a
progestogen for treatment of menopausal symptoms in
women.
|
| · |
LibiGel-E/T
- once daily transdermal combination gel of bioidentical estrogen
and
bioidentical testosterone for treatment of FSD in menopausal
women.
|
| · |
Bio-T-Gel
- once daily transdermal bioidentical testosterone gel for treatment
of
hypogonadism, or testosterone deficiency, in
men.
|
We
have
conducted human clinical trials on several of our hormone therapy products,
which are required to obtain U.S. Food and Drug Administration, or FDA, approval
to market the products. We completed our pivotal Phase III clinical trial of
Bio-E-Gel in March 2005 and submitted our New Drug Application, or NDA, to
the FDA in February 2006. We hope to commercially launch our Bio-E-Gel product
upon obtaining FDA approval, which we hope to receive in late 2006 or early
2007. Our proposed LibiGel product successfully completed a Phase II clinical
trial, and we are currently in the planning stage for our Phase III clinical
trials which we hope to begin by year-end 2006. We have not received FDA or
any
other government approval for any of our products and thus have not
commercialized any of them in the United States or elsewhere.
6
We also
are developing our CaP technology, several of whose issued patents we
license on an exclusive basis from the University of California, for novel
vaccines, including avian flu and biodefense vaccines for toxins such as anthrax
and ricin, and drug delivery systems. Our CaP technology is based on the use
of
extremely small, uniform particles, which we call “nanoparticles.” We are
pursuing the development of the following potential initial applications for
our
CaP technology:
| · |
the
creation of improved versions of current vaccines and of new vaccines
by
the “adjuvant” activity of our proprietary nanoparticles that enhance the
ability of a vaccine to stimulate an immune response. The same
nanoparticles allow for delivery of the vaccine via alternative routes
of
administration including non-injectable routes of administration;
and
|
| · |
the
creation of oral, buccal, intranasal and inhaled delivery of drugs
that
currently must be given by injection (e.g., insulin).
|
The
following is a list of our CaP products in development:
| · |
BioVant
-- proprietary CaP adjuvant and delivery technology in development
for
improved versions of current vaccines and new vaccines against avian
flu
and biodefense vaccines such as anthrax and
ricin.
|
| · |
CAP-Oral
-- a delivery system using CaP technology for oral/buccal/intranasal
administration of proteins and other therapies that currently must
be
injected.
|
| · |
BioAir
-- a delivery system using CaP technology for inhalable versions
of
proteins and other therapies that currently must be
injected.
|
Our
strategy with respect to CaP is to continue development of our CaP technology
and actively seek collaborators and licensees to fund and accelerate the
development and commercialization of products incorporating the technology.
We
have entered into an agreement with the U.S. Army’s Medical Research Institute
of Infectious Disease for the development of non-injected biodefense vaccines,
including anthrax, staph and ricin, and an agreement with DynPort Vaccine
Company LLC for the development of anthrax vaccines for delivery via alternative
routes of administration, including nasal, oral and needle-free transcutaneous
routes. We also have entered into a Material Transfer and Option Agreement
for
an option to obtain an exclusive, worldwide license to use our CaP in the
development of a series of allergy products, a subcontract with the University
of Nebraska-Lincoln for the development of recombinant Factor IX formulations
for delivery via alternative routes of administration, and an exclusive option
and license agreement with Medical Aesthetics Technology Corporation, or MATC,
for the use of our CaP technology in the field of aesthetic
medicine.
Business
Strategy
To
enhance the value of our company, we are pursuing the following corporate growth
strategies:
| · |
pursuing
the development of our hormone therapy
products;
|
| · |
continuing
to develop our nanoparticle-based CaP platform technology and seeking
assistance in such development through government agencies and corporate
partner sublicenses;
|
| · |
implementing
business collaborations or joint ventures with other pharmaceutical
and
biotechnology companies; and
|
| · |
licensing
or otherwise acquiring other drugs that will add value to our current
product portfolio.
|
7
Other
Information About Our Company
Our
company, which was initially formed as a corporation organized under the laws
of
the Province of Ontario on August 29, 1996, was continued as a corporation
under
the laws of the State of Wyoming on December 19, 1996 and was reincorporated
under the laws of the State of Delaware on June 26, 2001.
Our
principal executive offices are located at 111 Barclay Boulevard, Lincolnshire,
Illinois 60069. Our telephone number is (847) 478-0500 and our Internet web
site
address is www.biosantepharma.com.
The
information contained on our web site or connection to our web site is not
incorporated by reference into and should not be considered part of this
prospectus.
The
Offering
|
Common
stock offered by selling stockholders
|
5,147,520
shares
|
|
Use
of proceeds
|
BioSante
will not receive any of the proceeds from the sale of the shares
offered
hereby. See “Use of Proceeds.”
|
|
American
Stock Exchange Symbol
|
BPA
|
8
RISK
FACTORS
This
offering involves a high degree of risk. You should carefully consider the
risks
and uncertainties described below in addition to the other information contained
in this prospectus, or incorporated into this prospectus by reference, including
the section entitled “Cautionary Statement Concerning Forward-Looking
Statements,” before deciding whether to invest in shares of our common stock. If
any of the following risks actually occur, our business, financial condition
or
operating results could be harmed. In that case, the trading price of our common
stock could decline, and you may lose part or all of your investment. The risks
and uncertainties described below are not the only ones facing BioSante.
Additional risks and uncertainties not currently known to us or that we
currently deem immaterial may also impair our business operations and adversely
affect the market price of our common stock.
We
have a history of operating losses, expect continuing losses and may never
achieve profitability.
We
have
incurred losses in each year since our amalgamation in 1996 and expect to incur
substantial and continuing losses for the foreseeable future. We incurred a
net
loss of $9,651,036 for the year ended December 31, 2005, and as of December
31,
2005, our accumulated deficit was $49,688,320. We incurred a net loss of
$5,453,395 for the six month period ended June 30, 2006, and as of June 30,
2006, our accumulated deficit was $55,141,715.
All
of
our revenue to date has been derived from upfront and milestone payments earned
on licensing and sub-licensing transactions and revenue earned from
subcontracts. We have not commercially introduced any products. We expect to
incur substantial and continuing losses for the foreseeable future as our own
product development programs expand and various preclinical and clinical trials
commence. The amount of these losses may vary significantly from year-to-year
and quarter-to-quarter and will depend on, among other factors:
| · |
the
timing and cost of product
development;
|
| · |
the
progress and cost of preclinical and clinical development
programs;
|
| · |
the
costs of licensure or acquisition of new
products;
|
| · |
the
timing and cost of obtaining necessary regulatory
approvals;
|
| · |
the
timing and cost of obtaining third party reimbursement;
and
|
| · |
the
timing and cost of sales and marketing activities for future
products.
|
In
order
to generate new and significant revenues, we must successfully develop and
commercialize our own proposed products or enter into collaborative agreements
with others who can successfully develop and commercialize them. Even if our
proposed products and the products we may license or otherwise acquire are
commercially introduced, they may never achieve market acceptance and we may
never generate significant revenues or achieve profitability.
We
will need to raise substantial additional capital in the future to fund our
operations and we may be unable to raise such funds when needed and on
acceptable terms.
We
currently do not have sufficient resources to complete the commercialization
of
any of our proposed products. Our cash, cash equivalents and short-term
investments as of June 30, 2006 were $4,505,231. On July 21, 2006, we completed
a private placement of 3,812,978 shares of our common stock and warrants to
purchase 1,334,542 shares of our common stock at a purchase price of $2.00
per
share. The private placement resulted in net proceeds of approximately $7.2
million, after deduction of transaction expenses. We believe our cash will
be
sufficient to fund our operations through at least the next 12 months. We have
based this estimate on assumptions that may prove to be wrong. As a result,
we
will need to raise substantial additional capital to fund our operations
sometime in the future. Our future capital requirements will depend upon
numerous factors, including:
9
| · |
the
progress and costs of our research and development
programs;
|
| · |
the
scope, timing and results of our clinical
trials;
|
| · |
patient
recruitment and enrollment in our current and future clinical
trials;
|
| · |
the
cost, timing and outcome of regulatory
reviews;
|
| · |
the
rate of technological advances;
|
| · |
ongoing
determinations of the potential commercial success of our proposed
products;
|
| · |
our
general and administrative
expenses;
|
| · |
if
we receive FDA approval of any of our proposed products and choose
to
commercialize them ourselves, the amount of resources we devote to
sales
and marketing capabilities;
|
| · |
the
activities of our competitors; and
|
| · |
our
opportunities to acquire new products or take advantage of other
unanticipated opportunities.
|
Financing
may not be available when needed or will be on terms acceptable to us.
Insufficient funds may require us to delay, scale back or eliminate some or
all
of our programs designed to obtain regulatory approval of our proposed products,
delay the commercial introduction of our proposed products, prevent commercial
introduction of our products altogether or restrict us from acquiring new
products that we believe may be beneficial to our business.
We
are a development stage company, making it difficult for you to evaluate our
business and your investment.
We
are in
the development stage and our operations and the development of our proposed
products are subject to all of the risks inherent in the establishment of a
new
business enterprise, including:
| · |
the
absence of an operating history;
|
| · |
the
lack of commercialized products;
|
| · |
insufficient
capital;
|
| · |
expected
substantial and continual losses for the foreseeable
future;
|
| · |
limited
experience in dealing with regulatory
issues;
|
10
| · |
limited
marketing and manufacturing
experience;
|
| · |
an
expected reliance on third parties for the development and
commercialization of some of our proposed
products;
|
| · |
a
competitive environment characterized by numerous, well-established
and
well-capitalized competitors;
|
| · |
uncertain
market acceptance of our proposed products;
and
|
| · |
reliance
on key personnel.
|
Because
we are subject to these risks, you may have a difficult time evaluating our
business and your investment in our company.
Most
of our proposed products are in the development stages and will likely not
be
commercially introduced for one or more years, if at
all.
Most
of
our proposed products are in the development stages and will require further
development, preclinical and clinical testing and investment prior to
commercialization in the United States and abroad. We have not commercially
introduced any products and do not expect to do so until early 2007 at the
earliest depending upon the timing of the FDA’s decision on and approval of our
New Drug Application for our Bio-E-Gel product which was submitted in February
2006. We cannot assure you that any of our proposed products will:
| · |
be
successfully developed;
|
| · |
prove
to be safe and efficacious in clinical
trials;
|
| · |
meet
applicable regulatory standards or obtain required regulatory
approvals;
|
| · |
demonstrate
substantial protective or therapeutic benefits in the prevention
or
treatment of any disease;
|
| · |
be
capable of being produced in commercial quantities at reasonable
costs;
|
| · |
obtain
coverage and favorable reimbursement rates from insurers and other
third-party payors; or
|
| · |
be
successfully marketed or achieve market acceptance by physicians
and
patients.
|
If
we fail to obtain regulatory approval to commercially manufacture or sell any
of
our future products, or if approval is delayed or withdrawn, we will be unable
to generate revenue from the sale of our products.
We
must
obtain regulatory approval to sell any of our products in the United States
and
abroad. In the United States, we must obtain the approval of the FDA for each
product or drug that we intend to commercialize. The FDA approval process is
typically lengthy and expensive, and approval is never certain. Products to
be
commercialized abroad are subject to similar foreign government
regulation.
Generally,
only a very small percentage of newly discovered pharmaceutical products that
enter preclinical development are approved for sale. Because of the risks and
uncertainties in pharmaceutical development, our proposed products could take
a
significantly longer time to gain regulatory approval than we expect or may
never gain approval. If regulatory approval is delayed or never obtained, our
management’s credibility, the value of our company and our operating results and
liquidity would be adversely affected.
11
Furthermore,
even if a product gains regulatory approval, the product and the manufacturer
of
the product may be subject to continuing regulatory review. Even after obtaining
regulatory approval, we may be restricted or prohibited from marketing or
manufacturing a product if previously unknown problems with the product or
its
manufacture are subsequently discovered. The FDA may also require us to commit
to perform lengthy post-approval studies, for which we would have to expend
significant additional resources, which could have an adverse effect on our
operating results and financial condition.
To
obtain
regulatory approval to market our products, costly and lengthy pre-clinical
studies and human clinical trials are required, and the results of the studies
and trials are highly uncertain.
As
part
of the FDA approval process, we must conduct, at our own expense or the expense
of current or potential licensees, clinical trials on humans on each of our
proposed products. Pre-clinical studies on animals must be conducted on some
of
our proposed products. We expect the number of pre-clinical studies and human
clinical trials that the FDA will require will vary depending on the product,
the disease or condition the product is being developed to address and
regulations applicable to the particular product. We may need to perform
multiple pre-clinical studies using various doses and formulations before we
can
begin human clinical trials, which could result in delays in our ability to
market any of our products. Furthermore, even if we obtain favorable results
in
pre-clinical studies on animals, the results in humans may be
different.
After
we
have conducted pre-clinical studies in animals, we must demonstrate that our
products are safe and effective for use on the target human patients in order
to
receive regulatory approval for commercial sale. The data obtained from
pre-clinical and human clinical testing are subject to varying interpretations
that could delay, limit or prevent regulatory approval. We face the risk that
the results of our clinical trials in later phases of clinical trials may be
inconsistent with those obtained in earlier phases. A number of companies in
the
biopharmaceutical industry have suffered significant setbacks in advanced
clinical trials, even after experiencing promising results in early animal
or
human testing. Adverse or inconclusive human clinical results would prevent
us
from filing for regulatory approval of our products. Additional factors that
can
cause delay or termination of our human clinical trials include:
| · |
slow
patient enrollment;
|
| · |
timely
completion of clinical site protocol approval and obtaining informed
consent from subjects;
|
| · |
longer
treatment time required to demonstrate efficacy or
safety;
|
| · |
adverse
medical events or side effects in treated patients;
and
|
| · |
lack
of effectiveness of the product being
tested.
|
Delays
in
our clinical trials could allow our competitors additional time to develop
or
market competing products and thus can be extremely costly in terms of lost
sales opportunities and increased clinical trial costs.
12
A
request by an FDA advisory committee for additional safety data which may
require Procter & Gamble to conduct additional studies to learn more about
the long-term safety of testosterone treatment in women for FSD prior to
granting approval of Procter & Gamble’s Intrinsa testosterone patch could
increase the time, cost and expense of obtaining regulatory approval for our
LibiGel product, which might cause us to abandon the product depending on the
extent of the additional time and cost to develop
LibiGel.
In
December 2004, the FDA’s Reproductive Health Drugs Advisory Committee panel
voted unanimously against recommendation for approval of Procter & Gamble’s
Intrinsa testosterone patch for hypoactive sexual desire disorder. The panel’s
main concern was the desire to have long-term safety data particularly as it
pertains to potential increased risk of cardiovascular disease and breast cancer
in women treated chronically with testosterone in combination with estrogen.
Currently, the FDA has not explicitly publicly stated nor set any type of public
policy or guidance document as to what size or duration of a safety trial would
be required for approval. This FDA action with respect to Intrinsa or
testosterone products in general may affect the regulatory pathway for our
LibiGel product, as well as other similarly competitive products to treat HSDD
with testosterone therapy. The FDA’s final decision could increase the time,
cost and expense of obtaining regulatory approval for our LibiGel product,
which
might cause us to delay or abandon further development of the product depending
on the extent of the additional time and cost to develop LibiGel.
Several
pharmaceutical products have been found to have potentially life threatening
side effects and have been subsequently removed from the market. These drugs
had
been previously approved for sale by the FDA. The withdrawals of approved drugs
from the market create an increased risk for the pharmaceutical industry in
general in that certain proposed products may not receive the required
regulatory approval on a timely basis or ever. The withdrawal of Vioxx by Merck
& Co., Inc. has increased safety concerns of various groups including
physicians, patients, members of U.S. Congress and the FDA. Although marketed
product withdrawals have occurred over time, these withdrawals have resulted
and
may continue to result in a more cautious approach by the FDA in terms of
requirements for approval of new products before approval to market is granted.
These recent withdrawals could also result in additional requirements for safety
monitoring called pharmacovigilence after approval to market is granted. This
collective concern could result in longer, more expensive clinical trials before
approval and costly post-marketing surveillance programs and at the same time
could affect physicians’ desire to prescribe new medication before they are on
the market for a long period of time, all of which would adversely affect our
business, operating results and financial condition.
Uncertainties
associated with the impact of published studies regarding the adverse health
effects of certain forms of hormone therapy could adversely affect the market
for hormone therapy products and the trading price of our common
stock.
The
market for hormone therapy products has been negatively affected by the Women’s
Health Initiative study and other studies that have found that the overall
health risks from the use of certain hormone therapy products exceed the
benefits from the use of those products among healthy postmenopausal women.
In
July 2002, the National Institutes of Health (NIH) released data from its
Women’s Health Initiative (WHI) study on the risks and benefits associated with
long-term use of oral hormone therapy by healthy women. The NIH announced that
it was discontinuing the arm of the study investigating the use of oral
estrogen/progestin combination hormone therapy products after an average
follow-up period of 5.2 years because the product used in the study was shown
to
cause an increase in the risk of invasive breast cancer. The study also found
an
increased risk of stroke, heart attacks and blood clots and concluded that
overall health risks exceeded benefits from use of combined estrogen plus
progestin for an average of 5.2 year follow-up among healthy postmenopausal
women. Also in July 2002, results of an observational study sponsored by the
National Cancer Institute on the effects of estrogen therapy were announced.
13
The
main
finding of the study was that postmenopausal women who used estrogen therapy
for
10 or more years had a higher risk of developing ovarian cancer than women
who
never used hormone therapy. In October 2002, a significant hormone therapy
study
being conducted in the United Kingdom was also halted. Our proposed hormone
therapy products differ from the products used in the Women’s Health Initiative
study and the primary products observed in the National Cancer Institute and
United Kingdom studies. In March 2004, the NIH announced that the estrogen-alone
study was discontinued after nearly seven years because the NIH concluded that
estrogen alone does not affect (either increase or decrease) heart disease,
the
major question being evaluated in the study. The findings indicated a slightly
increased risk of stroke as well as a decreased risk of hip fracture and breast
cancer. Preliminary data from the memory portion of the WHI study suggested
that
estrogen alone may possibly be associated with a slight increase in the risk
of
dementia or mild cognitive impairment. Researchers continue to analyze data
from
both arms of the WHI study and other studies. Recent reports indicate that
the
safety of estrogen products may be affected by the age of the woman at
initiation of therapy. There currently are no studies published comparing the
safety of our proposed hormone therapy products against other hormone therapies.
The markets for female hormone therapies for menopausal symptoms have declined
as a result of these published studies. The release of any follow-up or other
studies that show adverse affects from hormone therapy, including in particular,
hormone therapies similar to our proposed products, would also adversely affect
our business.
Because
our industry is very competitive and many of our competitors have substantially
greater capital resources and more experience in research and development,
manufacturing and marketing than us, we may not succeed in developing our
proposed products and bringing them to market.
Competition
in the pharmaceutical industry is intense. Potential competitors in the United
States and abroad are numerous and include pharmaceutical, chemical and
biotechnology companies, most of which have substantially greater capital
resources and more experience in research and development, manufacturing and
marketing than us. Academic institutions, hospitals, governmental agencies
and
other public and private research organizations are also conducting research
and
seeking patent protection and may develop and commercially introduce competing
products or technologies on their own or through joint ventures. We cannot
assure you that our competitors (some of whom are our development partners)
will
not succeed in developing similar technologies and products more rapidly than
we
do, commercially introducing such technologies and products to the marketplace
prior than us, or that these competing technologies and products will not be
more effective or successful than any of those that we currently are developing
or will develop.
We
license the technology underlying most of our proposed hormone therapy products
and a portion of our CaP technology from third parties and may lose the rights
to license them, which could have a material adverse effect on our business,
financial position and operating results and could cause the market value of
our
common stock to decline.
We
license most of the technology underlying our proposed hormone therapy products
from Antares Pharma, Inc. and a portion of our CaP technology from the
University of California. We may lose our right to license these technologies
if
we breach our obligations under the license agreements. Although we intend
to
use our reasonable best efforts to meet these obligations, if we violate or
fail
to perform any term or covenant of the license agreements or with respect to
the
University of California’s license agreement within 60 days after written notice
from the University of California, the other party to these agreements may
terminate these agreements or certain projects contained in these agreements.
The termination of these agreements, however, will not relieve us of our
obligation to pay any royalty or license fees owing at the time of termination.
Our failure to retain the right to license the technology underlying our
proposed hormone therapy products or CaP technology could harm our business
and
future operating results.
14
For
example, if we were to enter into an outlicense agreement with a third party
under which we agree to outlicense our hormone therapy technology or CaP
technology for a license fee, the termination of the main license agreement
with
Antares Pharma, Inc. or the University of California could either, depending
upon the terms of the outlicense agreement, cause us to breach our obligations
under the outlicense agreement or give the other party a right to terminate
that
agreement, thereby causing us to lose future revenue generated by the outlicense
fees.
We
have licensed two of our proposed hormone therapy products to third parties
and
any breach by these parties of their obligations under these sublicense
agreements or a termination of these sublicense agreements by these parties
could adversely affect the development and marketing of our licensed products.
In addition, these third parties also may compete with us with respect to some
of our proposed products.
We
have
licensed two of our proposed hormone therapy product to third parties, Solvay
Pharmaceuticals, B.V. and Teva Pharmaceuticals USA, Inc., which have agreed
to
be responsible for continued development, regulatory filings and manufacturing
and marketing associated with the products. In addition, we may in the future
enter into additional similar license agreements. Our partnered products that
we
have licensed to others are thus subject to not only customary and inevitable
uncertainties associated with the drug development process, regulatory approvals
and market acceptance of products, but also depend on the respective licensees
for timely development, obtaining required regulatory approvals,
commercialization and otherwise continued commitment to the products. Our
current and future licensees may have different and, sometimes, competing
priorities. Teva USA has discontinued development of Bio-T-Gel and indicated
to
us a desire to formally terminate this agreement. Accordingly, we are in the
process of exploring various alternatives with respect to our Bio-T-Gel product,
including licensing the product to another third party or continuing the
development of the product ourselves. We cannot assure you that Solvay or any
future third party to whom we may license our proposed products will remain
focused on the development and commercialization of our partnered products
or
will not otherwise breach the terms of our agreements with them, especially
since these third parties may also compete with us with respect to some of
our
proposed products. Any breach by Solvay or any other third party of their
obligations under these agreements or a termination of these agreements by
these
parties could adversely affect development of the products in these agreements
if we are unable to sublicense the proposed products to another party on
substantially the same or better terms or continue the development and future
commercialization of the proposed products ourselves.
We
do not have any facilities appropriate for clinical testing, we lack significant
manufacturing experience and we have very limited sales and marketing personnel.
We are currently dependent upon our licensees or others for several of these
functions and may remain dependent upon others for these
functions.
We
do not
have a manufacturing facility that can be used for production of our products.
In addition, at this time, we have very limited sales and marketing personnel.
We are currently dependent upon our licensees or others for several of these
functions. In the course of our development program, we may be required to
enter
into additional arrangements with other companies, universities or clinical
investigators for our animal testing, human clinical testing, manufacturing
and
sales and marketing activities. Alternatively, we may decide to add additional
personnel and perform some of these functions ourselves, such as sales and
marketing activities. If our licensees or other third parties in which we have
entered into agreements breach their obligations under our agreements to perform
these functions or if we are otherwise unable to retain third parties for these
purposes on acceptable terms or perform such functions successfully ourselves,
we may be unable to successfully develop, manufacture and market our proposed
products.
15
In
addition, any failures by our licensees or other third parties to adequately
perform their responsibilities may delay the submission of our proposed products
for regulatory approval, impair our ability to deliver our products on a timely
basis or otherwise impair our competitive position. Our dependence on our
licensees and other third parties for the development, manufacture, sale and
marketing of our products also may adversely affect our profit
margins.
Even
if our proposed products receive FDA approval, they may not achieve expected
levels of market acceptance, which could have a material adverse effect on
our
business, financial position and operating results and could cause the market
value of our common stock to decline.
Even
if
we are able to obtain required regulatory approvals for our proposed products,
the success of those products is dependent upon market acceptance by physicians
and patients. Levels of market acceptance for our new products could be impacted
by several factors, including:
| · |
the
availability of alternative products from
competitors;
|
| · |
the
price of our products relative to that of our
competitors;
|
| · |
the
timing of our market entry; and
|
| · |
the
ability to market our products
effectively.
|
Some
of
these factors are not within our control. Our proposed products may not achieve
expected levels of market acceptance. Additionally, continuing studies of the
proper utilization, safety and efficacy of pharmaceutical products are being
conducted by the industry, government agencies and others. Such studies, which
increasingly employ sophisticated methods and techniques, can call into question
the utilization, safety and efficacy of previously marketed products. In some
cases, these studies have resulted, and may in the future result, in the
discontinuance of product marketing. These situations, should they occur, could
have a material adverse effect on our business, financial position and results
of operations, and the market value of our common stock could
decline.
Because
the pharmaceutical industry is heavily regulated, we face significant costs
and
uncertainties associated with our efforts to comply with applicable regulations.
Should we fail to comply we could experience material adverse effects on our
business, financial position and results of operations, and the market value
of
our common stock could decline.
The
pharmaceutical industry is subject to regulation by various federal and state
governmental authorities. For example, we must comply with FDA requirements
with
respect to the development of our proposed products and our clinical trials,
and
if any of our proposed products are approved, the manufacture, labeling, sale,
distribution, marketing, advertising and promotion of our products. Failure
to
comply with FDA and other governmental regulations can result in fines,
disgorgement, unanticipated compliance expenditures, recall or seizure of
products, total or partial suspension of production and/or distribution,
suspension of the FDA’s review of NDAs, enforcement actions, injunctions and
criminal prosecution. Under certain circumstances, the FDA also has the
authority to revoke previously granted drug approvals. Despite our efforts
at
compliance, there is no guarantee that we may not be deemed to be deficient
in
some manner in the future. If we were deemed to be deficient in any significant
way, our business, financial position and results of operations could be
materially affected and the market value of our common stock could
decline.
If
we are unable to protect our proprietary technology, we may not be able to
compete as effectively.
The
pharmaceutical industry places considerable importance on obtaining patent
and
trade secret protection for new technologies, products and processes. Our
success will depend, in part, upon our ability to obtain, enjoy and enforce
protection for any products we develop or acquire under United States and
foreign patent laws and other intellectual property laws, preserve the
confidentiality of our trade secrets and operate without infringing the
proprietary rights of third parties.
16
Where
appropriate, we seek patent protection for certain aspects of our technology.
However, our owned and licensed patents and patent applications may not ensure
the protection of our intellectual property for a number of other
reasons:
| · |
We
do not know whether our licensor’s patent applications will result in
issued patents.
|
| · |
Competitors
may interfere with our patents and patent process in a variety of
ways.
Competitors may claim that they invented the claimed invention before
us
or may claim that we are infringing on their patents and therefore
we
cannot use our technology as claimed under our patent. Competitors
may
also have our patents reexamined by showing the patent examiner that
the
invention was not original or novel or was
obvious.
|
| · |
We
are in the development stage and are in the process of developing
proposed
products. Even if we receive a patent, it may not provide much practical
protection. If we receive a patent with a narrow scope, then it will
be
easier for competitors to design products that do not infringe on
our
patent. Even if the development of our proposed products is successful
and
approval for sale is obtained, there can be no assurance that applicable
patent coverage, if any, will not have expired or will not expire
shortly
after this approval. Any expiration of the applicable patent could
have a
material adverse effect on the sales and profitability of our proposed
product.
|
| · |
Enforcing
patents is expensive and may require significant time by our management.
In litigation, a competitor could claim that our issued patents are
not
valid for a number of reasons. If the court agrees, we would lose
protection on products covered by those
patents.
|
| · |
We
also may support and collaborate in research conducted by government
organizations or universities. We cannot guarantee that we will be
able to
acquire any exclusive rights to technology or products derived from
these
collaborations. If we do not obtain required licenses or rights,
we could
encounter delays in product development while we attempt to design
around
other patents or we may be prohibited from developing, manufacturing
or
selling products requiring these licenses. There is also a risk that
disputes may arise as to the rights to technology or products developed
in
collaboration with other parties.
|
It
also
is unclear whether efforts to secure our trade secrets will provide useful
protection. While we use reasonable efforts to protect our trade secrets, our
employees or consultants may unintentionally or willfully disclose our
proprietary information to competitors resulting in a loss of protection.
Enforcing a claim that someone else illegally obtained and is using our trade
secrets, like patent litigation, is expensive and time consuming, and the
outcome is unpredictable. In addition, courts outside the United States are
sometimes less willing to protect trade secrets. Finally, our competitors may
independently develop equivalent knowledge, methods and know-how.
Claims
by others that our products infringe their patents or other intellectual
property rights could adversely affect our financial
condition.
The
pharmaceutical industry has been characterized by frequent litigation regarding
patent and other intellectual property rights. Patent applications are
maintained in secrecy in the United States and also are maintained in secrecy
outside the United States until the application is published. Accordingly,
we
can conduct only limited searches to determine whether our technology infringes
the patents or patent applications of others. Any claims of patent infringement
asserted by third parties would be time-consuming and could likely:
17
| · |
result
in costly litigation;
|
| · |
divert
the time and attention of our technical personnel and
management;
|
| · |
cause
product development delays;
|
| · |
require
us to develop non-infringing technology;
or
|
| · |
require
us to enter into royalty or licensing
agreements.
|
Although
patent and intellectual property disputes in the pharmaceutical industry often
have been settled through licensing or similar arrangements, costs associated
with these arrangements may be substantial and often require the payment of
ongoing royalties, which could hurt our gross margins. In addition, we cannot
be
sure that the necessary licenses would be available to us on satisfactory terms,
or that we could redesign our products or processes to avoid infringement,
if
necessary. Accordingly, an adverse determination in a judicial or administrative
proceeding, or the failure to obtain necessary licenses, could prevent us from
developing, manufacturing and selling some of our products, which could harm
our
business, financial condition and operating results.
We
have very limited staffing and will continue to be dependent upon key employees.
Our
success is dependent upon the efforts of a small management team and staff.
We
have employment arrangements in place with all of our executive officers, but
none of our executive officers is legally bound to remain employed for any
specific term. Although we have key man life insurance on our President and
Chief Executive Officer, Stephen M. Simes, we do not have key man life insurance
policies covering any of our other executive officers or employees. If key
individuals leave BioSante, we could be adversely affected if suitable
replacement personnel are not quickly recruited. There is competition for
qualified personnel in all functional areas, which makes it difficult to attract
and retain the qualified personnel necessary for the development and growth
of
our business. Our future success depends upon our ability to continue to attract
and retain qualified personnel.
The
price and trading volume of our common stock has been, and may continue to
be,
volatile.
Historically,
the market price and trading volume of our common stock has fluctuated over
a
wide range. During the past 12 months, our common stock traded in a range from
a
low of $1.75 to a high of $4.80, and our daily trading volume ranged from 4,500
shares to 1,001,300 shares. It is likely that the price and trading volume
of
our common stock will continue to fluctuate in the future. The securities of
small capitalization, biopharmaceutical companies, including our company, from
time to time experience significant price and volume fluctuations, often
unrelated to the operating performance of these companies. In particular, the
market price and trading volume of our common stock may fluctuate significantly
due to a variety of factors, including:
| · |
governmental
agency actions, including in particular decisions or actions by the
FDA or
FDA advisory committee panels with respect to our products or our
competitors’ products;
|
| · |
the
results of our clinical trials or those of our
competitors;
|
| · |
announcements
of technological innovations or new products by us or our
competitors;
|
| · |
announcements
by licensors or licensees of our
technology;
|
18
| · |
public
concern as to the safety or efficacy of or market acceptance of products
developed by us or our competitors;
|
| · |
developments
or disputes concerning patents or other proprietary
rights;
|
| · |
our
ability to obtain needed financing;
|
| · |
period-to-period
fluctuations in our financial results, including our cash, cash
equivalents and short-term investment balance, operating expenses,
cash
burn rate or revenues;
|
| · |
loss
of key management;
|
| · |
common
stock sales in the public market by one or more of our larger
stockholders, officers or
directors;
|
| · |
other
potentially negative financial announcements, including delisting
of our
common stock from the American Stock Exchange, review of any of our
filings by the SEC, changes in accounting treatment or restatement
of
previously reported financial results or delays in our filings with
the
SEC; and
|
| · |
economic
conditions in the United States and
abroad.
|
In
addition, the occurrence of any of the risks described above or elsewhere in
this prospectus or otherwise in reports we file with or submit to the SEC from
time to time could have a material and adverse impact on the market price of
our
common stock. For example, in December 2004, primarily as a result of the
unanimous vote by the FDA’s Reproductive Health Drugs Advisory Committee panel
against recommendation for approval of Procter & Gamble’s Intrinsa
testosterone patch for hypoactive sexual desire disorder, the price of our
common stock decreased over 35% in one trading day and over 50% over the course
of three trading days. In addition, on the day of and first two trading days
after the public announcement of FDA advisory panel’s recommendation, the daily
trading volume of our common stock went from an average of approximately 166,000
shares per day to an average of over approximately 3 million shares per day
for
those same three days and then back down to an average of approximately 140,000
shares per day.
Securities
class action litigation is sometimes brought against a company following periods
of volatility in the market price of its securities or for other reasons. We
may
become the target of similar litigation. Securities litigation, whether with
or
without merit, could result in substantial costs and divert management’s
attention and resources, which could harm our business and financial condition,
as well as the market price of our common stock.
Failure
to achieve and maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act could have a material adverse effect on our stock
price.
We
are in
the process of documenting and testing our internal control procedures in order
to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
which will become applicable to BioSante beginning with our fiscal year ended
December 31, 2007 or one year later if currently proposed SEC rules are adopted.
Section 404 of the Sarbanes-Oxley Act requires annual management assessment
of
the effectiveness of our internal controls over financial reporting (ICFR)
a
report by our registered independent public accounting firm addressing
management’s assessment and independent audit of ICFR. The Committee of
Sponsoring Organizations of the Treadway Commission (COSO) provides a framework
for companies to assess and improve their internal control systems. While we
feel that our key controls are currently effective, we have not yet completed
a
formal assessment of our ICFR.
19
We
cannot
be certain as to the timing of completion of our evaluation, testing and
remediation actions or their effects on our operations, although we expect
such
activities will require management time and resources. If we are not able to
implement the requirements of Section 404 in a timely manner or with adequate
compliance, we might be subject to sanctions or investigations by regulatory
authorities, such as the Securities and Exchange Commission or the American
Stock Exchange. Any such action could adversely affect our financial results,
financial position and the market price of our common stock. In addition, if
one
or more material weaknesses is identified in ICFR, we will be unable to assert
that our ICFR is effective. If we are unable to assert that our ICFR is
effective (or if our auditors are unable to attest that management’s report is
fairly stated, they are unable to express an opinion on our management’s
evaluation or on the effectiveness of the internal controls or they issue an
adverse opinion on ICFR), we could lose investor confidence in the accuracy
and
completeness of our financial reports, which in turn could have an adverse
effect on our stock price. If we fail to maintain the adequacy of our internal
controls, as such standards are modified, supplemented or amended from time
to
time, we may not be able to ensure that we can conclude on an ongoing basis
that
we have effective ICFR in accordance with Section 404 of the Sarbanes-Oxley
Act.
Failure to achieve and maintain effective ICFR could have an adverse effect
on
our common stock price.
Sales
of a substantial number of shares of our common stock in the public market,
including the shares offered under this prospectus and under other registration
statements, could lower our stock price and impair our ability to raise funds
in
new stock offerings.
Future
sales of a substantial number of shares of our common stock in the public
market, including the shares offered under this prospectus, other registration
statements and shares available for resale under Rule 144(k) under the
Securities Act, or the perception that such sales could occur, could adversely
affect the prevailing market price of our common stock and could make it more
difficult for us to raise additional capital through the sale of equity
securities.
We
may incur significant costs from class action litigation due to our expected
stock volatility.
In
the
past, following periods of large price declines in the public market price
of a
company’s stock, holders of that stock occasionally have instituted securities
class action litigation against the company that issued the stock. If any of
our
stockholders were to bring this type of lawsuit against us, even if the lawsuit
is without merit, we could incur substantial costs defending the lawsuit. The
lawsuit also could divert the time and attention of our management, which would
hurt our business. Any adverse determination in litigation could also subject
us
to significant liabilities.
Provisions
in our charter documents and Delaware law could discourage or prevent a
takeover, even if an acquisition would be beneficial to our
stockholders.
Provisions
of our certificate of incorporation and bylaws, as well as provisions of
Delaware law, could make it more difficult for a third party to acquire us,
even
if doing so would be beneficial to our stockholders. These provisions
include:
| · |
authorizing
the issuance of “blank check” preferred that could be issued by our Board
of Directors to increase the number of outstanding shares and thwart
a
takeover attempt;
|
20
| · |
prohibiting
cumulative voting in the election of directors, which would otherwise
allow less than a majority of stockholders to elect director candidates;
and
|
| · |
advance
notice provisions in connection with stockholder proposals that may
prevent or hinder any attempt by our stockholders to bring business
to be
considered by our stockholders at a meeting or replace our board
of
directors.
|
Our
directors and executive officers own a sufficient number of shares of our
capital stock to control our company, which could discourage or prevent a
takeover, even if an acquisition would be beneficial to our
stockholders.
Our
directors and executive officers own or control approximately 17.0% of our
outstanding voting power. Accordingly, these stockholders, individually and
as a
group, may be able to influence the outcome of stockholder votes, involving
votes concerning the election of directors, the adoption or amendment of
provisions in our certificate of incorporation and bylaws and the approval
of
certain mergers or other similar transactions, such as a sale of substantially
all of our assets. Such control by existing stockholders could have the effect
of delaying, deferring or preventing a change in control of our
company.
Exercise
of outstanding options and warrants will dilute stockholders and could decrease
the market price of our common stock.
As
of
August 17, 2006, we had issued and outstanding 22,973,672 shares of common
stock, 391,286 shares of our class C stock and outstanding options and warrants
to purchase 3,624,689 additional shares of common stock. The existence of the
outstanding options and warrants may adversely affect the market price of our
common stock and the terms under which we could obtain additional equity
capital.
We
do not intend to pay any cash dividends in the foreseeable future and,
therefore, any return on your investment in our common stock must come from
increases in the fair market value and trading price of our common
stock.
We
do not
intend to pay any cash dividends in the foreseeable future and, therefore,
any
return on your investment in our common stock must come from increases in the
fair market value and trading price of our common stock.
We
likely will issue additional equity securities which will dilute your share
ownership.
We
likely
will issue additional equity securities to raise capital and through the
exercise of options and warrants that are outstanding or may be outstanding.
These additional issuances will dilute your share ownership.
USE
OF PROCEEDS
We
will
not receive any of the proceeds from the sale of shares offered under this
prospectus by the selling stockholders. This offering is intended to satisfy
our
obligations to register, under the Securities Act of 1933, the resale of the
shares of our common stock, including shares of our common stock that will
be
issued to the selling stockholders upon the exercise of warrants held by them
that we issued to the selling stockholders in a private placement.
21
SELLING
STOCKHOLDERS
All
of
the selling stockholders named below acquired or have the right to acquire
upon
the exercise of warrants the shares of our common stock being offered under
this
prospectus directly from us in a private placement completed in July 2006.
The
following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of July 25, 2006 as provided by
the
selling stockholders. In accordance with the rules of the SEC, beneficial
ownership includes the shares issuable pursuant to warrants that are exercisable
within 60 days of July 25, 2006. Shares issuable pursuant to warrants are
considered outstanding for computing the percentage of the person holding the
warrants but are not considered outstanding for computing the percentage of
any
other person. The warrants issued in July 2006 become exercisable on January
22,
2007 and are subject to a conversion cap which precludes the holder thereof
from
exercising such warrants to the extent that such owner would beneficially own
in
excess of 4.99% or 9.99% of BioSante’s common stock. These warrants are included
in shares beneficially owned prior to the offering.
The
percentage of beneficial ownership for the following table is based on
22,973,672 shares of common stock outstanding as of July 25, 2006. To our
knowledge, except as indicated in the footnotes to this table, each person
named
in the table has sole voting and investment power with respect to all shares
of
common stock shown in the table to be beneficially owned by such
person.
Except
as
set forth below, none of the selling stockholders has had any position, office
or other material relationship with us within the past three years. The table
assumes that the selling stockholders will sell all of the shares offered by
them in this offering. However, we are unable to determine the exact number
of
shares that will actually be sold or when or if these sales will occur. We
will
not receive any of the proceeds from the sale of the shares offered under this
prospectus.
22
|
Shares
Beneficially
Owned
Prior to the Offering
|
Shares
Beneficially
Owned
After
Completion
of
the
Offering
|
||||||||||||||||||
|
Selling
Stockholder
|
Shares
Subject to Warrants
|
Total
Shares Beneficially Owned
|
Percentage
|
Number
of
Shares
Being
Offered
|
Number
|
Percentage
|
|||||||||||||
|
Bristol
Investment Fund, Ltd. (1)
|
52,500
|
202,500
|
*
|
202,500
|
0
|
--
|
|||||||||||||
|
Clarion
Capital Corporation (2)
|
43,750
|
168,750
|
*
|
168,750
|
0
|
--
|
|||||||||||||
|
Crescent
International Ltd. (3)
|
52,500
|
202,500
|
*
|
202,500
|
0
|
--
|
|||||||||||||
|
Crestview
Capital Master, LLC (4)
|
175,000
|
675,000
|
2.9
|
%
|
675,000
|
0
|
|||||||||||||
|
Diamond
Opportunity Fund, LLC (5)
|
43,750
|
168,750
|
*
|
168,750
|
0
|
--
|
|||||||||||||
|
Hermann
S. Graf zu Muenster
|
12,750
|
162,335
|
*
|
33,750
|
128,585
|
*
|
|||||||||||||
|
Hunt
BioVentures, L.P. (6)
|
87,500
|
337,500
|
1.5
|
%
|
337,500
|
0
|
--
|
||||||||||||
|
Iroquois
Master Fund Ltd. (7)
|
43,750
|
168,750
|
*
|
168,750
|
0
|
--
|
|||||||||||||
|
James
S. Levy Trust dtd. 2/1/99 (8)
|
8,750
|
33,750
|
*
|
33,750
|
0
|
--
|
|||||||||||||
|
Joseph
S. Levy
|
4,375
|
16,875
|
*
|
16,875
|
0
|
--
|
|||||||||||||
|
Mallette
Capital Master Fund Ltd. (9)
|
48,706
|
553,524
|
2.4
|
%
|
187,866
|
365,658
|
1.6
|
%
|
|||||||||||
|
Mallette
Capital Biotech Fund LP (9)
|
21,294
|
241,876
|
1.1
|
%
|
82,134
|
159,742
|
*
|
||||||||||||
|
Roscoe
F. Nicholson II Profit Sharing (10)
|
20,925
|
246,734
|
1.1
|
%
|
16,875
(11
|
)
|
196,109
|
*
|
|||||||||||
|
Nite
Capital L.P. (12)
|
65,792
|
253,770
|
1.1
|
%
|
253,770
|
0
|
--
|
||||||||||||
|
Panacea
Fund, LLC (13)
|
97,750
|
342,750
|
1.5
|
%
|
87,750
|
255,000
|
1.1
|
%
|
|||||||||||
|
Perceptive
Life Sciences Master Fund, Ltd. (14)
|
272,500
|
772,500
|
3.3
|
%
|
675,000
|
97,500
|
*
|
||||||||||||
|
Quogue
Capital LLC (15)
|
98,750
|
348,750
|
1.5
|
%
|
337,500
|
11,250
|
*
|
||||||||||||
|
RAQ,
LLC (16)
|
35,000
|
135,000
|
*
|
135,000
|
0
|
--
|
|||||||||||||
|
SF
Capital Partners Ltd. (17)
|
175,000
|
675,000
|
2.9
|
%
|
675,000
|
0
|
--
|
||||||||||||
|
Sheffield
Partners, L.P. (18)
|
11,013
|
150,866
|
*
|
42,478
|
108,388
|
*
|
|||||||||||||
|
Sheffield
Institutional Partners, L.P. (18)
|
17,078
|
233,812
|
1.0
|
%
|
65,873
|
167,939
|
*
|
||||||||||||
|
Sheffield
International Partners, Ltd. (18)
|
15,659
|
214,443
|
*
|
60,399
|
154,044
|
*
|
|||||||||||||
|
Valesco
Healthcare Master Fund, L.P. (19)
|
52,500
|
202,500
|
*
|
202,500
|
0
|
--
|
|||||||||||||
|
WHI
Growth Fund Q.P., L.P. (20)
|
82,250
|
966,950
|
4.2
|
%
|
317,250
|
649,700
|
2.8
|
%
|
|||||||||||
__________________________________
* Less
than
one percent (1%)
| (1) |
Bristol
Capital Advisors, LLC is the investment advisor to Bristol Investment
Fund, Ltd. Paul Kessler is the manager of Bristol Capital Advisors,
LLC
and as such has voting and investment control over the securities
held by
Bristol Investment Fund, Ltd. Mr. Kessler disclaims beneficial
ownership
of these securities.
|
| (2) |
Morton
A. Cohen is Chairman of Clarion Capital Corporation, and as such
has
authority to vote and dispose of securities held by Clarion Capital
Corporation.
|
23
| (3) |
Cantara
(Switzerland) SA is the investment advisor to Crescent International
Ltd.
Maxi Brezzi and Bachir Taleb-Ibrahimi are managers of Cantara
(Switzerland) SA, and as such have authority to vote and dispose
of the
securities held by Crescent International Ltd. Messrs. Brezzi and
Taleb-Ibrahimi disclaim beneficial ownership of such
securities.
|
| (4) |
Crestview
Capital Partners, LLC is the sole manager for Crestview Capital
Master,
LLC. The power to vote or dispose of the shares beneficially owned
by
Crestview Capital Master, LLC is shared by Stewart Flink, Robert
Hoyt and
Daniel Warsh, each of whom disclaim beneficial ownership of the
shares
beneficially owned by Crestview Capital Master, LLC. Stewart Flink,
a
manager of Crestview Capital Partners, LLC, is the controlling
shareholder
of Dillon Capital Inc., a registered broker-dealer. Crestview Capital
Master, LLC has represented to us that it purchased the shares
being
offered under this prospectus in the ordinary course of business,
and at
the time of purchase, had no agreements or understandings to distribute
the shares.
|
| (5) |
David
Hokin, Rob Rubin and Richard Marks, in their respective capacity
as
manager and managing Directors of Diamond Opportunity Fund, LLC,
have
shared voting and investment control over the shares held by Diamond
Opportunity Fund, LLC. Messrs. Hokin, Rubin and Marks disclaim
beneficial
ownership of such securities.
|
| (6) |
Christopher
W. Kleinert has sole investment and voting power over the shares
of
BioSante common stock held by Hunt BioVentures,
L.P.
|
| (7) |
Joshua
Silverman has voting and investment control over the shares held
by
Iroquois Master Fund Ltd. Mr. Silverman disclaims beneficial ownership
of
such securities.
|
| (8) |
James
S. Levy as trustee of the James S. Levy Trust dtd. 2/1/99 has voting
and
investment power over the securities beneficially owned by the
James S.
Levy Trust dtd. 2/1/99. James S. Levy is a registered broker-dealer
and
has represented to us that the James S. Levy Trust dtd. 2/1/99
has
purchased the shares being offered under this prospectus in the
ordinary
course of business, and at the time of purchase, had no agreements
or
understandings to distribute the
shares.
|
| (9) |
Mallette
Capital Management, Inc. is the investment advisor of Mallette
Capital
Master Fund Ltd. and Mallette Capital Biotech Fund L.P. and consequently
has voting control and investment discretion over securities owned
by
Mallette Capital Master Fund Ltd. and Mallette Biotech Fund L.P.
Quinterol
Mallette, M.D. is the President of Mallette Capital Management,
Inc. As a
result, Mallette Capital Management, Inc. and Dr. Mallette may
be
considered the beneficial owner of any shares deemed to be beneficially
owned by Mallette Capital Master Fund Ltd. and Mallette Biotech
Fund
L.P.
|
| (10) |
Mr.
Nicholson’s beneficial ownership includes: (1) 7,175 shares of common
stock issuable upon exercise of warrants, (2) 16,532 shares of
common
stock and 1,000 shares of common stock issuable upon exercise of
a warrant
held by Mr. Nicholson’s spouse, (3) 13,642 shares of common stock held by
Mr. Nicholson’s children, of which Mr. Nicholson shares voting and
dispositive power and (4) 149,585 shares of common stock and 12,750
shares
of common stock issuable upon exercise of warrants held by Hermann
S. Graf
zu Muenster, of which Mr. Nicholson serves as an advisor and shares
dispositive power over these shares.
|
| (11) |
Does
not include shares being offered by Hermann S. Graf zu
Muenster.
|
| (12) |
Nite
Capital, LLC, is the general partner of Nite Capital, L.P. Keith
A.
Goodman is the manager of Nite Capital, LLC, and as such has authority
to
vote and dispose of the securities held by Nite Capital, L.P. Mr.
Goodman
disclaims beneficial ownership of such
securities.
|
24
| (13) |
Michael
S. Resnick, executive vice president of William Harris Investors
Inc., the
manager of the selling stockholder, and Charles Polsky, a fund
manager of
the selling stockholder, share voting and investment control with
respect
to the shares offered by the selling
stockholder.
|
| (14) |
Perceptive
Advisors, LLC, is the investment manager of Perceptive Life Science
Master
Fund, Ltd. and consequently has voting control and investment discretion
over securities owned by Perceptive Life Science Master Fund, Ltd.
Joseph
Edelman is the managing member of Perceptive Advisors, LLC. As
a result,
Mr. Edelman may be considered the beneficial owner of any shares
deemed to
be beneficially owned by Perceptive Life Science Master Fund, Ltd.
Perceptive Life Science Master Fund, Ltd. was a 10% or more stockholder
of
BioSante within the last three
years.
|
| (15) |
Wayne
Rothbaum, a principal of Quogue Capital LLC, has voting and investment
power over the securities beneficially owned by Quogue Capital
LLC.
|
| (16) |
Lindsay
A. Rosenwald, M.D., is the managing and sole member of RAQ, LLC,
and as
such has authority to vote and dispose of the securities held by
RAQ, LLC.
Dr. Rosenwald is the sole shareholder and chairman of Paramount
BioCapital, Inc., a registered broker-dealer and Paramount BioCapital
Asset Management, Inc., an investment advisor. RAQ, LLC has indicated
to
us that it purchased the shares being offered under this prospectus
in the
ordinary course of business and, at the time of purchase, had no
agreements or understandings to distribute the
shares.
|
| (18) |
Brian
J. Feltzin and Craig C. Albert are the members of Sheffield Asset
Management, L.L.C., the general partner of Sheffield Partners,
L.P. and
Sheffield Institutional Partners, L.P. and the investment advisor
to
Sheffield International Partners, Ltd., and consequently have voting
control and investment discretion over securities owned by Sheffield
Partners, L.P., Sheffield Institutional Partners, L.P. and Sheffield
International Partners, Ltd. As a result, Brian J. Feltzin and
Craig C.
Albert may be considered the beneficial owners of any shares deemed
to be
beneficially owned by Sheffield Partners, L.P., Sheffield Institutional
Partners, L.P. and Sheffield International Partners,
Ltd.
|
| (19) |
Valesco
Healthcare GP, LLC is the general partner to Valesco Healthcare
Master
Fund, L.P. I. Keith Maher, M.D., is a member and the portfolio
manager of
Valesco Healthcare GP, LLC, and as such has authority to vote
and dispose
of the securities held by Valesco Healthcare Master Fund, LP.
Lindsay A.
Rosenwald, M.D.
is
the managing member of Valesco Healthcare GP, LLC. Dr. Rosenwald
is the
sole shareholder and chairman of Paramount BioCapital, Inc.,
a
registered broker-dealer, and Paramount BioCapital Asset Management,
Inc.,
an investment advisor. Dr. Maher is a managing director of Paramount
BioCapital Asset Management, Inc. Valesco Healthcare Master Fund,
LP has
represented to us that it purchased the shares being offered
under this
prospectus in the ordinary course of business and, at the time
of
purchase, had no agreements or understandings to distribute the
shares.
|
| (20) |
William
Harris Investors, Inc. is the general partner to WHI Growth Fund
Q.P.,
L.P. Michael S. Resnick, executive vice president of William Harris
Investors, Inc., has investment and voting power over the shares
of
BioSante common stock held by WHI Growth Fund Q.P.,
L.P.
|
25
PLAN
OF DISTRIBUTION
Each
selling stockholder of the common stock and any of their pledgees, assignees
and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on the American Stock Exchange or any other stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. A selling
stockholder may use any one or more of the following methods when selling
shares:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
| · |
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
| · |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
|
| · |
a
combination of any such methods of sale;
or
|
| · |
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended, if available, rather than under this
prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance
with
NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with NASDR IM-2440.
In
connection with the sale of the common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
26
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each selling stockholder has informed us
that it does not have any written or oral agreement or understanding, directly
or indirectly, with any person to distribute the common stock. In no event
shall
any broker-dealer receive fees, commissions and markups which, in the aggregate,
would exceed eight percent (8%).
We
are
required to pay certain fees and expenses incurred by us incident to the
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Because
selling stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under
the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the selling stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the selling stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities
Act
or any other rule of similar effect. The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not
be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the selling stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the selling stockholders or any other
person. We will make copies of this prospectus available to the selling
stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
27
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon for
BioSante by Oppenheimer Wolff & Donnelly LLP, Minneapolis,
Minnesota.
DISCLOSURE
OF COMMISSION POSITION ON
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
BioSante’s
Certificate of Incorporation limits the liability of its directors to the
fullest extent permitted by the Delaware General Corporation Law. Specifically,
Article VII of BioSante’s Certificate of Incorporation provides that no director
of BioSante shall be personally liable to BioSante or its stockholders for
monetary damages for any breach of fiduciary duty by such a director as a
director, except to the extent provided by applicable law (i) for any
breach of the director’s duty of loyalty to BioSante or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from
which such director derived an improper personal benefit. If the Delaware
General Corporation Law is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of BioSante shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law as so amended. No amendment
to
or repeal of Article VII shall apply to or have any effect on the liability
or
alleged liability of any director of BioSante for or with respect to any acts
or
omissions of such director occurring prior to such amendment or
repeal.
BioSante’s
Certificate of Incorporation provides for indemnification of BioSante’s
directors and officers. Specifically, Article VI provides that BioSante shall
indemnify, to the fullest extent authorized or permitted by law, as the same
exists or may thereafter be amended, any person who was or is made or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of BioSante), by reason of the fact
that such person is or was a director or officer of BioSante, or is or was
serving at the request of BioSante as a director, officer, employee or agent
of
any other company, partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise; provided, however, that BioSante
shall not indemnify any director or officer in connection with any action by
such director or officer against BioSante unless BioSante shall have consented
to such action. BioSante may, to the extent authorized from time to time by
BioSante’s Board of Directors, provide rights to indemnification to employees
and agents of BioSante similar to those conferred in Article VI to directors
and
officers of BioSante. No amendment or repeal of Article VI shall apply to or
have any effect on any right to indemnification provided thereunder with respect
to any acts or omission occurring prior to such amendment or
repeal.
BioSante
has also agreed to indemnify its selling stockholders against certain losses,
claims, damages, liabilities, costs and expenses under the securities laws,
or
to contribute to any losses associated with these liabilities. Each of these
selling stockholders has also agreed to indemnify us against certain civil
liabilities under the securities laws deriving from information provided by
it,
or to contribute to any losses associated with these liabilities.
BioSante
maintains an insurance policy for its directors and executive officers pursuant
to which its directors and executive officers are insured against liability
for
certain actions in their capacity as directors and executive officers of
BioSante.
28
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to BioSante’s directors, officers or persons controlling BioSante
pursuant to the foregoing provisions, BioSante is aware that in the opinion
of
the Securities and Exchange Commission that this indemnification is against
public policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
EXPERTS
The
financial statements as of December 31, 2005 and 2004 and for each of the three
years in the period ended December 31, 2005, incorporated by reference in this
prospectus by reference from BioSante’s Annual Report on Form 10-K for the year
ended December 31, 2005, have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report, (which
report expresses an unqualified opinion and includes an explanatory paragraph
indicating that BioSante Pharmaceuticals, Inc. is in the development stage),
which is incorporated herein by reference, and has been so incorporated in
reliance upon the report of such firm given upon their authority as experts
in
accounting and auditing.
29
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
following table sets forth the costs and expenses payable by BioSante in
connection with the issuance and distribution of the shares of common stock
being registered. All such expenses are estimated except for the SEC
registration fee.
| SEC registration fee | $ | 1,107 | ||
| Printing expenses | 1,000 | |||
| Fees and expenses of legal counsel for BioSante | 25,000 | |||
| Fees and expenses of accountants for BioSante | 20,000 | |||
| Blue sky fees and expenses | 2,000 | |||
| Miscellaneous | 10,000 | |||
| *Total | $ | $59,107 |
_____________________
* None
of
the expenses listed above will be borne by the selling
stockholders.
Item
15. Indemnification of Directors and Officers.
BioSante’s
Certificate of Incorporation limits the liability of its directors to the
fullest extent permitted by the Delaware General Corporation Law. Specifically,
Article VII of BioSante’s Certificate of Incorporation provides that no director
of BioSante shall be personally liable to BioSante or its stockholders for
monetary damages for any breach of fiduciary duty by such a director as a
director, except to the extent provided by applicable law (i) for any
breach of the director’s duty of loyalty to BioSante or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from
which such director derived an improper personal benefit. If the Delaware
General Corporation Law is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of BioSante shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law as so amended. No amendment
to
or repeal of Article VII shall apply to or have any effect on the liability
or
alleged liability of any director of BioSante for or with respect to any acts
or
omissions of such director occurring prior to such amendment or
repeal.
II
-
1
BioSante’s
Certificate of Incorporation provides for indemnification of BioSante’s
directors and officers. Specifically, Article VI provides that BioSante shall
indemnify, to the fullest extent authorized or permitted by law, as the same
exists or may thereafter be amended, any person who was or is made or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of BioSante), by reason of the fact
that such person is or was a director or officer of BioSante, or is or was
serving at the request of BioSante as a director, officer, employee or agent
of
any other company, partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise; provided, however, that BioSante
shall not indemnify any director or officer in connection with any action by
such director or officer against BioSante unless BioSante shall have consented
to such action. BioSante may, to the extent authorized from time to time by
BioSante’s Board of Directors, provide rights to indemnification to employees
and agents of BioSante similar to those conferred in Article VI to directors
and
officers of BioSante. No amendment or repeal of Article VI shall apply to or
have any effect on any right to indemnification provided thereunder with respect
to any acts or omission occurring prior to such amendment or
repeal.
BioSante
has also agreed to indemnify its selling stockholders against certain losses,
claims, damages, liabilities, costs and expenses under the securities laws,
or
to contribute to any losses associated with these liabilities. Each of these
selling stockholders has also agreed to indemnify us against certain civil
liabilities under the securities laws deriving from information provided by
it,
or to contribute to any losses associated with these liabilities.
BioSante
maintains an insurance policy for its directors and executive officers pursuant
to which its directors and executive officers are insured against liability
for
certain actions in their capacity as directors and executive officers of
BioSante.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to BioSante’s directors, officers or persons controlling BioSante
pursuant to the foregoing provisions, BioSante is aware that in the opinion
of
the Securities and Exchange Commission that this indemnification is against
public policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
Item
16. Exhibits.
See
the
Exhibit Index attached to this registration statement that is incorporated
herein by reference.
Item
17. Undertakings.
(a) The
undersigned registrant hereby undertakes:
(1) To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided,
however, that clauses (i) and (ii) do not apply if the information required
to
be included in a post-effective amendment by those clauses is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
II
-
2
(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.
(4) That,
for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission
such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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 Act and will be governed by the final adjudication
of
such issue.
II
-
3
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
of
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Lincolnshire, State of Illinois on August 23, 2006.
|
BIOSANTE
PHARMACEUTICALS, INC.
By /s/
Stephen M.Simes
Stephen
M. Simes
Vice
Chairman, President and Chief Executive Officer
|
|
|
By /s/
Phillip B. Donenberg
Phillip
B. Donenberg
Chief
Financial Officer, Treasurer and
Secretary
|
II
-
4
POWER
OF ATTORNEY
KNOW
ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints jointly and severally, Stephen M. Simes and Phillip
B.
Donenberg, and each one of them acting singly, as the person’s true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the person and in the person’s name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any additional registration
statements filed pursuant to Rule 462(b) under the Securities Act of 1933,
and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do
and perform each and every act and thing requisite and necessary to be done
in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
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 August
23, 2006.
|
Name
and Signature
|
Title
|
|
|
/s/
Stephen M. Simes
Stephen
M. Simes
|
Vice
Chairman, President and Chief Executive Officer (Principal Executive
Officer)
|
|
|
/s/
Phillip B. Donenberg
Phillip
B. Donenberg
|
Chief
Financial Officer, Treasurer and Secretary (Principal Financial and
Accounting Officer)
|
|
|
/s/
Louis W. Sullivan, M.D.
Louis
W. Sullivan, M.D.
|
Chairman
of the Board
|
|
/s/
Fred Holubow
Fred
Holubow
|
Director
|
|
/s/
Peter Kjaer
Peter
Kjaer
|
Director
|
|
/s/
Ross Mangano
Ross
Mangano
|
Director
|
|
Victor
Morgenstern
|
Director
|
|
/s/
Edward C. Rosenow, III, M.D.
Edward
C. Rosenow, III, M.D.
|
Director
|
II
-
5
BIOSANTE
PHARMACEUTICALS, INC.
REGISTRATION
STATEMENT ON FORM S-3
EXHIBIT
INDEX
|
Exhibit
No.
|
Exhibit
|
Method
of Filing
|
|
|
2.1
|
Arrangement
Agreement, dated October 23, 1996, between Structured Biologicals
Inc. and
BioSante Pharmaceuticals, Inc.
|
Incorporated
by reference to Exhibit 2.1 contained in BioSante’s Registration Statement
on Form 10-SB, as amended (File No. 0-28637).
|
|
|
4.1
|
Amended
and Restated Certificate of Incorporation of BioSante Pharmaceuticals,
Inc.
|
Incorporated
by reference to Exhibit 3.1 contained in BioSante’s Registration Statement
on Form SB-2, as amended (Reg. No. 333-64218).
|
|
|
4.2
|
Amendment
to Amended and Restated Certificate of Incorporation of BioSante
Pharmaceuticals, Inc.
|
Incorporated
by reference to Exhibit 3.2 contained in BioSante’s Registration Statement
on Form 8-A (File No. 1-31812).
|
|
|
4.3
|
Bylaws
of BioSante Pharmaceuticals, Inc.
|
Incorporated
by reference to Exhibit 3.2 contained in BioSante’s Registration Statement
on Form SB-2, as amended (Reg. No. 333-64218).
|
|
|
4.4
|
Form
of Warrant issued in connection with the August 2003 Private
Placement
|
Incorporated
by reference to Exhibit 10.2 contained in BioSante’s Current Report on
Form 8-K, filed on August 6, 2003 (File No. 0-28637).
|
|
|
4.5
|
Form
of Warrant issued in connection with the May 2004 Private
Placement
|
Incorporated
by reference to Exhibit 10.2 contained in BioSante’s Current Report on
Form 8-K, filed on May 12, 2004 (File No. 001-31812).
|
|
|
4.6
|
Form
of Warrant issued in connection with the July 2006 Private
Placement
|
Incorporated
by reference to Exhibit 10.2 contained in BioSante’s Current Report on
Form 8-K, filed on July 24, 2006 (File No. 001-31812).
|
|
|
5.1
|
Opinion
of Oppenheimer Wolff & Donnelly LLP
|
Filed
herewith.
|
|
|
23.1
|
Consent
of Deloitte & Touche LLP
|
Filed
herewith.
|
|
|
23.2
|
Consent
of Oppenheimer Wolff & Donnelly LLP (included in Exhibit
5.1)
|
Included
in Exhibit 5.1.
|
|
|
24.1
|
Power
of Attorney
|
Included
on page II-5 of this Registration Statement.
|
|
E
- 1
Exhibit
5.1
[OPPENHEIMER
WOLFF & DONNELLY LLP LETTERHEAD]
August
23, 2006
|
BioSante
Pharmaceuticals, Inc.
111
Barclay Boulevard
Lincolnshire,
IL 60069
|
|
Re:
BioSante Pharmaceuticals, Inc. - Registration Statement on Form
S-3
|
Ladies
and Gentlemen:
We
have
acted as counsel to BioSante Pharmaceuticals, Inc., a Delaware corporation,
in
connection with the registration by BioSante of the offer and resale of
5,147,520 shares of the common stock, $0.0001 par value per share, of BioSante
pursuant to BioSante’s registration statement on Form S-3 filed with the
Securities and Exchange Commission on the date hereof, on behalf of the certain
selling stockholders named therein. The
shares consist of outstanding shares (the “Issued Shares”) and shares issuable
by BioSante upon the exercise of outstanding warrants (the “Warrant Shares”)
that were issued by BioSante in its July 2006 private placement.
In
acting
as counsel for BioSante and arriving at the opinions expressed below, we have
examined and relied upon originals or copies, certified or otherwise identified
to our satisfaction, of such records of BioSante, agreements and other
instruments, certificates of officers and representatives of BioSante,
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
all natural persons and the conformity to original documents of all documents
submitted to us as certified or photostatic copies.
Based
on
the foregoing, and subject to the qualifications and limitations stated herein,
it is our opinion that:
|
1.
|
BioSante
had the corporate authority to issue the Issued Shares and has corporate
authority to issue the Warrant Shares in the manner and under the
terms
set forth in the registration
statement.
|
|
2.
|
The
Issued Shares being registered for resale by the selling stockholders
under the registration statement have been duly authorized, validly
issued, fully paid and nonassessable. The Warrant Shares being registered
for resale by the selling stockholders under the registration statement
have been duly authorized, and when issued in accordance with the
terms of
the warrants and
receipt by BioSante of the consideration required therein,
will be validly issued, fully paid and
non-assessable.
|
We
express no opinion with respect to laws other than those of the federal law
of
the United States of America and the Delaware General Corporation Law, 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, to its use as part of the registration statement, and to the use
of
our name under the caption “Legal Matters” in the prospectus constituting a part
of the registration statement.
Very
truly yours,
OPPENHEIMER
WOLFF & DONNELLY LLP
/s/
Oppenheimer Wolff & Donnelly LLP
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in this Registration Statement on
Form
S-3 of our report dated March 30, 2006, relating to the financial statements
of
BioSante Pharmaceuticals Inc. (which report expresses an unqualified opinion
and
includes an explanatory paragraph stating that BioSante Pharmaceuticals, Inc.
is
in the development stage) appearing in the Annual Report on Form 10-K of
BioSante Pharmaceuticals Inc. for the year ended December 31, 2005 and to the
reference to us under the heading “Experts” in the Prospectus, which is part of
this Registration Statement.
/s/
Deloitte & Touche LLP
DELOITTE
& TOUCHE LLP
Chicago,
IL
August
23, 2006