Filing
pursuant to Rule 424(b)(2)
Registration
Statement No. 333-99157
PROSPECTUS
SUPPLEMENT TO PROSPECTUS DATED
SEPTEMBER
10, 2002
22,486,233
SHARES OF
COMMON
STOCK
We
are
filing this Prospectus Supplement to inform you that OTA LLC, one of the
selling
stockholders under the Prospectus to which this Prospectus Supplement relates,
has assigned and transferred to Xmark JV Investment Partners, LLC the right
to
purchase up to 385,000 shares of our common stock, the rights under the original
warrants issued in August 2002 from our August 2002 private placement. The
warrants are exercisable on or before August 8, 2006, at an exercise price
of
$0.75 per share.
Xmark
JV
Investment Partners, LLC is now the selling stockholder with respect to 385,000
shares of our common stock.
Our
common stock is registered under Section 12(g) of the Securities Exchange
Act of
1934 and is listed on The Nasdaq Capital Market under the symbol "PPHM”. On
February 23, 2006, the last reported sale price of our common stock on The
Nasdaq Capital Market was $1.50 per share.
INVESTING
IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. SEE “RISK FACTORS” BEGINNING ON
PAGE 3 FOR A DESCRIPTION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PURCHASING THE SHARES OFFERED BY THIS PROSPECTUS.
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 Supplement is February 24, 2006
S-1
| Prospectus Supplement |
S-1
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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.
i
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 subsidiary, Avid
Bioservices, 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:
|
Products
in Clinical Trials
|
||||
|
Technology
Platform
|
Product
Name
|
Disease
|
Stage
of
Development
|
Development
Status Overview
|
|
Tumor
Necrosis
Therapy(“TNT”)
|
Cotara®
|
Brain
Cancer
|
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.
|
|
Anti-
Phospholipid
Therapy
|
Tarvacin™
|
Advanced
Solid
Cancers
|
Phase
I
|
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 University of Texas M. D. Anderson Cancer Center, Arizona
Cancer
Center in Tucson, Arizona, and Premiere Oncology in Santa Monica,
California and Scottsdale, Arizona.
|
|
Anti-
Phospholipid
Therapy
|
Tarvacin™
|
Hepatitis
C
Virus
|
Phase
I
|
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.
|
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.
About
Peregrine Pharmaceuticals, Inc.
Peregrine
Pharmaceuticals, Inc., located in Tustin, California, is a biopharmaceutical
company primarily engaged in the research, development, manufacture and
commercialization of cancer therapeutics and cancer diagnostics through a series
of proprietary platform technologies using monoclonal antibodies. During January
2002, our Company formed a wholly-owned subsidiary, Avid Bioservices, Inc.,
to
provide an array of contract manufacturing services, including contract
manufacturing of antibodies and proteins, cell culture development, process
development, and testing of biologics for biopharmaceutical and biotechnology
companies under current Good Manufacturing Practices.
As
used
in this prospectus, the terms “we”, “us”, “our”, “Company” and “Peregrine”
refers to Peregrine Pharmaceuticals, Inc., and our wholly-owned subsidiaries,
Avid Bioservices, Inc. and Vascular Targeting Technologies, Inc.
Our
main
focus is on the development of our collateral targeting agent technologies.
Collateral targeting agents typically use antibodies that bind to or target
components found in or on most solid tumors. An antibody is a naturally
occurring molecule that humans and other animals create in response to disease.
In pre-clinical and/or clinical studies, these antibodies are capable of
targeting and delivering therapeutic killing agents that kill cancerous tumor
cells. We currently have exclusive rights to over 50 issued U.S. and foreign
patents protecting various aspects of our technology and have additional pending
patent applications that we believe will further strengthen our patent position.
Our three collateral targeting agent technologies are known as tumor necrosis
therapy, vascular targeting agents and vasopermeation enhancement agents, and
are discussed in greater detail in our Annual Report on Form 10-K for the year
ended April 30, 2002, which was filed with the Securities and Exchange
Commission on August 13, 2002.
In
addition to collateral targeting agents, we have a direct tumor-targeting
antibody, Oncolym®, for the treatment of Non-Hodgkins B-cell Lymphoma. Oncolym®
is currently in a Phase I/II clinical trial, which was developed and initiated
by Schering A.G. Until recently, we continued to enroll patients as part of
the
clinical trial plan developed and initiated by Schering A.G. Based on our
available financial resources, however, we have currently suspended patient
enrollment for this study as we seek to license or partner Oncolym® and focus
our financial resources on our more advanced clinical trials.
Our
principal executive offices are located at 14272 Franklin Avenue, Suite 100,
Tustin, California 92780-7017, and our telephone number is (714)
508-6000.
-1-
About
the Offering
We
are
registering the resale of our common stock by the selling stockholders. The
selling stockholders and the specific number of shares that they each may resell
through this prospectus are listed on page 10. The shares offered for resale
by
this prospectus include the following:
| · |
5,221,540
common shares that are presently outstanding and owned
by the selling
stockholders,
|
| · |
11,749,981
common shares, which reflects a number that is 125% of
the number of
shares that may be acquired by the selling stockholders
upon the exercise
of outstanding warrants;
and
|
| · |
5,514,712
shares, which reflects a number that is 125% of the number
of shares that
may be acquired by the selling stockholders upon the conversion
of
outstanding
debentures.
|
The
figures noted above with respect to the outstanding debentures and warrants
reflect an additional 25% of the shares of common stock currently issuable
upon
conversion or exercise of the debentures and warrants, respectively, because
such additional shares are required to be included pursuant to the terms of
the
registration rights agreements that we entered into with the selling
stockholders.
Information
on Outstanding Shares
The
number of shares of our common stock outstanding before and after this offering
are set forth below:
| · |
Common
stock outstanding before this
offering
118,396,749
shares
|
| · |
Common
stock outstanding after this
offering
132,208,499
shares
|
The
numbers set forth above for the shares of common stock outstanding before this
offering is the number of shares of our common stock outstanding on August
29,
2002. The number of shares of common stock outstanding after this offering
includes (i) up to 9,399,982 shares of our common stock that may be issued
upon
the exercise of outstanding warrants and (ii) up to 4,411,768 shares of common
stock that may be issued upon the conversion of outstanding debentures that
may
be resold pursuant to this prospectus, but do not include the additional 25%
that we are required to include in the registration statement pursuant to the
relevant registration rights agreements. The warrants have exercise prices
of
either $0.71 or $0.75 per share, and the conversion price of the debentures
is
$0.85 per share.
The
numbers set forth above do not include 21,834,804 shares of our common stock
that, as of the date of this prospectus, are issuable upon the exercise of
outstanding options and warrants other than those covered by this prospectus.
These additional options and warrants are exercisable at prices ranging from
$0.24 to $5.28 per share, with a weighted average exercise price of $1.60 per
share.
-2-
An
investment in our common stock being offered for resale by the selling
stockholders 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.
At
August
29, 2002, we had approximately $9.5 million in cash and cash equivalents on
hand. We have expended substantial funds on the research, development and
clinical trials of our product candidates. 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 our contract manufacturing services provided by our subsidiary Avid
Bioservices, Inc. and/or from the sale and/or licensing of our products under
development. While we expect Avid to generate revenues during the foreseeable
future, we expect our monthly negative cash flow to continue for the foreseeable
future, due to our anticipated clinical trial activities using Cotara™, our
anticipated development costs associated with Vasopermeation Enhancement Agents
(“VEA’s”) and Vascular Targeting Agents (“VTA’s”), and expansion of our
manufacturing capabilities. Although we expect research and development expenses
to decrease over the next fiscal year primarily due to our available capital
resources, we have the ability to expand our research and development plans
based on potential capital resources obtained from future financing activities,
potential licensing arrangements, and the potential revenues generated from
Avid. We believe that we have sufficient cash on hand to meet our obligations
on
a timely basis through
at least the current fiscal year assuming
(i) we entered into no additional financing arrangements, (ii) we do not enter
into any licensing arrangements for our other product candidates and (iii)
we do
not generate any other revenue from Avid except for amounts committed to under
two signed contracts.
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 platform
technologies. 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.
We
Have Had Significant Losses And We Anticipate Future
Losses.
All
of
our products are currently in development, pre-clinical studies or clinical
trials, and no sales have been generated from commercial product sales. 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:
|
Net
Loss
|
||||
|
Fiscal
Year 2002
|
$
|
11,718,000
|
||
|
Fiscal
Year 2001
|
$
|
9,535,000
|
||
|
Fiscal
Year 2000
|
$
|
14,516,000
|
||
As
of
April 30, 2002, we had an accumulated deficit of $128,447,000. While we expect
to generate revenues from our contract manufacturing services to be provided
by
Avid, in order 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, contract manufacturing
and
contract isotope combination services are 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 revenues for at least the next two years,
and
we may never generate product revenues sufficient to become profitable or to
sustain profitability.
-3-
Our
Product Development Efforts May Not Be Successful.
Since
inception, we have been engaged in the development of drugs and related
therapies for the treatment of people with cancer. Our product candidates have
not received regulatory approval and are generally in 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 products currently in clinical trials represent 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 in our clinical study. These factors contributed to slower
than planned patient enrollment in our Phase II clinical study using Cotara™ for
the treatment of brain cancer. If we encounter similar delays during our planned
Phase III clinical study using Cotara™, we will likely experience increased
costs and delays in conducting the Phase III trial. If we experience any such
difficulties or delays with our other clinical trials, we may have to reduce
or
discontinue development or clinical testing of some or all of our product
candidates currently under development.
Our
Dependency On One Radiolabeling Supplier May Negatively Impact Our Ability
To
Complete Clinical Trials And Market Our Products.
For
the
past four years, we have procured our antibody radioactive isotope combination
services (“radiolabeling”) with Iso-tex Diagnostics, Inc. for all clinical
trials. If this supplier is unable to continue to qualify its facility or label
and supply our antibody in a timely manner, our clinical trials could be
adversely affected and significantly delayed. While there are other suppliers
for radioactive isotope combination services, our clinical trials would be
delayed for up to 12 to 18 months because it would 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 I-131,
cannot be stockpiled against future shortages because 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 and to market
our products, if approved.
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 $5,000,000 per occurrence or
$5,000,000 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, however, that
we
will be successful in obtaining such agreements in the future or that such
indemnification agreements will adequately protect us against potential claims
relating to such contract manufacturing services. 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.
-4-
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.
|
Net
tangible assets of at least $2,000,000 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;
|
| 2. |
Public
float of at least 500,000 shares;
|
|
3.
|
Market
value of our public float of at least
$1,000,000;
|
|
4.
|
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;
|
|
5.
|
At
least two market makers; and
|
|
6.
|
At
least 300 stockholders, each holding at least 100 shares of common
stock.
|
During
August 2002, we were notified by The Nasdaq Stock Market, Inc. that we had
fallen out of compliance with a listing requirement because the closing bid
price our common stock was less than $1.00 for a period of 30 consecutive
trading days. We now have 180 days from the date of notice or until February
18,
2003 to regain compliance by maintaining a minimum closing bid price of $1.00
per share for 10 consecutive trading days while maintaining all other listing
requirements. Following this initial 180 calendar day grace period, if we can
demonstrate either net income of at least $750,000 in either our latest fiscal
year or in two of our last three fiscal years, stockholders’ equity of $5
million or a market capitalization of at least $50 million, we will be afforded
an additional 180 day grace period. We cannot guarantee that we will be able
to
achieve the minimum bid price requirement or maintain any of the other
requirements in the future. 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 will apply to have our common stock quoted on
the
over-the-counter electronic bulletin board, or any successor exchange. Upon
being delisted, however, our common stock will become subject to the regulations
of the Securities and Exchange Commission relating to the market for penny
stocks. 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.
The
Sale Of Substantial Shares Of Our Common Stock May Depress Our Stock
Price.
As
of
August 29, 2002, we had approximately 118,397,000 shares of common stock
outstanding, and the last reported sales price of our common stock was $0.60
per
share. We could also issue up to approximately 31,235,000 additional shares
of
common stock upon the exercise of outstanding options and warrants at an average
exercise price of $1.33 per share for proceeds of up to approximately $41.6
million, if exercised on a 100% cash basis. Of the total warrants and options
outstanding as of August 29, 2002, approximately 6,410,000 options and warrants
would be considered dilutive to shareholders because we would receive an amount
per share which is less than the current market price of our common stock.
In
addition to the above, we could issue approximately 4,412,000 additional shares
of common stock upon the conversion of the convertible debentures at the initial
conversion price of $0.85 per share.
-5-
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 two years ended April 30, 2002:
|
Common
Stock
Sales
Price
|
Common
Stock Trading Volume
(000’s
omitted)
|
||||||||||||
|
High
|
Low
|
High
|
Low
|
||||||||||
|
Fiscal
Year 2002
|
|||||||||||||
|
Quarter
Ended April 30, 2002
|
$
|
2.90
|
$
|
1.50
|
751
|
135
|
|||||||
|
Quarter
Ended January 31, 2002
|
$
|
4.00
|
$
|
1.32
|
3,525
|
73
|
|||||||
|
Quarter
Ended October 31, 2001
|
$
|
2.23
|
$
|
0.81
|
4,265
|
117
|
|||||||
|
Quarter
Ended July 31, 2001
|
$
|
3.50
|
$
|
1.21
|
2,127
|
127
|
|||||||
|
Fiscal
Year 2001
|
|||||||||||||
|
Quarter
Ended April 30, 2001
|
$
|
2.00
|
$
|
1.06
|
705
|
91
|
|||||||
|
Quarter
Ended January 31, 2001
|
$
|
2.88
|
$
|
0.38
|
2,380
|
191
|
|||||||
|
Quarter
Ended October 31, 2000
|
$
|
3.84
|
$
|
1.94
|
3,387
|
200
|
|||||||
|
Quarter
Ended July 31, 2000
|
$
|
4.75
|
$
|
2.50
|
3,742
|
391
|
|||||||
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;
|
| § |
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;
|
| § |
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.
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. It is also subject to rapid
change and sensitive to new product introductions or enhancements. We expect
to
continue to experience significant and increasing levels of competition in
the
future. 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. 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. Our competitors with respect to various cancer indications include
the companies identified in the following table. Due to the significant number
of companies attempting to develop cancer treating products, the following
table
is not intended to be a comprehensive listing of such competitors, nor is the
inclusion of a company intended to be a representation that such company’s drug
will be approved.
-6-
|
Competitor’s
Name
|
Cancer
Indication
|
Product
Status
|
Most
Recent Reported Cash & Investments Balance
|
Peregrine’s
Product Status
|
|||||||||
|
Neurocrine
Biosciences
|
Brain
|
Phase
II
|
$
|
306,005,000
|
Phase
II
|
||||||||
|
NeoPharm
|
Brain
|
Phase
I/II
|
$
|
118,157,000
|
Phase
II
|
||||||||
|
Genentech
|
Colorectal
|
Phase
III
|
$
|
2,452,791,000
|
Phase
I
|
||||||||
|
Celgene
Corporation
|
Colorectal
|
Phase
III
|
$
|
301,825,000
|
Phase
I
|
||||||||
|
Titan
Pharmaceuticals, Inc.
|
Liver
|
Phase
I/II
|
$
|
96,013,000
|
Phase
I
|
||||||||
|
MGI
Pharma
|
Liver
|
Phase
II
|
$
|
75,822,000
|
Phase
I
|
||||||||
|
Imclone
Systems, Inc.
|
Pancreatic
|
Phase
II
|
$
|
414,739,000
|
Phase
I
|
||||||||
|
ImmunoGen,
Inc.
|
Pancreatic
|
Phase
I
|
$
|
144,002,000
|
Phase
I
|
||||||||
|
Vertex
Pharmaceuticals, Inc.
|
Soft-tissue
sarcoma
|
Phase
II
|
$
|
699,030,000
|
Phase
I
|
||||||||
|
Idec
Pharmaceuticals
|
Lymphoma
|
Approved
|
$
|
876,411,000
|
Phase
I/II
|
||||||||
|
Corixa
Corporation
|
Lymphoma
|
BLA
submitted
|
$
|
94,870,000
|
Phase
I/II
|
||||||||
The
above
information was gathered from the most recent filings with the Securities and
Exchange Commission for the above companies. For a listing of other competitors
and products in clinical trials, you can utilize the world wide web and web
sites such as http://www.biospace.com,
http://biotech.about.com
and
http://www.centerwatch.com.
We do
not vouch for the accuracy of the information found at these web sites, nor
do
we intend to incorporate by reference its contents.
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 who are an at-will employee, and our scientific researchers. For
example, because of their extensive understanding of our technologies and
product development programs, the loss of either Mr. Steven King, our Vice
President of Technology and Product Development, or Dr. Terrence Chew, our
Senior Vice President of Clinical and Regulatory Affairs, would adversely affect
our development efforts and clinical trial programs during the six to 12 month
period 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.
Except
for historical information, the information contained in this prospectus and
in
our reports filed with the SEC are “forward looking” statements about our
expected future business and financial performance. 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.
-7-
We
will
not receive any proceeds from the resale of our common stock by the selling
stockholders. We may receive proceeds from the exercise of the warrants held
by
the selling stockholders, although they are not obligated to, and we can give
no
assurance that they will, exercise the warrants. The warrants are exercisable
on
a cash basis unless the resale of the shares under this registration statement
is not effective at the time the warrant is exercised, in which case the holder
may exercise the warrant on a cashless basis. If all warrants are exercised
in
full on a cash basis, we estimate that we will receive gross proceeds of
$6,806,340. We intend to use such proceeds, if any, for working capital
purposes. Pending the use of any such proceeds, we intend to invest these funds
in short-term, interest bearing investment-grade securities.
The
following table identifies the selling stockholders and indicates (i) the nature
of any position, office or other material relationship that each selling
stockholder has had with us during the past three years (or any of our
predecessors or affiliates) and (ii) the number of shares of our common stock
owned by the selling stockholder prior to the offering, the number of shares
to
be offered for the selling stockholder’s account and the number of shares and
percentage of outstanding shares to be owned by the selling stockholder after
completion of the offering.
Beneficial
ownership is determined in accordance with Rule 13d-3 promulgated by the
Securities and Exchange Commission, and generally includes voting or investment
power with respect to securities. Except as indicated in the footnotes to the
table, we believe each holder possesses sole voting and investment power with
respect to all of the shares of common stock owned by that holder, subject
to
community property laws where applicable. In computing the number of shares
beneficially owned by a holder and the percentage ownership of that holder,
shares of common stock subject to options or warrants or underlying debentures
held by that holder that are currently exercisable or convertible or are
exercisable or convertible within 60 days after the date of the table are deemed
outstanding. Those shares, however, are not deemed outstanding for the purpose
of computing the percentage ownership of any other person or group.
The
terms
of the debentures and the warrants whose underlying shares of common stock
are
included for resale under this prospectus prohibit conversion of the debentures
or exercise of the warrants to the extent that conversion of the debentures
would result in the holder, together with its affiliates, beneficially owning
in
excess of 4.999% or 9.999% of our outstanding shares of common stock, and to
the
extent that exercise of the warrants would result in the holder, together with
its affiliates, beneficially owning in excess of 4.999% or 9.999% of our
outstanding shares of common stock. These limitations do not preclude a holder
from converting or exercising a debenture or warrant, respectively, and selling
shares underlying the debenture or warrant in stages over time where each stage
does not cause the holder and its affiliates to beneficially own shares in
excess of the limitation amounts. The footnotes to the table describe beneficial
ownership adjustments required by these limitations, if any.
In
addition to the above restrictions, the outstanding debentures and warrants
each
contain a provision which precluded us from issuing, in connection with the
transactions described below, and at prices less than the greater of book or
market value of our common stock, a number of shares of our common stock which,
in the aggregate for such transactions, would exceed in excess of 19.99% of
our
common stock outstanding as of the date we consummated such transactions. The
foregoing limitation will cease to apply in the event that we obtain, prior
to
any such prohibited issuance, approval of our stockholders under applicable
Nasdaq Marketplace Rules to issue in connection with these transactions an
aggregate number of shares equal to or in excess of 20% or outstanding shares
of
common stock. Consequently, we have determined that, although not presently
required, it is more efficient and cost effective to solicit stockholder
approval in connection with our annual stockholder meeting to be held on October
22, 2002, as opposed to call a special meeting of stockholders in the event
that
we later become required to seek such approval. You should refer to our
definitive proxy statement on Form 14A, which was filed with the SEC on August
28, 2002, which contains the proposal in question.
-8-
All
of
the shares of our common stock being offered under this prospectus were issued
or are issuable upon exercise or conversion of warrants or debentures,
respectively, that were issued in the following two private placement
transactions:
First
Securities Purchase Agreement
Convertible
Debt Issuance. On
August
9, 2002, we entered into a private placement with four of the selling
stockholders under a Securities Purchase Agreement, whereby we issued
convertible debentures for aggregate gross proceeds equal to $3,750,000
(“Debenture”). The Debentures earn interest at a rate of 6% per annum, payable
in cash semi-annually. Under the terms of the Debenture, the principal amount
is
convertible, at the option of the holder (or automatically upon our common
stock
trading at a certain price level for a certain period of time), into a number
of
shares of our common stock calculated by dividing the unpaid principal amount
of
the Debenture by the conversion price of $0.85 per share (“Conversion Price”).
If we enter into any financing transactions (with certain defined exceptions)
within 18 months following the date this registration statement is declared
effective by the SEC (“Reset Period”), at a per share price less than the
Conversion Price, the Conversion Price will be reset to the lower price for
all
outstanding Debentures. The Debentures are secured by generally all assets
of
the Company.
Under
this Securities Purchase Agreement, the selling stockholders who purchased
debentures were also granted warrants to purchase an aggregate of 3,308,827
shares of our common stock, which was calculated, as to each selling
stockholder, as follows: 75% of the quotient obtained by dividing the aggregate
principal amount of the selling stockholder’s Debenture by the initial
Conversion Price. The warrants have a 4-year term and are exercisable six months
after the date of issuance at an exercise price of $0.75 per share. The Exercise
Price of the warrants may also be reduced to a lower price if, during the Reset
Period, we enter into a financing transaction at a per share price less than
the
Exercise Price.
Common
Stock Purchase. Under
the
same Securities Purchase Agreement, we sold an aggregate of 1,923,078 shares
of
our common stock to two selling stockholders for gross proceeds of $1,250,000.
In conjunction with the sale of our common stock, we issued warrants to the
two
selling stockholders to purchase up to an aggregate of 1,442,309 shares of
common stock. The warrants have a 4-year term and are exercisable six months
after the date of issuance at an exercise price of $0.71 per share. The exercise
price of these warrants is subject to a reset provision that is similar to
that
of the above described warrants issued in connection with the debentures. In
addition, if we enter into any financing transaction during the Reset Period
at
a per share price less than the common stock purchase price of $0.65 per share
(“Adjusted Purchase Price”), then each applicable selling stockholder will
receive an adjustment warrant equal to (1) the number of shares of our common
stock that would have been issued to such selling stockholder on the closing
date at the Adjusted Purchase Price less (2) the number of shares of our common
stock actually issued to such selling stockholder on the closing date. The
adjustment warrant, if issued, will be priced at an exercise price of $0.001
per
share and will expire 4 years from the closing date. If we issue any adjustment
warrant, we are required to file an additional registration statement covering
the resale of the shares of our common stock issuable upon exercise of such
adjustment warrant.
Second
Securities Purchase Agreement
Common
Stock Purchase. Also
on
August 9, 2002, pursuant to a second Securities Purchase Agreement, we sold
3,298,462 shares of our common stock at a negotiated price of $0.65 per share
in
exchange for gross proceeds of $2,144,000 to selling stockholder. In conjunction
with this offering, we issued a warrant to purchase up to an aggregate 4,648,846
shares of our common stock. The warrant has a 4-year term and is exercisable
six
months after the date of issuance at an exercise price of $0.71 per share.
This
warrant contains an exercise price reset provision similar to those described
above. In addition, if we enter into any financing transaction within 18 months
following the date this registration statement is declared effective by the
SEC
at a per share price less than the purchase price of $0.65 per share (“Adjusted
Price”), then the selling stockholder will receive an adjustment warrant equal
to (1) the number of shares of our common stock that would have been issued
to
such selling stockholder on the closing date at the Adjusted Price less (2)
the
number of shares of our common stock actually issued to such selling stockholder
on the closing date. The adjustment warrant, if issued, will be at an exercise
price of $0.001 per share and will expire 4 years from the closing date. If
we
issue any adjustment warrant, we are required to file an additional registration
statement covering the resale of the shares of our common stock issuable upon
exercise of such adjustment warrant.
-9-
We
entered into a Registration Rights Agreement with the selling stockholders
under
each of the Securities Purchase Agreements pursuant to which we agreed to
register the resale of no less than 125% of the number of shares of our common
stock issued or to be issued upon exercise of the warrants or conversion of
the
debentures. The figures below for each selling stockholder include the
additional 25% of shares of common stock that we are required to include in
the
registration statement.
|
Shares
Beneficially
Owned
Prior to Offering(1)
|
Maximum
Number of
|
Shares
Beneficially
Owned
After Offering
|
||||||||||||||
|
Name
of Registered Shareholder
|
Number
|
Percent
|
Shares to be Sold(2) |
Number
|
Percent
|
|||||||||||
|
Otato
L.P. (3)
c/o
OTA Limited Partnership
One
Manhattanville Road
Purchase,
NY 10577
|
470,589
|
*
|
823,531
|
0
|
0
|
%
|
||||||||||
|
SDS
Merchant Fund, L.P. (4)
c/o
SDS Capital Partners
53
Forest Avenue, 2nd
Floor
Old
Greenwich, CT 06870
|
882,353
|
*
|
1,544,118
|
0
|
0
|
%
|
||||||||||
|
Xmark
Fund, L.P. (5)
152
W. 57th
Street, 21st
Floor
New
York, NY 10019
|
778,530
|
*
|
1,362,428
|
0
|
0
|
%
|
||||||||||
|
Xmark
Fund, Ltd. (6)
152
W. 57th
Street, 21st
Floor
New
York, NY 10019
|
2,162,648
|
1.8
|
%
|
3,784,634
|
0
|
0
|
%
|
|||||||||
|
Cleveland
Overseas Limited (7)
St.
Markusgazza 19
FL-9490
Vaduz, Liechtenstein
|
117,648
|
*
|
205,884
|
0
|
0
|
%
|
||||||||||
|
Cranshire
Capital, L.P. (8)
666
Dundee Road, Suite 1901
Northbrook,
IL 60062
|
1,384,616
|
1.2
|
%
|
2,423,078
|
0
|
0
|
%
|
|||||||||
|
Alpha
Capital Aktiengesellschaff (9)
160
Central Park South, Suite 2701
New
York, NY 10019
|
538,462
|
*
|
942,309
|
0
|
0
|
%
|
||||||||||
|
ZLP
Master Fund, Ltd. (10)
Goldman
Sachs (Cayman) Trust, Ltd.
2nd
Floor, Harbour Centre
Georgetown,
Cayman Islands, B.W.I.
|
3,298,462
|
2.8
|
%
|
7,947,308
|
0
|
0
|
%
|
|||||||||
|
TOTAL
|
9,633,308
|
8.14
|
%
|
19,033,290
|
0
|
0
|
%
|
|||||||||
| * |
Represents
less than 1%.
|
|
(1)
|
Based
on an aggregate of 118,396,749 shares of common stock issued and
outstanding as of August 29, 2002.
|
|
(2)
|
Assumes
that all selling stockholders will resell all of the offered shares.
|
|
(3)
|
Includes
(i) up to 470,589 shares which may be issued to Otato L.P. upon conversion
of a 6% convertible debenture issued in connection with a Securities
Purchase Agreement dated August 9, 2002, at a conversion price of
$0.85
per share and (ii) up to 352,942 shares which may be issued to Otato
L.P.
upon exercise of an outstanding warrant issued in connection with
the
Securities Purchase Agreement. The exercise price of the warrant
is $0.75
per share. Otato L.P. has not had a material relationship with us
or any
of our affiliates within the past three years.
|
|
(4)
|
Includes
(i) up to 882,353 shares which may be issued to SDS Merchant Fund,
LP upon
conversion of a 6% convertible debenture issued in connection with
a
Securities Purchase Agreement dated August 9, 2002, at a conversion
price
of $0.85 per share and (ii) up to 661,765 shares which may be issued
to
SDS Merchant Fund, LP upon exercise of an outstanding warrant issued
in
connection with the Securities Purchase Agreement. The exercise price
of
the warrant is $0.75 per share. SDS Merchant Fund, LP has not had
a
material relationship with us or any of our affiliates within the
past
three years.
|
|
(5)
|
Includes
(i) up to 778,530 shares which may be issued to Xmark Fund, L.P.
upon
conversion of a 6% convertible debenture issued in connection with
a
Securities Purchase Agreement dated August 9, 2002, at a conversion
price
of $0.85 per share and (ii) up to 583,898 shares which may be issued
to
Xmark Fund, L.P. upon exercise of an outstanding warrant issued in
connection with the Securities Purchase Agreement. The exercise price
of
the warrant is $0.75 per share. Xmark Fund, L.P. has not had a material
relationship with us or any of our affiliates within the past three
years.
|
|
(6)
|
Includes
(i) up to 2,162,648 shares which may be issued to Xmark Fund, Ltd.
upon
conversion of a 6% convertible debenture issued in connection with
a
Securities Purchase Agreement dated August 9, 2002, at a conversion
price
of $0.85 per share and (ii) up to 1,621,986 shares which may be issued
to
Xmark Fund, Ltd. upon exercise of an outstanding warrant issued in
connection with the Securities Purchase Agreement. The exercise price
of
the warrant is $0.75 per share. Xmark Fund, Ltd. has not had a material
relationship with us or any of our affiliates within the past three
years.
|
|
(7)
|
Includes
(i) up to 117,648 shares which may be issued to Cleveland Overseas
Limited
upon conversion of a 6% convertible debenture issued in connection
with a
Securities Purchase Agreement dated August 9, 2002, at a conversion
price
of $0.85 per share and (ii) up to 88,236 shares which may be issued
to
Cleveland Overseas Limited upon exercise of an outstanding warrant
issued
in connection with the Securities Purchase Agreement. The exercise
price
of the warrant is $0.75 per share. Cleveland Overseas Limited has
not had
a material relationship with us or any of our affiliates within the
past
three years.
|
|
(8)
|
Includes
(i) 1,384,616 shares issued to Cranshire Capital, L.P. in connection
with
a Securities Purchase Agreement dated August 9, 2002, at a purchase
price
of $0.65 per share and (ii) up to 1,038,462 shares which may be issued
to
Cranshire Capital, L.P. upon exercise of an outstanding warrant issued
in
connection with the Securities Purchase Agreement. The exercise price
of
the warrant is $0.71 per share. Cranshire Capital, L.P. has not had
a
material relationship with us or any of our affiliates within the
past
three years.
|
|
(9)
|
Includes
(i) 538,462 shares issued to Alpha Capital Aktiengesellschaff in
connection with a Securities Purchase Agreement dated August 9, 2002,
at a
purchase price of $0.65 per share and (ii) up to 403,847 shares which
may
be issued to Alpha Capital Aktiengesellschaff upon exercise of an
outstanding warrant issued in connection with the Securities Purchase
Agreement. The exercise price of the warrant is $0.71 per share.
Alpha
Capital Aktiengesellschaff has not had a material relationship with
us or
any of our affiliates within the past three years.
|
|
(10)
|
Includes
(i) 3,298,462 shares issued to ZLP Master Fund, Ltd. in connection
with a
Securities Purchase Agreement dated August 9, 2002, at a purchase
price of
$0.65 per share and (ii) up to 4,648,846 shares which may be issued
to ZLP
Master Fund, Ltd. upon exercise of an outstanding warrant issued
in
connection with the Securities Purchase Agreement. The exercise price
of
the warrant is $0.71 per share. ZLP Master Fund, Ltd. has not had
a
material relationship with us or any of our affiliates within the
past
three years.
|
-10-
The
Selling Stockholders and any of their pledges, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any 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. The Selling Stockholders 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 transactions;
|
| · |
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;
|
| · |
Short
sales;
|
| · |
Broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
| · |
A
combination of any such methods of sale;
and
|
| · |
Any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other broker-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. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock or warrants owned by them and,
if
they default in the performance of their secured obligations, the pledges or
secured parties may offer and sell the shares of common stock from time to
time
under this prospectus, or under any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the
list
of Selling Stockholders to include the pledgee, transferee or other successors
in interest as Selling Stockholders under this prospectus.
The
Selling Stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledges or other successors in
interest will be the selling beneficial owners for purposes of this
prospectus.
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 our
Company that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the common stock.
The
Selling Stockholders may enter into hedging transactions with third parties,
which may in turn engage in short sales of the securities in the course of
hedging the position they assume. The Selling Stockholders may also enter into
short positions or other derivative transactions relating to the securities,
or
interests in the securities, and deliver the securities, or interests in the
securities, to close out their short or other positions or otherwise settle
short sales or other transactions, or loan or pledge the securities, or
interests in the securities, to third parties that in turn may dispose of these
securities.
-11-
The
Selling Stockholders have agreed that they will not engage in any trading
practice or activity for the purpose of manipulating the price of our common
stock or otherwise engage in any trading practice or activity that violates
the
rules and regulations of the SEC.
Our
Company is required to pay all fees and expenses 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.
In
order
to comply with the securities laws of certain states, if applicable, the shares
of our common stock offered by this prospectus may be sold in these
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the shares of our common stock offered by this
prospectus may not be sold unless such shares 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 shares of common stock offered by this prospectus has been
passed upon for us by Falk, Shaff & Ziebell, LLP, Irvine,
California.
Ernst
& Young LLP, independent auditors, have audited our consolidated financial
statements and schedule included in our Annual Report on Form 10-K for the
year
ended April 30, 2002, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
consolidated financial statements and schedule are incorporated by reference
in
reliance on Ernst & Young LLP’s report, given on their authority as experts
in accounting and auditing.
We
have
filed with the SEC a registration statement on Form S-3 under the Securities
Act, relating to the shares of our common stock being offered by this
prospectus. For further information pertaining to our common stock and the
shares of common stock 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 SEC. In addition, we are
subject to the informational requirements of the Exchange Act, and, in
accordance with such requirements, files reports, proxy statements and other
information with the SEC 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 Exchange Act and other information filed with the SEC
as
well as copies of the registration statement can be inspected and copied at
the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC’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 SEC 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 SEC’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.
-12-
The
SEC
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 SEC automatically updates and supersedes
any information in this prospectus. We incorporate by reference into this
prospectus the documents listed below:
| 1. |
Annual
Report on Form 10-K for the fiscal year ended April 30, 2002, as
filed
with the SEC on August 13, 2002, under Section 13(a) of the Securities
Exchange Act of 1934;
|
|
2.
|
Amendment
No. 1 to the Annual Report on Form 10-K for the fiscal year ended
April
30, 2002, as filed with the SEC on August 14, 2002, under Section
13(a) of
the Securities Exchange Act of
1934;
|
|
3.
|
Current
Report on Form 8-K, as filed with the SEC on August 12,
2002;
|
|
4.
|
Current
Report on Form 8-K, as filed with the SEC on August 13,
2002;
|
|
5.
|
Current
Report on Form 8-K, as filed with the SEC on August 22,
2002;
|
|
6.
|
Definitive
Proxy Statement with respect to the Annual Meeting of Stockholders
to be
held on October 22, 2002, as filed with the SEC on August 28,
2002;
|
| 7. |
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
|
| 8. |
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,
2002.
|
All
documents we have filed with the SEC 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,
Vice President, Finance and Accounting, 14272 Franklin Avenue, Suite 100,
Tustin, California 92780-7017, telephone number (714) 508-6000. See also “Where
to Learn More About Us.”
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.
-13-
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 SEC, 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 indemnify or are required or permitted by law to indemnify
our
directors and officers.
-14-
|
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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|
__________________________________
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|
TABLE
OF CONTENTS
|
Common
Stock
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1
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3
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7
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8
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8
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11
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12
|
_________________
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12
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PROSPECTUS
|
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|
12
|
_________________
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|
13
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13
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|
September
10, 2002
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