Filed
Pursuant to 424(b)(2)
Registration
Statement No. 333-128322
PROSPECTUS
SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 29, 2005
12,000,000
Shares of Common Stock
Unless
the context otherwise requires, all references to “we,” “us,” or “our” in this
prospectus supplement refer to Peregrine Pharmaceuticals, Inc., a Delaware
corporation.
This
Prospectus Supplement and the attached Prospectus relate to the offering
and
sale of 8,000,000 shares of our common stock, par value $.001 per share,
for net
proceeds of $6,720,000 to Double U Master Fund LP, an institutional investor
(the “Investor”), pursuant to the terms of a common stock purchase agreement
dated November 23, 2005. The terms of the offering were negotiated between
us
and the Investor. No warrants were issued, nor were any commissions paid,
in
connection with this offering.
Our
common stock is listed on The Nasdaq Capital Market under the symbol “PPHM”. On
November 22, 2005, the last reported sale price of our common stock on the
Nasdaq Capital Market was $0.94 per share. As of November 23, 2005, after
giving
effect to this offering, there are approximately 174,033,000 shares of our
common stock outstanding. The common stock sold under this prospectus supplement
will be listed on The Nasdaq Capital Market after we notify The Nasdaq Capital
Market that the shares have been issued.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A
CRIMINAL OFFENSE.
THIS
PROSPECTUS SUPPLEMENT IS NOT COMPLETE WITHOUT THE PROSPECTUS DATED SEPTEMBER
29,
2005, AND WE HAVE NOT AUTHORIZED ANYONE TO DELIVER OR USE THIS PROSPECTUS
SUPPLEMENT WITHOUT THE PROSPECTUS. You should read this Prospectus Supplement
and the accompanying Prospectus carefully before you invest. Both documents
contain information you should consider when making your investment
decision.
The
date
of this prospectus supplement is November 23, 2005.
S-1
in connection with Registration Statement No. 333-128322
PROSPECTUS
12,000,000
Shares of Common Stock
This
prospectus will allow us to issue, from time to time in one or more offerings,
up to 12,000,000 shares of our common stock. In this prospectus, we sometimes
refer to our common stock as the “securities.” Each time we sell
securities:
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we
will provide a prospectus supplement;
and
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the
prospectus supplement will inform you about the specific terms of
that
offering and may also add, update or change information contained
in this
document.
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You
should read this document and any prospectus supplement carefully before you
invest.
Our
common stock is registered under Section 12(g) of the Securities Exchange Act
of
1934 and is listed on The Nasdaq SmallCap Market under the symbol "PPHM”. On
September 9, 2005, the last reported sale price of our common stock on The
Nasdaq SmallCap Market was $1.12 per share.
__________________________________
See
"Risk
Factors"
beginning on page 3 to read about the risks you
should
consider
before buying shares of our common stock.
_________________________________
This
prospectus may not be used to offer or sell any securities unless accompanied
by
a prospectus supplement.
The
securities may be sold directly by us to investors, through agents designated
from time to time or to or through underwriters or dealers. For additional
information on the methods of sale, you should refer to the section entitled
“Plan of Distribution.” If any underwriters are involved in the sale of any
securities with respect to which this prospectus is being delivered, the names
of such underwriters and any applicable commissions or discounts will be set
forth in a prospectus supplement. The net proceeds we expect to receive from
such sale will also be set forth in a prospectus supplement.
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 September 29, 2005
TABLE
OF CONTENTS
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You
should rely only on the information contained in this document or to which
we
have referred you. We have not authorized anyone to provide you with information
that is different. This document may only be used where it is legal to sell
these securities. The information in this document may only be accurate on
the
date of this document. However, in the event of a material change, this
prospectus will be amended or supplemented accordingly.
This
is only a summary and does not contain all of the information that you should
consider before investing in our Common Stock. You should read the entire
prospectus carefully, including the “Risk Factors” section as well as the
information incorporated by reference into this prospectus under “Where You Can
Find More Information.”
As
used
in this prospectus, the terms “we”, “us”, “our”, “Company” and “Peregrine” refer
to Peregrine Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Avid
Bioservices, Inc., and Vascular Targeting Technologies, Inc.
About
Peregrine Pharmaceuticals, Inc.
We
are a biopharmaceutical company primarily developing broad-based therapeutics
directed towards the treatment of cancer and viruses using targeted monoclonal
antibodies. We are organized into two reportable operating segments: (i)
Peregrine Pharmaceuticals, Inc. (“Peregrine”), the parent company, is engaged in
the research and development of targeted broad-based therapeutics and (ii)
Avid
Bioservices, Inc. (“Avid”), our wholly-owned subsidiary, is engaged in providing
manufacturing expertise of biologics for biopharmaceutical and biotechnology
companies, including Peregrine. The
following table provides you with an overview of our products in clinical trials
and the current clinical status of each trial:
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Products
in Clinical Trials
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Technology
Platform
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Product
Name |
Disease |
Stage
of
Development |
Development Status Overview |
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Tumor
Necrosis Therapy (“TNT”) |
Cotara®
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Brain
Cancer
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Phase
II/III
registration trial |
Peregrine,
in collaboration with New Approaches to Brain Tumor Therapy (“NABTT”), a
brain tumor consortium, have initiated the first part of the Phase
II/III
product registration study to evaluate Cotara® for the treatment of brain
cancer. This study is partially funded by the National Cancer Institute
("NCI”) and will treat up to 28 patients. The study is being conducted
at
the following four NABTT institutions: Wake Forest University, Emory
University, University of Alabama at Birmingham and University of
Pennsylvania.
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Anti-
Phospholipid Therapy |
Tarvacin™
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Advanced
Solid Cancers |
Phase
I
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This
phase I clinical study is a single and repeat dose escalation study
designed to enroll up to 28 patients with advanced solid tumors that
no
longer respond to standard cancer treatments. Patient enrollment
is open
at the Scottsdale and Tucson sites of the Arizona Cancer Center and
more
recently at Premiere Oncology in Santa Monica, CA.
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Anti-
Phospholipid Therapy |
Tarvacin™
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Hepatitis
C
Virus |
Phase
I
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This
phase I clinical study is a single dose-escalation study in up to
32 adult
patients with chronic hepatitis C virus (HCV) infection who either
no
longer respond to or have failed standard therapy with pegylated
interferon and ribavirin combination therapy. Patient enrollment
is open
at Bach and Godofsky Infectious Diseases located in Bradenton, FL.
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1
For
a more detailed discussion of our proprietary platforms, please refer to our
Form 10-K for the fiscal year ended April 30, 2005, filed with the Securities
and Exchange Commission on July 14, 2005.
Company
Information
All
of our product candidates are being evaluated in clinical trials and
pre-clinical studies or are in early stages of development. To date, we have
not
obtained regulatory approval for or commercialized any products. We have
incurred significant losses since our inception and we expect to incur annual
losses for at least the next 2 years as we continue with our drug discovery,
development and commercialization efforts.
We
are a Delaware corporation. Our principal offices are located at 14272 Franklin
Avenue, Tustin, California 92780. The telephone number of our principal offices
is 714-508-6000. Our internet addresses are www.peregrineinc.com and
www.avidbio.com. The information contained on our websites is not incorporated
by reference and should not be considered a part of this prospectus. Our website
address is included in this prospectus as an inactive textual reference
only.
About
the Offering
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Common
stock offered in this
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prospectus
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12,000,000
shares
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Common
stock outstanding after
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this
offering
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178,017,599
shares (1)
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Use
of proceeds
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See
“Use of Proceeds”
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Nasdaq
Small Cap Market symbol
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PPHM
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(1)
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Based
on 166,017,599 shares outstanding as of September 9, 2005, and
assumes the
issuance of common stock offered in this prospectus. The number
set forth
above does not include approximately 24,540,000 shares of our common
stock
that, as of September 9, 2005, are issuable upon the exercise of
outstanding options and warrants. These options and warrants are
exercisable at prices ranging from $0.34 to $5.28 per share, with
an
average exercise price of $1.71 per share. With regard to options
to
purchase 3,100,000 shares of our common stock, we have obtained
standstill
agreements from the holders of these options pursuant to which
they have
agreed not to exercise such options until we have obtained approval
from
our stockholders to increase our authorized shares of common stock.
In
the event that stockholder approval to increase our authorized
shares is
not obtained at our annual stockholder meeting to be held on October
24,
2005, then we may need to file a post-effective amendment to the
registration statement of which this prospectus is a part to de-register
up to 3,100,000 shares. Prior to receiving stockholder approval, we
will not offer to sell more than 8,900,000 shares covered by this
prospectus.
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2
An
investment in our securities being offered in this prospectus is very risky.
You
should carefully consider the risk factors described below, together with all
other information in this prospectus or incorporated herein by reference, before
making an investment decision. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occurs, our business,
financial conditions or operating results could be materially adversely
affected. In such case, the trading price of our common stock could decline,
and
you may lose all or part of your investment.
If
We Cannot Obtain Additional Funding, Our Product Development And
Commercialization Efforts May Be Reduced Or Discontinued And We May Not Be
Able
To Continue Operations.
At
July
31, 2005, we had approximately $16.5 million in cash and cash equivalents.
We
have expended substantial funds on (i) the research, development and clinical
trials of our product candidates, and (ii) funding the operations of our wholly
owned subsidiary, Avid Bioservices, Inc. As a result, we
have historically experienced negative cash flows from operations since our
inception and we expect the negative cash flows from operations to continue
for
the foreseeable future, unless and until we are able to generate sufficient
revenues from Avid’s contract manufacturing services and/or from the sale and/or
licensing of our products under development. While we expect Avid to generate
revenues in the foreseeable future, we expect our monthly negative cash flow
to
continue for the foreseeable future, due to our clinical trial activities using
Cotara®, our two Tarvacin™ clinical trials (both solid cancer tumors and
hepatitis C virus infection), our anticipated development costs associated
with
Anti-Phospholipid Therapy, Vasopermeation Enhancement Agents (“VEAs”) and
Vascular Targeting Agents (“VTAs”), and possible expansion of our manufacturing
capabilities. We believe we have sufficient cash on hand to meet our obligations
on a timely basis through
at least fiscal year 2006.
In
addition to the operations of Avid, we plan to obtain any necessary financing
through one or more methods including either equity or debt financing and/or
negotiating additional licensing or collaboration agreements for our technology
platforms. There can be no assurances that we will be successful in raising
such
funds on terms acceptable to us, or at all, or that sufficient additional
capital will be raised to complete the research, development, and clinical
testing of our product candidates.
Successful
Development Of Our Products Is Uncertain. To Date, No Revenues Have Been
Generated From The Commercial Sale Of Our Products And Our Products May Not
Generate Revenues In The Future.
Our
development of current and future product candidates is subject to the risks
of
failure inherent in the development of new pharmaceutical products and products
based on new technologies. These risks include:
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delays
in product development, clinical testing or
manufacturing;
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unplanned
expenditures in product development, clinical testing or
manufacturing;
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failure
in clinical trials or failure to receive regulatory
approvals;
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emergence
of superior or equivalent products;
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inability
to manufacture on our own, or through others, product candidates
on a
commercial scale;
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inability
to market products due to third party proprietary
rights;
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election
by our partners not to pursue product development;
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failure
by our partners to develop products successfully; and
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failure
to achieve market acceptance.
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In
certain instances, we have experienced delays in our product development and
clinical testing as a result of slower than anticipated patient recruitment.
In
addition, we determined not to continue the further development of one product
candidate, Oncolym®, due to the failure by our partners to develop products
successfully and the emergence of superior or equivalent products, such as
Bexxar™, Zevalin®, and Rituxan®.
3
Because
of these risks, our research and development efforts or those of our partners
may not result in any commercially viable products. If significant portions
of
these development efforts are not successfully completed, required regulatory
approvals are not obtained, or any approved products are not commercially
successful, our business, financial condition and results of operations may
be
materially harmed.
Because
our licensing partners and we have not begun commercial sales of our products,
our revenue and profit potential is unproven and our limited operating history
makes it difficult for an investor to evaluate our business and prospects.
Our
technology may not result in any meaningful benefits to our current or potential
partners. No revenues have been generated from the commercial sale of our
products, and our products may not generate revenues in the future. Further,
due
to our limited operating history, we have difficulty accurately forecasting
our
revenue. Our business and prospects should be considered in light of the
heightened risks and unexpected expenses and problems we may face as a company
in an early stage of development in a new and rapidly evolving
industry.
We
Have Had Significant Losses And We Anticipate Future
Losses.
We
have
incurred net losses in most fiscal years since we began operations in 1981.
The
following table represents net losses incurred during the past three fiscal
years and our most recent fiscal quarter ended July 31, 2005:
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Net
Loss
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Quarter
Ended July 2005
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$
4,339,000
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Fiscal
Year 2005
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$15,452,000
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Fiscal
Year 2004
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$14,345,000
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Fiscal
Year 2003
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$11,559,000
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As
of
July 31, 2005, we had an accumulated deficit of $174,142,000 (unaudited). While
we expect to generate revenues from Avid’s contract manufacturing services, in
an effort to achieve and sustain profitable operations, we must successfully
develop and obtain regulatory approval for our products, either alone or with
others, and must also manufacture, introduce, market and sell our products.
The
costs associated with clinical trials and product manufacturing is very
expensive and the time frame necessary to achieve market success for our
products is long and uncertain. We do not expect to generate product or royalty
revenues
for at least the next 2 years, and we may never generate product revenues
sufficient to become profitable or to sustain profitability.
Our
Product Development Efforts May Not Be Successful.
Since
our inception, we have been engaged in the development of drugs and related
therapies for the treatment of people with cancer. We recently began exploring
the use of one of our product candidates, Tarvacin™, for the treatment of viral
infections (in particular enveloped viruses) and are in the process of enrolling
a clinical trial for the treatment of people with the hepatitis C virus. Our
product candidates have not received regulatory approval and are generally
in
research, clinical and pre-clinical stages of development. If the results from
any of the clinical trials are poor, those results may adversely affect our
ability to raise additional capital, which will affect our ability to continue
full-scale research and development for our antibody technologies. In addition,
our product candidates may take longer than anticipated to progress through
clinical trials, or patient enrollment in the clinical trials may be delayed
or
prolonged significantly, thus delaying the clinical trials. Patient enrollment
is a function of many factors, including the size of the patient population,
the
nature of the protocol, the proximity of patients to the clinical sites, the
eligibility criteria for the study, and the availability of insurance coverage.
In addition, because our Cotara® product currently in clinical trials represents
a departure from more commonly used methods for cancer treatment, potential
patients and their doctors may be inclined to use conventional therapies, such
as chemotherapy, rather than enroll patients in our clinical
study.
4
Clinical
Trials Required For Our Product Candidates Are Expensive And Time Consuming,
And
Their Outcome Is Uncertain.
In
order
to obtain FDA approval to market a new drug product, our partners or we must
demonstrate proof of safety and efficacy in humans. To meet these requirements,
our partners or we will have to conduct extensive pre-clinical testing and
“adequate and well-controlled” clinical trials. Conducting clinical trials is a
lengthy, time-consuming and expensive process. The length of time may vary
substantially according to the type, complexity, novelty and intended use of
the
product candidate, and often can be several years or more per trial. Delays
associated with products for which we are directly conducting pre-clinical
or
clinical trials may cause us to incur additional operating expenses. Moreover,
we will continue to be affected by delays associated with the pre-clinical
testing and clinical trials of certain product candidates conducted by our
partners over which we have no control. The commencement and rate of completion
of clinical trials may be delayed by many factors, including, for
example:
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the
inability to manufacture sufficient quantities of qualified materials
under current good manufacturing practices, or cGMPs, for use in
clinical
trials;
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the
need or desire to modify our manufacturing processes;
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slower
than expected rates of patient recruitment;
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the
inability to adequately observe patients after
treatment;
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changes
in regulatory requirements for clinical trials;
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the
lack of effectiveness during the clinical trials;
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unforeseen
safety issues;
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·
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delays,
suspension, or termination of the clinical trials due to the institutional
review board responsible for overseeing the study at a particular
study
site; and
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government
or regulatory delays or “clinical holds” requiring suspension or
termination of the trials.
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Even
if
we obtain positive results from pre-clinical or clinical trials, we may not
achieve the same success in future trials. Clinical trials may not demonstrate
statistically sufficient safety and effectiveness to obtain the requisite
regulatory approvals for product candidates employing our
technology.
Historically,
we have experienced slower than expected rates of patient recruitment in certain
of our Cotara® clinical trials. As a result, in certain instances, we have
experienced delays in our product development and clinical testing. Clinical
trials that we conduct or that third-parties conduct on our behalf may not
demonstrate sufficient safety and efficacy to obtain the requisite regulatory
approvals for any of our product candidates. We expect to commence new clinical
trials from time to time in the course of our business as our product
development work continues. The failure of clinical trials to demonstrate safety
and effectiveness for our desired indications could harm the development of
that
product candidate as well as other product candidates. Any change in, or
termination of, our clinical trials could materially harm our business,
financial condition and results of operations.
If
We Cannot License Or Sell Our Cotara®, It May Be Delayed Or Never Be Further
Developed.
We
have
recently concluded our Phase I study with Cotara® for colorectal cancer, and
recently entered into a collaboration with New Approaches to Brain Tumor Therapy
Consortium (“NABTT”) that has initiated the first part of our FDA approved Phase
II/III registration trial with Cotara® for the treatment of brain cancer. The
Cotara® Phase II/III registration study for brain cancer is at the stage in
development where substantial financial resources are needed to complete
clinical studies necessary for potential product approval. We do not presently
have the financial resources internally to complete the entire remaining portion
of the Phase II/III registration trial. We therefore intend to continue to
seek
a licensing or funding partner for Cotara®, and hope that the data from this
collaboration with NABTT will enhance our chances of finding such partner.
If a
partner is not found for this technology, we may not be able to advance the
project past its current state of development. Because there are a limited
number of companies which have the financial resources, the internal
infrastructure, the technical capability and the marketing infrastructure to
develop and market a radiopharmaceutical based anti-cancer drug, we may not
find
a suitable partnering candidate for Cotara®. If we are not successful in
licensing or funding Cotara®, we may explore the possibility of a spin-off of
the technology into a separate entity whereby the Company will contribute the
technology and the other entity will fund future clinical development in
exchange for a percentage ownership of the new entity. We cannot assure you
that
we will be able to find a suitable licensing or funding partner for this
technology. Furthermore, we cannot assure you that if we do find a suitable
licensing partner, the financial terms that they propose will be acceptable
to
the Company.
5
Our
Dependency On One Radiolabeling Supplier May Negatively Impact Our Ability
To
Complete Clinical Trials And Market Our Products.
We
have
procured our antibody radioactive isotope combination services (“radiolabeling”)
with Iso-tex Diagnostics, Inc. for all clinical trials using Cotara®. If this
supplier is unable to continue to qualify its facility or label and supply
our
antibody in a timely manner, our current clinical trial or potential licensing
partner’s clinical trials using radiolabeling technology could be adversely
affected and delayed. While there are other suppliers for radioactive isotope
combination services, our clinical trial would be delayed for up to 12 to 18
months because it may take that amount of time to certify a new facility under
current Good Manufacturing Practices and qualify the product, plus we would
incur significant costs to transfer our technology to another vendor. Prior
to
commercial distribution of any of our products, if approved, we will be required
to identify and contract with a company for commercial antibody manufacturing
and radioactive isotope combination services. An antibody that has been combined
with a radioactive isotope, such as Iodine 131, cannot be stored for long
periods of time, as it must be used within one week of being radiolabeled to
be
effective. Accordingly, any change in our existing or future contractual
relationships with, or an interruption in supply from, any such third-party
service provider or antibody supplier could negatively impact our ability to
complete ongoing clinical trials conducted by us or a potential licensing
partner.
Our
Manufacturing Facilities May Not Continue To Meet Regulatory Requirements And
Have Limited Capacity.
Before
approving a new drug or biologic product, the FDA requires that the facilities
at which the product will be manufactured be in compliance with current good
manufacturing practices, or cGMP requirements. To be successful, our therapeutic
products must be manufactured for development and, following approval, in
commercial quantities, in compliance with regulatory requirements and at
acceptable costs. Currently, we manufacture all pre-clinical and clinical
material through Avid Bioservices, our wholly-owned subsidiary. While we believe
our current facilities are adequate for the limited production of product
candidates for clinical trials, our facilities may not be adequate to produce
sufficient quantities of any products for commercial sale.
If
we are
unable to establish and maintain a manufacturing facility or secure third-party
manufacturing capacity within our planned time and cost parameters, the
development and sales of our products and our financial performance may be
materially harmed.
We
may
also encounter problems with the following:
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production
yields;
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quality
control and assurance;
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shortages
of qualified personnel;
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compliance
with FDA regulations, including the demonstration of purity and
potency;
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changes
in FDA requirements;
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production
costs; and/or
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development
of advanced manufacturing techniques and process
controls.
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In
addition, any third-party manufacturer and we will be required to register
manufacturing facilities with the FDA and other regulatory authorities. The
facilities will be subject to inspections confirming compliance with cGMP or
other regulations. If any of our third-party manufacturers or we fail to
maintain regulatory compliance, the FDA can impose regulatory sanctions
including, among other things, refusal to approve a pending application for
a
new drug product or biologic product, or revocation of a pre-existing approval.
As a result, our business, financial condition and results of operations may
be
materially harmed.
6
We
May Have Significant Product Liability Exposure Because We Maintain Only Limited
Product Liability Insurance.
We
face
an inherent business risk of exposure to product liability claims in the event
that the administration of one of our drugs during a clinical trial adversely
affects or causes the death of a patient. Although we maintain product liability
insurance for clinical studies in the amount of $1,000,000 per occurrence or
$1,000,000 in the aggregate on a claims-made basis, this coverage may not be
adequate. Product liability insurance is expensive, difficult to obtain and
may
not be available in the future on acceptable terms, if at all. Our inability
to
obtain sufficient insurance coverage on reasonable terms or to otherwise protect
against potential product liability claims in excess of our insurance coverage,
if any, or a product recall, could negatively impact our financial position
and
results of operations.
In
addition, the contract manufacturing services that we offer through Avid expose
us to an inherent risk of liability as the antibodies or other substances
manufactured by Avid, at the request and to the specifications of our customers,
could possibly cause adverse effects or have product defects. We obtain
agreements from our customers indemnifying and defending us from any potential
liability arising from such risk. There can be no assurance that such
indemnification agreements will adequately protect us against potential claims
relating to such contract manufacturing services or protect us from being named
in a possible lawsuit. Although Avid has procured insurance coverage, there
is
no guarantee that we will be able to maintain our existing coverage or obtain
additional coverage on commercially reasonable terms, or at all, or that such
insurance will provide adequate coverage against all potential claims to which
we might be exposed. A successful partially or completely uninsured claim
against Avid would have a material adverse effect on our consolidated
operations.
The
Liquidity Of Our Common Stock Will Be Adversely Affected If Our Common Stock
Is
Delisted from The Nasdaq SmallCap Market.
Our
common stock is presently traded on The Nasdaq SmallCap Market. To maintain
inclusion on the Nasdaq SmallCap Market, we must continue to meet the following
six listing requirements:
|
1.
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Net
tangible assets of at least $2,500,000 or market capitalization of
at
least $35,000,000 or net income of at least $500,000 in either our
latest
fiscal year or in two of our last three fiscal
years;
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2.
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Public
float of at least 500,000 shares;
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3.
|
Market
value of our public float of at least
$1,000,000;
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4.
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A
minimum closing bid price of $1.00 per share of common stock, without
falling below this minimum bid price for a period of 30 consecutive
trading days;
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5.
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At
least two market makers; and
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6.
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At
least 300 stockholders, each holding at least 100 shares of common
stock.
|
We
cannot
guarantee that we will be able to maintain the minimum closing bid price
requirement or maintain any of the other requirements in the future. The market
price of our common stock has generally been highly volatile. During fiscal
year
2005 and the first quarter of fiscal year 2006, the trading price of our common
stock on the Nasdaq SmallCap Market ranged from $0.88 per share to $1.96 per
share. If we fail to meet any of the Nasdaq SmallCap Market listing
requirements, the market value of our common stock could fall and holders of
common stock would likely find it more difficult to dispose of the common
stock.
If
our
common stock is delisted, we would apply to have our common stock quoted on
the
over-the-counter electronic bulletin board. Upon any such delisting, our common
stock would become subject to the regulations of the Securities and Exchange
Commission relating to the market for penny stocks. A penny stock, as defined
by
the Penny Stock Reform Act, is any equity security not traded on a national
securities exchange or quoted on the NASDAQ National or SmallCap Market, that
has a market price of less than $5.00 per share. The penny stock regulations
generally require that a disclosure schedule explaining the penny stock market
and the risks associated therewith be delivered to purchasers of penny stocks
and impose various sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited investors.
The
broker-dealer must make a suitability determination for each purchaser and
receive the purchaser’s written agreement prior to the sale. In addition, the
broker-dealer must make certain mandated disclosures, including the actual
sale
or purchase price and actual bid offer quotations, as well as the compensation
to be received by the broker-dealer and certain associated persons. The
regulations applicable to penny stocks may severely affect the market liquidity
for our common stock and could limit your ability to sell your securities in
the
secondary market.
7
The
Sale Of Substantial Shares Of Our Common Stock May Depress Our Stock
Price.
As
of
September 9, 2005, we had approximately 166,018,000 shares of our common stock
outstanding, and the last reported sales price of our common stock was $1.12
per
share on September 9, 2005.
We
could
also issue up to 24,540,237 additional shares of our common stock upon the
exercise of outstanding options and warrants as further described in the
following table:
|
Number
of Shares Outstanding
|
Weighted
Average Per Share Exercise Price
|
||||||
|
Common
shares issuable upon exercise of outstanding stock options
|
10,998,441
|
$
|
1.59
|
||||
|
Common
shares issuable upon exercise of outstanding warrants
|
13,541,796
|
$
|
1.81
|
||||
|
Total
|
24,540,237
|
$
|
1.71
|
||||
Of
the
total warrants and options outstanding as of September 9, 2005, approximately
10,042,000 options and warrants would be considered dilutive to stockholders
because we would receive an amount per share which is less than the market
price
of our common stock at September 9, 2005. With regard to options to purchase
3,100,000 shares of our common stock, we have obtained standstill agreements
from the holders of these options pursuant to which they have agreed not to
exercise such options until we have obtained approval from our stockholders
to
increase our authorized shares of common stock.
Our
Highly Volatile Stock Price And Trading Volume May Adversely Affect The
Liquidity Of Our Common Stock.
The
market price of our common stock and the market prices of securities of
companies in the biotechnology sector have generally been highly volatile and
are likely to continue to be highly volatile.
The
following table shows the high and low sales price and trading volume of our
common stock for each quarter in the three years ended April 30, 2005 and our
most recent quarter ended July 31, 2005:
|
Common Stock Sales
Price
|
Common
Stock Daily
Trading Volume (000’s
omitted)
|
|||||||
|
High
|
Low
|
High
|
Low
|
|||||
|
Fiscal
Year 2006
|
||||||||
|
Quarter
Ended July 31, 2005
|
$1.31
|
$0.92
|
7,715
|
178
|
||||
|
Fiscal
Year 2005
|
||||||||
|
Quarter
Ended April 30, 2005
|
$1.64
|
$1.11
|
5,945
|
223
|
||||
|
Quarter
Ended January 31, 2005
|
$1.45
|
$0.99
|
6,128
|
160
|
||||
|
Quarter
Ended October 31, 2004
|
$1.96
|
$0.95
|
2,141
|
148
|
||||
|
Quarter
Ended July 31, 2004
|
$1.92
|
$0.88
|
1,749
|
131
|
||||
|
Fiscal
Year 2004
|
||||||||
|
Quarter
Ended April 30, 2004
|
$2.85
|
$1.56
|
3,550
|
320
|
||||
|
Quarter
Ended January 31, 2004
|
$3.14
|
$2.01
|
6,062
|
201
|
||||
|
Quarter
Ended October 31, 2003
|
$2.44
|
$1.25
|
18,060
|
314
|
||||
|
Quarter
Ended July 31, 2003
|
$2.19
|
$0.60
|
12,249
|
255
|
||||
|
Fiscal
Year 2003
|
||||||||
|
Quarter
Ended April 30, 2003
|
$0.85
|
$0.44
|
3,239
|
94
|
||||
|
Quarter
Ended January 31, 2003
|
$1.20
|
$0.50
|
3,619
|
59
|
||||
|
Quarter
Ended October 31, 2002
|
$0.93
|
$0.35
|
1,696
|
104
|
||||
|
Quarter
Ended July 31, 2002
|
$2.29
|
$0.66
|
1,686
|
113
|
||||
8
The
market price of our common stock may be significantly impacted by many factors,
including, but not limited to:
|
·
|
Announcements
of technological innovations or new commercial products by us or
our
competitors;
|
|
|
·
|
publicity
regarding actual or potential clinical trial results relating to
products
under development by us or our competitors;
|
|
|
·
|
our
financial results or that of our competitors;
|
|
|
·
|
published
reports by securities analysts;
|
|
|
·
|
announcements
of licensing agreements, joint ventures, strategic alliances, and
any
other transaction that involves the sale or use of our technologies
or
competitive technologies;
|
|
|
·
|
developments
and/or disputes concerning our patent or proprietary
rights;
|
|
|
·
|
regulatory
developments and product safety concerns;
|
|
|
·
|
general
stock trends in the biotechnology and pharmaceutical industry
sectors;
|
|
|
·
|
public
concerns as to the safety and effectiveness of our
products;
|
|
|
·
|
economic
trends and other external factors, including but not limited to,
interest
rate fluctuations, economic recession, inflation, foreign market
trends,
national crisis, and disasters; and
|
|
|
·
|
health
care reimbursement reform and cost-containment measures implemented
by
government agencies.
|
These
and
other external factors have caused and may continue to cause the market price
and demand for our common stock to fluctuate substantially, which may limit
or
prevent investors from readily selling their shares of common stock, and may
otherwise negatively affect the liquidity of our common stock.
If
We Are Unable To Obtain, Protect And Enforce Our Patent Rights, We May Be Unable
To Effectively Protect Or Exploit Our Proprietary Technology, Inventions And
Improvements.
Our
success depends in part on our ability to obtain, protect and enforce
commercially valuable patents. We try to protect our proprietary positions
by
filing United States and foreign patent applications related to our proprietary
technology, inventions and improvements that are important to developing our
business. However, if we fail to obtain and maintain patent protection for
our
proprietary technology, inventions and improvements, our competitors could
develop and commercialize products that would otherwise infringe upon our
patents.
Our
patent position is generally uncertain and involves complex legal and factual
questions. Legal standards relating to the validity and scope of claims in
the
biotechnology and biopharmaceutical fields are still evolving. Accordingly,
the
degree of future protection for our patent rights is uncertain. The risks and
uncertainties that we face with respect to our patents include the
following:
|
·
|
the
pending patent applications we have filed or to which we have exclusive
rights may not result in issued patents or may take longer than
we expect
to result in issued patents;
|
|
|
·
|
the
claims of any patents that issue may not provide meaningful
protection;
|
|
|
·
|
we
may be unable to develop additional proprietary technologies that
are
patentable;
|
|
|
·
|
the
patents licensed or issued to us may not provide a competitive
advantage;
|
|
|
·
|
other
parties may challenge patents licensed or issued to us;
|
|
|
·
|
disputes
may arise regarding the invention and corresponding ownership rights
in
inventions and know-how resulting from the joint creation or use
of
intellectual property by us, our licensors, corporate partners
and other
scientific collaborators; and
|
|
|
·
|
other
parties may design around out patented
technologies.
|
We
May Become Involved In Lawsuits To Protect Or Enforce Our Patents That Would
Be
Expensive And Time Consuming.
In
order
to protect or enforce our patent rights, we may initiate patent litigation
against third parties. In addition, we may become subject to interference or
opposition proceedings conducted in patent and trademark offices to determine
the priority of inventions. The defense of intellectual property rights,
including patent rights through lawsuits, interference or opposition
proceedings, and other legal and administrative proceedings, would be costly
and
divert our technical and management personnel from their normal
responsibilities. An adverse determination of any litigation or defense
proceedings could put our patent application at risk of not being
issued.
9
Furthermore,
because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our confidential
information could be compromised by disclosure during this type of litigation.
For example, during the course of this kind of litigation, confidential
information may be inadvertently disclosed in the form of documents or testimony
in connection with discovery requests, depositions or trial testimony. This
disclosure could materially adversely affect our business and financial
results.
We
May Not Be Able To Compete With Our Competitors In The Biotechnology Industry
Because Many Of Them Have Greater Resources Than We Do And They Are Further
Along In Their Development Efforts.
The
biotechnology industry is intensely competitive. We face competition from
pharmaceutical companies, pharmaceutical divisions of chemical companies, and
biotechnology companies of various sizes. Some or all of these companies may
have greater financial resources, larger technical staffs, and larger research
budgets than we have, as well as greater experience in developing products
and
running clinical trials. We expect to continue to experience significant and
increasing levels of competition in the future. In addition, there may be other
companies which are currently developing competitive technologies and products
or which may in the future develop technologies and products which are
comparable or superior to our technologies and products.
We
are
conducting the initial part of our Cotara® product registration trial for the
treatment of recurrent brain cancer as a stand-alone study in collaboration
with
New Approaches to Brain Tumor Therapies (“NABTT”) consortium. Companies
conducting late stage clinical trials in brain cancer that may complete with
us
include, among others, Xenova Group plc, Allos Therapeutics, Inc. and NeoPharm.
Xenova has begun patient dosing in a phase III clinical trial of TransMID™ for
the treatment of progressive or recurrent non-operable glioblastoma multiforme.
Allos Therapeutics, Inc. is developing RSR13 (efaproxiral) for the treatment
of
patients with brain metastases originating from breast cancer in a phase III
study. NeoPharm is developing IL13-PE38QQR for the treatment of recurrent
glioblastoma multiforme in a Phase III study.
Most
of
our other products are in early stages of development or clinical trials,
including Tarvacin™. Tarvacin™ for the treatment of advanced solid cancers is
currently in Phase I clinical trials. As for Tarvacin™, there are a number of
possible competitors with approved products or who are developing targeted
agents in combination with standard chemotherapy, including but not limited
to, Avastin™ by Genentech, Iressa® by AstraZeneca, Gleevec® by Novartis,
Tarceva™ by OSI Pharmaceuticals and Genentech, Erbitux™ by ImClone, and
panitumumab by Abgenix. Due to the significant number of companies attempting
to
develop cancer therapeutics combined with the fact that our other products
are
generally in early stages of development, we cannot provide an accurate listing
of all possible competitors at this stage of development.
In
addition, we received clearance from the FDA to commence a Phase I clinical
trial using Tarvacin™ for the treatment of hepatitis C virus (“HCV”). There are
a number of companies that have products approved and on the market for the
treatment of HCV, including but not limited to: Peg-Intron (pegylated
interferon-alpha-2b), Rebetol (ribavirin), and Intron-A (interferon-alpha-2a),
which are marketed by Schering-Plough, and Pegasys (pegylated
interferon-alpha-2a), Copegus (ribavirin USP), and Roferon-A
(interferon-alpha-2a), which are marketed by Roche. In addition, a number of
companies have products in clinical trials for the treatment of HCV, such as
Schering-Plough, Idenix Pharmaceuticals, Inc., Vertex Pharmaceuticals
Incorporated, Valeant Pharmaceuticals International, Anadys Pharmaceuticals,
Inc., among others.
New
And Potential New Accounting Pronouncements May Impact Our Future Financial
Position And Results Of Operations
There
may
be potential new accounting pronouncements or regulatory rulings, which may
have
an impact on our future financial position and results of operations. In
particular, there are a number of rule changes and proposed legislative
initiatives following the recent corporate bankruptcies and failures which
could
result in changes in accounting rules, including the accounting for employee
stock options as an expense. These and other potential changes could materially
impact our assets and liabilities, and the expenses we report under generally
accepted accounting principles, and could adversely affect our operating results
or financial condition.
10
If
We Lose Qualified Management And Scientific Personnel Or Are Unable To Attract
And Retain Such Personnel, We May Be Unable To Successfully Develop Our Products
Or We May Be Significantly Delayed In Developing Our
Products.
Our
success is dependent, in part, upon a limited number of key executive officers,
each of whom is an at-will employee, and also upon our scientific researchers.
For example, because of his extensive understanding of our technologies and
product development programs, the loss of Mr. Steven King, our President and
Chief Executive Officer, would adversely affect our development efforts and
clinical trial programs during the 6 to 12 month period that we estimate it
would take to find and train a qualified replacement.
We
also
believe that our future success will depend largely upon our ability to attract
and retain highly-skilled research and development and technical personnel.
We
face intense competition in our recruiting activities, including competition
from larger companies with greater resources. We do not know if we will be
successful in attracting or retaining skilled personnel. The loss of certain
key
employees or our inability to attract and retain other qualified employees
could
negatively affect our operations and financial performance.
Some
of
the statements under “About Peregrine Pharmaceuticals, Inc.”, “Risk Factors” and
elsewhere in this prospectus constitute “forward-looking” statements. These
statements involve known and unknown risks, including, among others, risks
resulting from economic and market conditions, the regulatory environment in
which we operate, pricing pressures, accurately forecasting operating and
capital expenditures and clinical trial costs, competitive activities,
uncertainties of litigation and other business conditions, and are subject
to
uncertainties and assumptions contained elsewhere in this prospectus. We base
our forward-looking statements on information currently available to us, and,
in
accordance with the requirements of federal securities laws, we will disclose
to
you material developments affecting such statements. Our actual operating
results and financial performance may prove to be very different from what
we
have predicted as of the date of this prospectus due to certain risks and
uncertainties. The risks described above in the section entitled "Risk Factors"
specifically address some of the factors that may affect our future operating
results and financial performance.
Except
as
otherwise provided in the applicable prospectus supplement, we will use the
net
proceeds from the sale of the securities for general corporate purposes, which
may include research and development expenses, clinical trial expenses,
expansion of our contract manufacturing capabilities and increasing our working
capital. Pending the application of the net proceeds, we expect to invest the
proceeds in investment grade, interest bearing securities.
The
principal purposes of this offering are to increase our operating and financial
flexibility. As of the date of this prospectus, we cannot specify with certainty
all of the particular uses for the net proceeds we will have upon completion
of
this offering. Accordingly, our management will have broad discretion in the
application of net proceeds, if any.
As
of the
date of the prospectus, we are authorized to issue up to 200,000,000 shares
of
common stock, $.001 par value per share. As of September 9, 2005, 166,017,599
shares of our common stock were outstanding, and an additional 24,540,237 shares
were reserved for issuance upon the exercise of outstanding stock options and
warrants. With regard to options to purchase 3,100,000 shares of our common
stock, we have obtained standstill agreements from the holders of these options
pursuant to which they have agreed not to exercise such options until we have
obtained approval from our stockholders to increase our authorized shares of
common stock.
11
Dividends
Our
Board
of Directors may, out of funds legally available, at any regular or special
meeting, declare dividends to the holders of shares of our common stock as
and
when they deem expedient, subject to the rights of holders of the preferred
stock, if any.
Voting
Each
share of common stock entitles the holders to one vote per share on all matters
requiring a vote of the stockholders, including the election of directors.
No
holders of shares of common stock shall have the right to vote such
shares cumulatively in any election for the Board of Directors.
Rights
Upon Liquidation
In
the
event of our voluntary or involuntary liquidation, dissolution, or winding
up,
the holders of our common stock will be entitled to share equally in our assets
available for distribution after payment in full of all debts and after the
holders of preferred stock, if any, have received their liquidation preferences
in full.
Miscellaneous
No
holders of shares of our common stock shall have any preemptive rights to
subscribe for, purchase or receive any shares of any class, whether now or
hereafter authorized, or any options or warrants to purchase any such shares,
or
any securities convertible into or exchanged for any such shares, which may
at
any time be issued, sold or offered for sale by us.
We
may
sell the securities from time to time pursuant to underwritten public offerings,
negotiated transactions, block trades or a combination of these methods. We
may
sell the securities (1) through underwriters or dealers, (2) through
agents, and/or (3) directly to one or more purchasers. We may distribute
the securities from time to time in one or more transactions at:
|
·
|
a
fixed price or prices, which may be
changed;
|
|
·
|
market
prices prevailing at the time of
sale;
|
|
·
|
prices
related to the prevailing market prices; or
|
|
·
|
negotiated
prices.
|
We
may
solicit directly offers to purchase the securities being offered by this
prospectus. We may also designate agents to solicit offers to purchase the
securities from time to time. We will name in a prospectus supplement any agent
involved in the offer or sale of our securities.
If
we
utilize a dealer in the sale of the securities being offered by this prospectus,
we will sell the securities to the dealer, as principal. The dealer may then
resell the securities to the public at varying prices to be determined by the
dealer at the time of resale.
If
we
utilize an underwriter in the sale of the securities being offered by this
prospectus, we will execute an underwriting agreement with the underwriter
at
the time of sale and will provide the name of any underwriter in the prospectus
supplement which the underwriter will use to make resales of the securities
to
the public. In connection with the sale of the securities, we, or the purchasers
of securities for whom the underwriter may act as agent, may compensate the
underwriter in the form of underwriting discounts or commissions. The
underwriter may sell the securities to or through dealers, and the underwriter
may compensate those dealers in the form of discounts, concessions or
commissions.
12
With
respect to underwritten public offerings, negotiated transactions and block
trades, we will provide in the applicable prospectus supplement any compensation
we pay to underwriters, dealers or agents in connection with the offering of
the
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Underwriters, dealers and agents
participating in the distribution of the securities may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended,
and
any discounts and commissions received by them and any profit realized by them
on resale of the securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers
and
agents against civil liabilities, including liabilities under the Securities
Act, or to contribute to payments they may be required to make in respect
thereof.
Shares
of
common stock sold pursuant to the registration statement of which this
prospectus is a part will be authorized for quotation and trading on the Nasdaq
SmallCap Market. To facilitate the offering of securities, certain persons
participating in the offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the securities. This may include
over-allotments or short sales of the securities, which involve the sale by
persons participating in the offering of more securities than we sold to them.
In these circumstances, these persons would cover such over-allotments or short
positions by making purchases in the open market or by exercising their
over-allotment option. In addition, these persons may stabilize or maintain
the
price of the securities by bidding for or purchasing securities in the open
market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if securities sold by
them are repurchased in connection with stabilization transactions. The effect
of these transactions may be to stabilize or maintain the market price of the
securities at a level above that which might otherwise prevail in the open
market. These transactions may be discontinued at any time.
The
underwriters, dealers and agents may engage in other transactions with us,
or
perform other services for us, in the ordinary course of their
business.
In
order
to comply with the securities laws of certain states, if applicable, the
securities offered by this prospectus may be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the securities offered by this prospectus may not be sold unless such
securities have been registered or qualified for sale in these states or an
exemption from registration or qualification is available and complied
with.
Our
common stock is currently traded on the Nasdaq SmallCap Market under the symbol
“PPHM.”
The
validity of the securities offered by this prospectus has been passed upon
for
us by Snell & Wilmer LLP, Costa Mesa, California, counsel to Peregrine
Pharmaceuticals, Inc. Certain legal matters will be passed upon for any agents
or underwriters by counsel for such agents or underwriters identified in the
applicable prospectus supplement.
Ernst
& Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements and schedules included in our Annual Report
on
Form 10-K for the year ended April 30, 2005, and management's assessment of
the
effectiveness of our internal control over financial reporting as of April
30,
2005, as set forth in their reports, which is incorporated by reference in
this
prospectus and elsewhere in the registration statement. Our financial
statements and schedules and management's assessment are incorporated by
reference in reliance on Ernst & Young LLP's reports, given on their
authority as experts in accounting and auditing.
We
have
filed with the Commission a registration statement on Form S-3 under the
Securities Act of 1933, relating to the securities being offered by this
prospectus. For further information pertaining to our securities being offering
by this prospectus, reference is made to such registration statement. This
prospectus constitutes the prospectus we filed as a part of the registration
statement and it does not contain all information in the registration statement,
certain portions of which have been omitted in accordance with the rules and
regulations of the Commission. In addition, we are subject to the informational
requirements of the Securities Exchange Act of 1934, and, in accordance with
such requirements, files reports, proxy statements and other information with
the Commission relating to its business, financial statements and other matters.
Reports and proxy and information statements filed under Section 14(a) and
14(c)
of the Securities Exchange Act of 1934 and other information filed with the
Commission as well as copies of the registration statement can be inspected
and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at
the Commission's Midwest Regional Offices at 500 West Madison Street, Chicago,
Illinois 60606. Copies of such material can also be obtained at prescribed
rates
from the Public Reference Section of the Commission at its principal office
at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
may also be obtained electronically by visiting the Commission's web site on
the
Internet at http://www.sec.gov. Our common stock is traded on the Nasdaq
SmallCap Market under the symbol "PPHM." Reports, proxy statements and other
information concerning our Company may be inspected at the National Association
of Securities Dealers, Inc., at 1735 K Street, N.W., Washington D.C.
20006.
13
The
Commission allows us to "incorporate by reference" into this prospectus the
documents we file with them, which means that we can disclose important
information to you by referring you to these documents. The information that
we
incorporate by reference into this prospectus is considered to be part of this
prospectus, and information that we file later with the Commission automatically
updates and supersedes any information in this prospectus. We have filed the
following documents with the Commission. These documents are incorporated by
reference as of their respective dates of filing:
|
1.
|
our
Annual Report on Form 10-K for the fiscal year ended April 30,
2005, as
filed with the Commission on July 14, 2005, under Section 13(a)
of the
Securities Exchange Act of 1934;
|
|
|
2.
|
our
Quarterly
Report on Form 10-Q for the quarter ended July 31, 2005, filed
with the
Commission on September 9, 2005;
|
|
|
3.
|
our
Current Reports on Form 8-K as furnished to the Commission on July
15,
2005 and September 9, 2005;
|
|
|
|
||
|
4.
|
our
Definitive Proxy Statement with respect to the Annual Meeting of
Stockholders to be held on October 24, 2005, as filed with the
Commission
on August 29, 2005;
|
|
|
5.
|
the
description of our common stock contained in our Registration Statement
on
Form 8-A and Form 8-B (Registration of Successor Issuers) filed
under the
Securities Exchange Act of 1934, including any amendment or report
filed
for the purpose of updating such description; and
|
|
|
6.
|
all
other reports filed by us under Section 13(a) of 15(d) of the Securities
Exchange Act of 1934 since the end of our fiscal year ended April
30,
2005.
|
All
documents we have filed with the Commission under Sections 13(a), 13(c), 14
or
15(d) of the Securities Exchange Act of 1934 after the date of the initial
registration statement and prior to the effective date of the registration
statement or subsequent to the date of this prospectus and prior to the filing
of a post-effective amendment indicating that all securities offered have been
sold (or which re-registers all securities then remaining unsold), are deemed
to
be incorporated in this prospectus by this reference and to be made a part
of
this prospectus from the date of filing of such documents.
We
will
provide, without charge, upon written or oral request of any person to whom
a
copy of this prospectus is delivered, a copy of any or all of the foregoing
documents and information that has been or may be incorporated in this
prospectus by reference, other than exhibits to such documents. Requests for
such documents and information should be directed to Attention: Paul J. Lytle,
Chief Financial Officer, 14272 Franklin Avenue, Tustin, California 92780-7017,
telephone number (714) 508-6000. See also “Where to Learn More About
Us.”
14
Our
Bylaws provide that we will indemnify our directors and officers and may
indemnify our employees and other agents to the fullest extent permitted by
law.
We believe that indemnification under our Bylaws covers at least negligence
and
gross negligence by indemnified parties, and permits us to advance litigation
expenses in the case of stockholder derivative actions or other actions, against
an undertaking by the indemnified party to repay such advances if it is
ultimately determined that the indemnified party is not entitled to
indemnification. We have liability insurance for our directors and
officers.
In
addition, our Certificate of Incorporation provides that, under Delaware law,
our directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty as a director to us and our stockholders. This
provision in the Certificate of Incorporation does not eliminate the directors'
fiduciary duty, and in appropriate circumstances equitable remedies such as
injunctive or other forms of non-monetary relief will remain available under
Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to our Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
Provisions
of our Bylaws require us, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors
or
officers (other than liabilities arising from actions not taken in good faith
or
in a manner the indemnitee believed to be opposed to our best interests) to
advance their expenses incurred as a result of any proceeding against them
as to
which they could be indemnified and to obtain directors' insurance if available
on reasonable terms. To the extent that indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers or
persons controlling our Company as discussed in the foregoing provisions, we
have been informed that in the opinion of the Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, and is
therefore unenforceable. We believe that our Certificate of Incorporation and
Bylaw provisions are necessary to attract and retain qualified persons as
directors and officers.
We
have
in place a directors' and officers' liability insurance policy that, subject
to
the terms and conditions of the policy, insures our directors and officers
against losses arising from any wrongful act (as defined by the policy) in
his
or her capacity as a director or officer. The policy reimburses us for amounts,
which we lawfully indemnifies or is required or permitted by law to indemnify
its directors and officers.
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You
should rely only on the information contained in this document
or to which
we have referred you. We have not authorized anyone to provide
you with
information that is different. This document may only be used
where it is
legal to sell these securities. The information in this document
may only
be accurate on the date of this document.
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TABLE
OF CONTENTS
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PROSPECTUS
SUMMARY
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1
|
Common
Stock
|
|
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RISK
FACTORS
|
3
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FORWARD-LOOKING
STATEMENTS
|
11
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USE
OF PROCEEDS
|
11
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DESCRIPTION
OF COMMON STOCK
|
11
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PLAN
OF DISTRIBUTION
|
12
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LEGAL
MATTERS
|
13
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EXPERTS
|
13
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WHERE
TO LEARN MORE ABOUT US
|
13
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INCORPORATION
OF CERTAIN
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DOCUMENTS
BY REFERENCE
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14
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PROSPECTUS |
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DISCLOSURE
OF COMMISSION
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POSITION
ON INDEMNIFICATION
|
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|
FOR
SECURITIES ACT LIABILITIES
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15
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Dated:
September 29, 2005
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