This
filing is made pursuant to Rule 424(b)(2) under the Securities Act of
1933
in
connection with Registration Statement No. 333-132872
PROSPECTUS
15,000,000
Shares of Common Stock
This
prospectus will allow us to issue, from time to time in one or more offerings,
up to 15,000,000 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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·
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we
will provide a prospectus supplement;
and
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·
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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 Capital Market under the symbol “PPHM”. On
March 28, 2006, the last reported sale price of our common stock on The Nasdaq
Capital Market was $1.40 per share.
__________________________________
See
“Risk
Factors”
beginning on page 4 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 April 12, 2006
TABLE
OF CONTENTS
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13
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15
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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
prospectus is part of a registration statement that we have filed with the
Securities and Exchange Commission, or SEC or Commission, using the SEC’s shelf
registration process. Each time we sell our common stock under this prospectus,
we will provide a prospectus supplement that will contain specific information
about the terms of that offering, including the price, the amount of common
stock being offered and the plan of distribution. The prospectus supplement
for
a particular offering may also add, update or change information contained
in
this prospectus. In addition, we may update or supplement any prospectus
supplement relating to a particular offering. You should read both this
prospectus and any applicable prospectus supplement together with the additional
information about Peregrine Pharmaceuticals, Inc., to which we refer you in
the
section of this prospectus entitled “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.
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.”
Peregrine
Pharmaceuticals, Inc. is a biopharmaceutical company primarily developing
broad-based therapeutics for 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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||||
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Technology
Platform
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Product
Name
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Disease
/
Indication
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Stage
of
Development |
Development
Status Overview
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Tumor
Necrosis Therapy (“TNT”)
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Cotara®
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Brain
Cancer
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Phase
II/III registration trial
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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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1
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Products
in Clinical Trials
|
||||
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Technology
Platform
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Product
Name
|
Disease
/
Indication
|
Stage
of
Development |
Development
Status Overview
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Anti-Phospholipid
Therapy
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Tarvacin™
(bavituximab)
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Advanced
Solid Cancers
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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 following clinical sites: MD Anderson Cancer Center
in Houston, Texas; Arizona Cancer Center in Tucson,
Arizona; Premiere Oncology in Scottsdale, Arizona; Premiere
Oncology in Santa Monica, California and; Scott & White
Hospital & Clinic in Temple, Texas.
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Anti-Phospholipid
Therapy
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Tarvacin™
(bavituximab)
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Hepatitis
C Virus
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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 failed standard therapy with pegylated interferon
and
ribavirin combination therapy. Planned enrollment and treatment of
24
patients was completed in February 2006 at Bach and Godofsky Infectious
Diseases located in Bradenton, FL. Based on the safety profile seen
to
date in the first 24 patients, an additional dose level may be added
to
the study. Meanwhile, a repeat dose study and a combination therapy
dose
study are currently being planned.
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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 preclinical
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 two 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.
2
About
the Offering
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Common
stock offered in this prospectus
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15,000,000
shares
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Common
stock outstanding after this offering
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190,318,259
shares (1)
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Use
of proceeds
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See
“Use of Proceeds”
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Nasdaq
Capital Market symbol
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PPHM
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(1)
Based
on
175,318,259 shares outstanding as of March 28, 2006, and assumes the issuance
of
common stock offered in this prospectus. The number set forth above does not
include approximately 27,861,462 shares of our common stock that, as of March
28, 2006, are reserved for issuance under shelf registration statements, stock
option plans and warrant agreements, calculated as follows:
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Number
of Shares
of
Common Stock
Reserved
For
Issuance
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Shares
reserved under shelf registration statements
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4,179,180
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Options
issued, outstanding and reserved for future issuance
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16,717,629
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Warrants
issued and outstanding
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6,964,653
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Total
shares reserved
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27,861,462
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||
3
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
January 31, 2006, we had approximately $15.7 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® for the treatment of brain cancer, our ongoing clinical studies of
Tarvacin™ (bavituximab)
for the
treatment of both solid tumors and hepatitis C virus infection, our anticipated
research and development costs associated with the possible expansion our
clinical indications using Tarvacin™ (bavituximab)
for the
treatment of other viral indications, our continued research directed towards
our other technologies in preclinical development, and our 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 December 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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·
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delays
in product development, clinical testing or
manufacturing;
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·
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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;
and
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·
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failure
to achieve market acceptance.
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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. 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.
4
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 the nine months ended January 31, 2006:
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Net
Loss
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Nine
Months Ended January 2006 (unaudited)
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$
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12,023,000
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Fiscal
Year 2005
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$
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15,452,000
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Fiscal
Year 2004
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$
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14,345,000 | ||
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Fiscal
Year 2003
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$
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11,559,000
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As
of
January 31, 2006, we had an accumulated deficit of $181,826,000 (unaudited).
While we expect to continue to generate revenues from Avid’s contract
manufacturing services, 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 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 two 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. During fiscal year 2006,
we
began exploring the use of one of our product candidates, Tarvacin™ (bavituximab),
for the
treatment of viral infections (in particular enveloped viruses). We recently
completed planned enrollment in a Phase I trial for the treatment of people
with
the hepatitis C virus, and are in the process of (i) extending the study to
test
an additional six patients at a higher dose, and (ii) preparing trial protocols
for both a repeat dose study and a combination therapy study using Tarvacin™
(bavituximab)
with
standard antiviral therapies. Our product candidates have not received
regulatory approval and are generally in research, preclinical and 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.
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, we or our potential
partners must demonstrate proof of safety and efficacy in humans. To meet these
requirements, we or our potential partners will have to conduct extensive
preclinical 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 preclinical or clinical trials may cause us to incur
additional operating expenses. Moreover, we may continue to be affected by
delays associated with the preclinical 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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·
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slower
than expected rates of patient recruitment;
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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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·
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the
need or desire to modify our manufacturing processes;
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·
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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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·
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the
lack of effectiveness during the clinical trials;
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|
·
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unforeseen
safety issues;
|
|
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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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·
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government
or regulatory delays or “clinical holds” requiring suspension or
termination of the trials.
|
5
Even
if
we obtain positive results from preclinical 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.
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.
Success
In Early Clinical Trials May Not Be Indicative Of Results Obtained In Later
Trials.
Results
of our early clinical trials using our targeted antibody technology are based
on
a limited number of patients and may, upon review, be revised or negated by
authorities or by later stage clinical results. Historically, the results from
preclinical testing and early clinical trials have often not been predictive
of
results obtained in later clinical trials. A number of new drugs and biologics
have shown promising results in initial clinical trials, but subsequently failed
to establish sufficient safety and effectiveness data to obtain necessary
regulatory approvals. Data obtained from preclinical and clinical activities
are
subject to varying interpretations, which may delay, limit or prevent regulatory
approval.
In
addition, regulatory delays or rejections may be encountered as a result of
many
factors, including changes in regulatory policy during the period of product
development.
If
We Cannot License Or Sell Our Cotara®, It May Be Delayed Or Never Be Further
Developed.
We
have
concluded our Phase I and Phase II study with Cotara® for brain cancer, and are
collaborating with various universities that are members of the consortium
New
Approaches to Brain Tumor Therapy Consortium (“NABTT”) that are initiating the
first part of our FDA approved Phase II/III registration trial with Cotara® for
the treatment of brain cancer. In addition, we are also exploring additional
sites outside of the United States to expedite the Phase II/III trial. Once
we
complete the initial two parts of the Cotara® Phase II/III registration study
for brain cancer, substantial financial resources will be needed to complete
the
final part of the registration trial and any additional supportive 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 members of NABTT together with other data from possible
non-United States trials, if any, 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®. We also cannot assure you that we
will be able to find a suitable licensing 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.
6
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 U.S. clinical trials using Cotara®. If
this supplier is unable to continue to qualify its facility or radiolabel 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
twelve to eighteen 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 preclinical and clinical
material through Avid Bioservices, our wholly owned subsidiary. While we believe
our current facilities are adequate for the manufacturing 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 frame and cost parameters, the
development and sales of our products, if approved, 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 quality assurance;
|
|
|
·
|
shortages
of qualified personnel;
|
|
|
·
|
compliance
with FDA regulations, including the demonstration of purity and
potency;
|
|
|
·
|
changes
in FDA requirements;
|
|
|
·
|
production
costs; and/or
|
|
|
·
|
development
of advanced manufacturing techniques and process
controls.
|
In
addition, we or any third-party manufacturer will be required to register the
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.
7
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 $3,000,000 per occurrence or
$3,000,000 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 partially successful 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 Capital Market.
Our
common stock is presently traded on The Nasdaq Capital Market. To maintain
inclusion on the Nasdaq Capital Market, we must continue to meet the following
six listing requirements:
|
1.
|
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;
|
|
|
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 thirty consecutive
trading days;
|
|
|
5.
|
At
least two market makers; and
|
|
|
6.
|
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 our first
three quarters of fiscal year 2006 ended January 31, 2006, the trading price
of
our common stock on the Nasdaq Capital Market ranged from $0.88 per share to
$1.76 per share. If we fail to meet any of the Nasdaq Capital 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.
During the third quarter ended January 31, 2006, the closing bid price of our
common stock was less than $1.00 for a period of 27 consecutive trading days.
Had the closing bid price not equaled at least $1.00 prior to the close of
the
30th day, we would have been out of compliance with a continued listing
requirement and subject to delisting if we did not regain compliance in
accordance with the Nasdaq listing rules within 180 days
thereafter.
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 Capital 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.
8
The
Sale Of Substantial Shares Of Our Common Stock May Depress Our Stock
Price.
As
of
March 28, 2006, we had approximately 175,318,000 shares of our common stock
outstanding, and for that date the last reported sales price of our common
stock
was $1.40 per share.
We
could
also issue up to approximately 27,861,000 additional shares of our common stock
reserved for issuance under our shelf registration statements, stock option
plans and outstanding warrants, as further described in the following
table:
|
Number
of Shares
of
Common Stock Reserved For Issuance
|
||||
|
Shares
reserved under shelf registration statements
|
4,179,000
|
|||
|
Common
shares reserved for issuance under stock option plans
|
16,718,000
|
|||
|
Common
shares issuable upon exercise of outstanding warrants
|
6,964,000
|
|||
|
Total
|
27,861,000
|
|||
Of
the
total warrants and options outstanding as of March 28, 2006, approximately
11,213,000 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 March 28, 2006.
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
three fiscal quarters ended January 31, 2006:
|
Common
Stock
Sales
Price
|
Common
Stock Daily Trading Volume
(000’s
omitted)
|
||||||||||||
|
High
|
Low
|
High
|
Low
|
||||||||||
|
Fiscal
Year 2006
|
|||||||||||||
|
Quarter
Ended January 31, 2006
|
$
|
1.40
|
$
|
0.88
|
12,152
|
251
|
|||||||
|
Quarter
Ended October 31, 2005
|
$
|
1.28
|
$
|
0.91
|
4,619
|
156
|
|||||||
|
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
|
|||||||
9
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.
10
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
certain universities that are part of 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 is 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 completed enrollment in
a
Phase III study in December 2005.
Most
of
our other products are in early stages of development or clinical trials,
including Tarvacin™ (bavituximab).
Tarvacin™ (bavituximab)
for the
treatment of advanced solid cancers is currently in Phase I clinical trials.
As
for Tarvacin™ (bavituximab),
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 recently completed planned enrollment in our Phase I clinical
trial
using Tarvacin™ (bavituximab)
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., Coley Pharmaceutical Group, 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. For
example, in December 2004, the FASB issued an amendment to SFAS No. 123,
Accounting For Stock-Based Compensation (“FAS 123R”). We are required to
implement this standard during fiscal year 2007 commencing May 1, 2006. SFAS
No. 123R eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board Opinion No. 25 (“APB 25”),
and instead requires companies to recognize compensation expense using a
fair-value based method for costs related to share-based payments including
stock options. The adoption of SFAS No. 123R will materially impact our
financial position and results of operations for future periods. Our actual
share-based compensation expense in fiscal year 2007 and subsequent periods
will
be dependent on a number of factors, including the amount of awards granted
and
the fair value of those awards at the time of grant. Also, a change in
accounting pronouncements or taxation rules or practices can have a significant
effect on our reported results and may even affect our reporting of transactions
completed before the change is effective. Other new accounting pronouncements
or
taxation rules and varying interpretations of accounting pronouncements or
taxation practice have occurred and may occur in the future. Changes to existing
rules, future changes, if any, or the questioning of current practices may
adversely affect our reported financial results or the way we conduct our
business, which may also adversely affect our stock price.
11
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 W. King, our President
and
Chief Executive Officer, would adversely affect our development efforts and
clinical trial programs during the six to twelve 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.
Our
Governance Documents And State Law Provide Certain Anti-Takeover Measures Which
Will Discourage A Third Party From Seeking To Acquire Us Unless Approved By
the
Board of Directors.
We
adopted a shareholder rights plan, commonly referred to as a “poison pill,” on
March 16, 2006. The purpose of the shareholder rights plan is to protect
stockholders against unsolicited attempts to acquire control of us that do
not
offer a fair price to our stockholders as determined by our board of directors.
Under the plan, the acquisition of 15% or more of our outstanding common stock
by any person or group, unless approved by our board of directors, will trigger
the right of our stockholders (other than the acquiror of 15% or more of our
common stock) to acquire additional shares of our common stock, and, in certain
cases, the stock of the potential acquiror, at a 50% discount to market price,
thus significantly increasing the acquisition cost to a potential acquiror.
The
shareholder rights plan may have the effect of dissuading a potential hostile
acquiror from making an offer for our common stock at a price that represents
a
premium to the then-current trading price. In addition, our certificate of
incorporation and by-laws contain certain additional anti-takeover protective
devices. For example,
|
·
|
no
stockholder action may be taken without a meeting, without prior
notice
and without a vote; solicitations by consent are thus
prohibited;
|
|
|
·
|
special
meetings of stockholders may be called only by our board of directors;
and
|
|
|
·
|
our
board of directors has the authority, without further action by the
stockholders, to fix the rights and preferences, and issue shares,
of
preferred stock. An issuance of preferred stock with dividend and
liquidation rights senior to the common stock and convertible into
a large
number of shares of common stock could prevent a potential acquiror
from
gaining effective economic or voting
control.
|
Further,
we are subject to Section 203 of the Delaware General Corporation Law which,
subject to certain exceptions, restricts certain transactions and business
combinations between a corporation and a stockholder owning 15% or more of
the
corporation’s outstanding voting stock for a period of three years from the date
the stockholder becomes a 15% stockholder.
12
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 250,000,000 shares
of
common stock, $.001 par value per share. As of March 28, 2006, 175,318,259
shares of our common stock were outstanding, and an additional 27,861,462 shares
were reserved for issuance under our shelf registration statements, stock option
plans and warrant agreements.
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.
13
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.
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
Capital 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.
14
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 Capital 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 schedule 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 are incorporated by reference in
this
prospectus and elsewhere in the registration statement. Our financial
statements and schedule 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 Capital
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.
15
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:
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1.
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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;
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2.
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our
Quarterly
Reports on Form 10-Q for the quarters ended July 31, 2005, October
31,
2005 and January 31, 2006 filed with the Commission on September
9, 2005,
December 12, 2005 and March 13, 2006, respectively;
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3.
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our
Current Reports on Form 8-K as furnished to the Commission on July
15,
2005, September 9, 2005, October 28, 2005, November 23, 2005, December
9,
2005, December 23, 2005, February 16, 2006, March 13, 2006 and March
17,
2006;
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4.
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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;
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5.
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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;
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6.
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the
description of our preferred stock purchase rights contained in our
Form
8-A filed under the Securities Exchange Act of 1934 on March 17,
2006,
including any amendment or report filed for the purpose of updating
such
descriptions; and
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7.
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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.
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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.”
16
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.
17
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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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ABOUT
THIS PROSPECTUS
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1
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Common
Stock
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OUR
BUSINESS
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1
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RISK
FACTORS
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4
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FORWARD-LOOKING
STATEMENTS
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13
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USE
OF PROCEEDS
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13
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DESCRIPTION
OF COMMON STOCK
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13
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PLAN
OF DISTRIBUTION
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14
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LEGAL
MATTERS
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15
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EXPERTS
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15
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WHERE
TO LEARN MORE ABOUT US
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15
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INCORPORATION OF CERTAIN
DOCUMENTS
BY REFERENCE
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16
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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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17
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Dated:
April 12, 2006
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