FILED PURSUANT TO RULE 424(B)(3) UNDER THE SECURITIES ACT OF
1933, AS AMENDED IN CONNECTION WITH REGISTRATION NO. 333-101197
PROSPECTUS
1,221,344 SHARES
[LOGO] IMMTECH INTERNATIONAL, INC.
COMMON STOCK
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Stockholders of Immtech International, Inc. named under the caption
"Selling Stockholders" may from time to time offer and sell up to 1,221,344
shares of the Company's Common Stock ("Shares"). The Shares may be sold in
transactions occurring either on or off the NASDAQ SmallCap Market at prevailing
market prices or at negotiated prices. Sales may be made through brokers or
through dealers, who are expected to receive customary commissions or discounts.
We will receive no proceeds from the sale of Shares offered by this Prospectus.
No period of time has been fixed within which the Shares registered under this
Prospectus may be offered or sold. Our obligation to keep the Registration
Statement of which this Prospectus is a part effective expires as to 150,000 of
the Selling Stockholders' Shares on June 28, 2003, 671,344 Shares on September
25, 2003 and 400,000 Shares on February 22, 2004 or sooner if all Selling
Stockholders' Shares are sold. As used in this Prospectus, the terms "we," "us,
"our," the "Company" and "Immtech" mean Immtech International, Inc. and the term
"Common Stock" means the common stock of Immtech, $0.01 par value per share.
Our Common Stock is traded on the NASDAQ SmallCap Market under the symbol
"IMMT." The last reported sale price of our Common Stock on November 26, 2002
was $2.89. The address of our principal executive offices is 150 Fairway Drive,
Suite 150, Vernon Hills, Illinois 60061, and our telephone number is (847)
573-0033.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-1 OF THIS PROSPECTUS
BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 29, 2002
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS,
INCORPORATED BY REFERENCE HEREIN OR PROVIDED BY SUPPLEMENT. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THIS
PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY
SALE OF THESE SECURITIES.
TABLE OF CONTENTS
RISK FACTORS.................................................................S-1
ABOUT THIS PROSPECTUS.......................................................S-11
WHERE YOU CAN FIND MORE INFORMATION.........................................S-11
FORWARD-LOOKING STATEMENTS..................................................S-13
THE COMPANY.................................................................S-14
USE OF PROCEEDS.............................................................S-19
SELLING STOCKHOLDERS........................................................S-19
DESCRIPTION OF CAPITAL STOCK................................................S-21
PLAN OF DISTRIBUTION........................................................S-22
LEGAL MATTERS...............................................................S-23
EXPERTS.....................................................................S-23
GLOSSARY....................................................................S-24
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RISK FACTORS
An investment in the Shares offered by this Prospectus involves a high
degree of risk. In addition to the other information contained in this
Prospectus, the following risk factors should be considered carefully in
evaluating our business before purchasing the Shares.
THERE IS NO ASSURANCE THAT WE WILL SUCCESSFULLY DEVELOP A COMMERCIALLY VIABLE
PRODUCT.
We are at an early stage of clinical development activities required for
drug approval and commercialization. Since our formation in October 1984, we
have engaged in developing research programs, recruiting scientific advisors and
scientists, negotiating and consummating technology licensing agreements and
sponsoring research and development activities. We have generated no revenue
from product sales and do not have any products currently available for sale,
and none are expected to be commercially available for sale until after March
31, 2003, if at all. There can be no assurance that the research we fund and
manage will lead to the development of commercially viable products.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT; OUR FUTURE PROFITABILITY
IS UNCERTAIN.
We have experienced significant operating losses since our inception and
we expect to incur additional operating losses as we continue research and
development and clinical trial efforts. As of September 30, 2002, we had an
accumulated deficit of approximately $40,301,000. We have incurred additional
operating losses since such date and expect to incur additional operating losses
for the foreseeable future.
WE NEED SUBSTANTIAL ADDITIONAL FUNDS.
Our operations to date have consumed substantial amounts of cash. Negative
cash flow from operations is expected to continue in the foreseeable future. Our
cash requirements may vary materially from those now planned because of results
of research and development, results of pre-clinical and clinical testing,
responses to our grant requests, relationships with strategic partners, changes
in the focus and direction of our research and development programs, competitive
and technological advances, the Food and Drug Administration ("FDA") regulatory
process and other factors. In any of these circumstances, we may require
substantially more funds than we currently have available or currently intend to
raise to continue our business. We may seek to satisfy future funding
requirements through public or private offerings of securities, by collaborative
or other arrangements with pharmaceutical companies or from other sources.
Additional financing may not be available when needed or may not be available on
acceptable terms. If adequate financing is not available, we may not be able to
continue as a going concern or may be required to delay, scale back or eliminate
certain research and development programs, relinquish rights to certain
technologies or product candidates, forego desired opportunities or license
third parties to commercialize our products or technologies that we would
otherwise seek to develop internally. To the extent we raise additional capital
by issuing equity securities, ownership dilution of existing stockholders will
result.
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THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A "GOING CONCERN."
We have a shortage of unrestricted working capital and have had recurring
losses from operations and negative cash flows from operations since our
inception. These factors, among others discussed in this Prospectus, raise
substantial doubt about our ability to continue as a going concern. (See "Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Item 8. Financial Statements and Supplemental Data" for an
explanatory paragraph relating to substantial doubt about our ability to
continue as a going concern and elsewhere in our Form 10-K and our Quarterly
Reports on Form 10-Q, incorporated by reference in this Prospectus, for further
information on our financial position and results of operations). Our ability to
continue to operate will ultimately depend upon raising additional funds,
attaining profitability and operating at a profit on a consistent basis, which
will not occur for some time or may never occur.
OUR DEPENDENCE ON KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS.
Our business depends to a significant degree on the continuing
contributions of our key management and scientific and technical personnel, as
well as on the continued discoveries of scientists, researchers and technicians
at The University of North Carolina at Chapel Hill, Duke University, Auburn
University and Georgia State University (collectively, the "Consortium") who
have entered into an agreement, dated January 15, 1997, as amended, and a
License Agreement, dated as of January 28, 2002 (collectively, the "Consortium
Agreements"), by which the members of the Consortium have given us exclusive
rights to commercialize certain pharmaceutical product candidates developed in
the Consortium-member laboratories related to the dication technology. There can
be no assurance that the loss of certain members of management or the
scientists, researchers and technicians from the Consortium-member universities
would not materially adversely affect our business. We do not have "key-man"
life insurance policies on any of our executives.
ADDITIONAL RESEARCH GRANTS MAY NOT BE AVAILABLE.
We will continue to apply for new grants to support continuing research
and development of the dication platform technology product candidates. The
process of obtaining grants is extremely competitive and there can be no
assurance that any of our grant applications will be acted upon favorably.
OUR PRODUCT CANDIDATES ARE IN EARLY STAGE CLINICAL TRIALS.
All of our product candidates, including DB289 and DB075, require
additional clinical testing, regulatory approval and development of marketing
and distribution channels, all of which are expected to require substantial
additional investment prior to commercialization. There can be no assurance that
any of our product candidates will be successfully developed, prove to be safe
and effective in human clinical trials, meet applicable regulatory standards, be
capable of being produced in commercial quantities at acceptable costs, be
eligible for third party reimbursement from governmental or private insurers, be
successfully marketed or achieve market acceptance.
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THERE ARE SUBSTANTIAL UNCERTAINTIES RELATED TO CLINICAL TRIALS.
To obtain required regulatory approvals for the commercial sale of our
product candidates, we must demonstrate through clinical trials that such
product candidates are safe and effective for their intended uses.
We may find, at any stage of our research and development, that product
candidates which appeared promising in earlier clinical trials do not
demonstrate safety or effectiveness in later clinical trials and therefore do
not receive regulatory approvals. The results from pre-clinical testing and
early clinical trials may not be predictive of results obtained in later
clinical trials and large-scale testing. Companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in various stages of
clinical trials, even after promising results had been obtained in earlier stage
trials. Completion of the clinical trials may be delayed by many factors,
including slower than anticipated patient enrollment, difficulty in securing
sufficient supplies of clinical trial materials or adverse events occurring
during clinical trials. Completion of testing, studies and trials may take
several years, and the length of time varies substantially with the type,
complexity, novelty and intended use of the product. Delays or rejections may be
based upon many factors, including changes in regulatory policy during the
period of product development. No assurance can be given that any of our
development programs will be successfully completed, that any Investigational
New Drug Application filed with the FDA (or any foreign equivalent filed with
the appropriate foreign authorities) will become effective, that additional
clinical trials will be allowed by the FDA or other regulatory authorities or
that clinical trials will commence as planned. There have been delays in our
testing and development schedules to date and there can be no assurance that our
future testing and development schedules will be met.
WE HAVE NO MANUFACTURING CAPABILITY, WHICH COULD IMPAIR OUR ABILITY TO DEVELOP
COMMERCIALLY VIABLE PRODUCTS AT REASONABLE COSTS.
Our ability to conduct clinical trials and to commercialize product
candidates will depend in part upon our ability to manufacture the product
candidates, either directly or through third parties, at a competitive cost and
in accordance with FDA and other regulatory requirements. We currently lack
facilities and personnel to manufacture our product candidates. There can be no
assurance that we will be able to acquire such resources, either directly or
through third parties, at reasonable costs if we develop commercially viable
products.
WE ARE DEPENDENT ON THIRD-PARTY RELATIONSHIPS FOR CRITICAL ASPECTS OF OUR
BUSINESS.
We follow a business strategy of utilizing the expertise and resources of
third parties in a number of areas, including the research and development of
potential products, the manufacture of potential products for clinical trial
purposes, the conduct of pre-clinical and clinical trials and the future
development and manufacture of commercialized drugs. This strategy creates risks
by placing critical aspects of our business in the hands of third parties that
we may not be able to control. If these third parties do not perform in a timely
and satisfactory manner, we may incur costs and delays as we seek alternate
sources of such products and services, if available. Such costs and delays may
have a material adverse effect on our business.
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We may seek additional third-party relationships in certain areas,
particularly in clinical testing, marketing, manufacturing and other areas where
pharmaceutical company collaborators will enable us to develop particular
products or geographic markets which are otherwise beyond our resources and/or
capabilities. There is no assurance that we will be able to obtain any such
collaboration or any other research and development, manufacturing or clinical
trial agreement. Our inability to obtain and maintain satisfactory relationships
with third parties may have a material adverse effect on our business.
WE ARE UNCERTAIN ABOUT THE ABILITY TO PROTECT OR OBTAIN NECESSARY PATENTS AND
PROTECT OUR PROPRIETARY INFORMATION.
There can be no assurance that any particular patent will be granted or
that issued patents will provide us, directly or through licenses, with the
intellectual property protection contemplated. Patents and licenses of patents
can be challenged, invalidated or circumvented. It is also possible that
competitors will develop similar products simultaneously. Our breach of any
license agreement or the failure to obtain a license to any technology or
process which may be required to develop or commercialize one or more of our
product candidates may have a material adverse effect on our business.
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings, and a substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Third parties may
have filed applications for or have been issued patents and may obtain
additional patents and proprietary rights related to products or processes
competitive with or similar to those that we are attempting to develop and
commercialize. We may not be aware of all of the patents potentially adverse to
our interests that may have been issued to others. No assurance can be given
that patents do not exist, have not been filed or could not be filed or issued,
which contain claims relating to or competitive with our technology, products or
processes. If patents have been or are issued to others containing preclusive or
conflicting claims, then we may be required to obtain licenses to one or more of
such patents or to develop or obtain alternate technology. There can be no
assurance that the licenses that might be required for such technology,
processes or products would be available on commercially acceptable terms, or at
all.
Because of the substantial length of time and expense associated with
bringing new products to the marketplace through the development and regulatory
approval process, the biotechnology industry places considerable importance on
patent and trade secret protection for new technologies, products and processes.
Since patent applications in the United States are confidential until patents
are issued and since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, we cannot be certain that we (or
our licensors) were the first to make the inventions covered by pending patent
applications or that we (or our licensors) were the first to file patent
applications for such inventions. The patent positions of pharmaceutical and
biotechnology companies can be highly uncertain and involve complex legal and
factual questions, and therefore, the breadth of claims allowed in
pharmaceutical and biotechnology patents, or their enforceability, cannot be
predicted. There can be no assurance that any patents under pending patent
applications or any further patent applications will be issued. Furthermore,
there can be no assurance that the scope of any patent protection will exclude
competitors or provide us competitive advantages, that any of our (or our
licensors')
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patents that have been issued or may be issued will be held valid if
subsequently challenged, or that others, including competitors or current or
former employers of our employees, advisors and consultants, will not claim
rights in, or ownership to, our (or our licensors') patents and other
proprietary rights. There can be no assurance that others will not independently
develop substantially equivalent proprietary information or otherwise obtain
access to our proprietary information, or that others may not be issued patents
that may require us to obtain a license for, and pay significant fees or
royalties for, such proprietary information.
The pharmaceutical and biotechnology industries have experienced extensive
litigation regarding patent and other intellectual property rights. We could
incur substantial costs in defending suits that may be brought against us (or
our licensors) claiming infringement of the rights of others or in asserting our
(or our licensors') patent rights in a suit against another party. We may also
be required to participate in interference proceedings declared by the United
States Patent and Trademark Office for the purpose of determining the priority
of inventions in connection with our (or our licensors') patent applications.
Adverse determinations in litigation or interference proceedings could
require us to seek licenses (which may not be available on commercially
reasonable terms) or subject us to significant liabilities to third parties, and
could therefore have a material adverse effect on our business. Even if we
prevail in an interference proceeding or a lawsuit, substantial resources,
including the time and attention of our officers, will be required.
We also rely on trade secrets, know-how and technological advancement to
maintain our competitive position. Although we use confidentiality agreements
and employee proprietary information and invention assignment agreements to
protect our trade secrets and other unpatented know-how, these agreements may be
breached by the other party to the agreement or may otherwise be of limited
effectiveness or enforceability.
CONFIDENTIALITY AGREEMENTS MAY NOT ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.
We require our employees and consultants to execute confidentiality
agreements upon the commencement of their relationship with us. The agreements
generally provide that trade secrets and all inventions conceived by the
individual and all confidential information developed or made known to the
individual during the term of the relationship will be Immtech's exclusive
property and must be kept confidential and not disclosed to third parties except
in specified circumstances. There can be no assurance, however, that these
agreements will provide meaningful protection for our proprietary information in
the event of unauthorized use or disclosure of such information.
OUR BUSINESS HAS SIGNIFICANT COMPETITION; OUR PRODUCT CANDIDATES MAY BECOME
OBSOLETE PRIOR TO COMMERCIALIZATION DUE TO ALTERNATIVE TECHNOLOGIES.
The pharmaceutical field is characterized by extensive research efforts
and rapid technological progress. Competition from biotechnology companies,
pharmaceutical companies and research and academic institutions is intense and
other companies are engaged in research and product development for treatment of
the same diseases as we are. New developments in molecular cell biology,
molecular pharmacology, recombinant DNA technology and other pharmaceutical
processes are expected to continue at a rapid pace in both industry and
academia.
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There can be no assurance that research and discoveries by others will not
render some or all of our programs or products noncompetitive or obsolete.
We are aware of other companies and institutions dedicated to the
development of therapeutics similar to those we are developing, including Eli
Lilly and Company, Hoffman-LaRoche Ltd., Chiron Corporation, Cubist
Pharmaceuticals, Inc., Schering-Plough Corporation and Abbott Laboratories. Many
of our existing or potential competitors have substantially greater financial
and technical resources than we do and therefore may be in a better position to
develop, manufacture, and market pharmaceutical and biological products. Many of
these competitors are also more experienced with regard to pre-clinical testing,
human clinical trials and obtaining regulatory approvals. The current or future
existence of competitive products may also adversely affect the marketability of
our product candidates.
THERE IS NO ASSURANCE THAT WE WILL RECEIVE FDA APPROVAL FOR ANY OF OUR PRODUCT
CANDIDATES; GOVERNMENT REGULATION MAY IMPEDE, DELAY OR PREVENT THE
COMMERCIALIZATION OF OUR PRODUCT CANDIDATES.
All new drugs and biologics (a biologic is a naturally occurring protein,
or a synthetic form of such protein), including our product candidates, are
subject to extensive and rigorous regulation by the federal government,
principally the FDA under the Federal Food, Drug and Cosmetic Act and other laws
including, in the case of biologics, the Public Health Services Act, and by
state, local and foreign governments. Such regulations govern, among other
things, the development, testing, manufacture, labeling, storage, pre-market
clearance or approval, advertising, promotion, sale and distribution of drugs
and biologics. If drug products are marketed abroad, they are subject to
extensive regulation by foreign governments. Failure to comply with applicable
regulatory requirements may subject us to administrative or judicially imposed
sanctions such as civil penalties, criminal prosecution, injunctions, product
seizure or detention, product recalls, total or partial suspension of production
and FDA refusal to approve pending applications.
WE HAVE NOT RECEIVED REGULATORY APPROVAL IN THE UNITED STATES OR ANY FOREIGN
JURISDICTION FOR THE COMMERCIAL SALE OF ANY OF OUR PRODUCT CANDIDATES.
The process of obtaining FDA and other required regulatory approvals,
including foreign approvals, often takes many years and varies substantially
based upon the type, complexity and novelty of the products involved and the
indications being studied. Furthermore, the approval process is extremely
expensive and uncertain. There can be no assurance that our product candidates
will be cleared for commercial sale in the United States by the FDA or in
foreign countries by foreign regulatory agencies. The regulatory review process
can take many years and we will need to raise additional funds prior to
completing the regulatory review process for our current and future product
candidates. Failure to receive FDA approval for our product candidates would
preclude us from marketing and selling such products in the United States.
Therefore, the failure to receive FDA approval would have a material adverse
effect on our business. Even if regulatory approval of a product is granted,
there can be no assurance that we will be able to obtain the labeling claims (a
labeling claim is a product's description and its FDA-permitted uses) necessary
or desirable for the promotion of such product. FDA regulations prohibit the
marketing or promotion of a drug for unapproved indications. Furthermore,
regulatory marketing approval may entail ongoing requirements for post-marketing
studies if
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regulatory approval is obtained; we will then be subject to ongoing FDA
obligations and continued regulatory review. In particular, we, or our third
party manufacturers, will be required to adhere to regulations setting forth
Good Manufacturing Practices which require us (or our third party manufacturers)
to manufacture products and maintain records in a prescribed manner with respect
to manufacturing, testing and quality control activities. Further, we (or our
third party manufacturers) must pass a manufacturing facilities pre-approval
inspection by the FDA before obtaining marketing approval. Failure to comply
with applicable regulatory requirements may result in penalties such as
restrictions on a product's marketing or withdrawal of the product from the
market. In addition, identification of certain side effects after a drug is on
the market or the occurrence of manufacturing problems could cause subsequent
withdrawal of approval, reformulation of the drug, additional pre-clinical
testing or clinical trials and changes in labeling of the product.
Prior to the submission of an application for FDA approval, our
pharmaceutical and biologic product candidates must undergo rigorous
pre-clinical and clinical testing, which may take several years and the
expenditure of substantial financial and other resources. Before commencing
clinical trials in humans, we must submit to the FDA, and receive clearance of,
an Investigational New Drug Application ("IND"). There can be no assurance that
submission of an IND for future clinical testing of any of our pharmaceutical or
biological product candidates under development or other future product
candidates would result in FDA permission to commence clinical trials or that we
will be able to obtain the necessary approvals for future clinical testing in
any foreign jurisdiction. There can be no assurance that if testing of
pharmaceutical product candidates under development is completed, any such drug
compounds will be accepted for formal review by the FDA or any foreign
regulatory body or approved by the FDA for marketing in the United States or by
any such foreign regulatory bodies for marketing in foreign jurisdictions.
If the product candidate is regulated as a biologic, the FDA will require
the submission and approval of both a Product License Application ("PLA") and an
Establishment License Application before commercial marketing can commence. The
PLA must include detailed information about the biologic and its manufacture and
the results of product development, pre-clinical studies and clinical trials.
The FDA's time to review PLAs averages two to five years. The FDA may ultimately
decide that the PLA does not satisfy its regulatory criteria for approval and
deny approval or require additional clinical studies. Future federal, state,
local or foreign legislation or administrative acts could also prevent or delay
regulatory approval of our pharmaceutical and biologic candidates.
THERE IS UNCERTAINTY REGARDING THE AVAILABILITY OF HEALTH CARE REIMBURSEMENT FOR
PURCHASERS OF OUR ANTICIPATED PRODUCTS; HEALTH CARE REFORM MAY NEGATIVELY IMPACT
THE ABILITY OF PROSPECTIVE PURCHASERS OF OUR ANTICIPATED PRODUCTS TO PAY FOR
SUCH PRODUCTS.
Our ability to commercialize any of our product candidates will depend in
part on the extent to which reimbursement for the costs of the resulting drug or
biologic will be available from government health administration authorities,
private health insurers and others. Significant uncertainty exists as to the
reimbursement status of newly-approved health care products. There can be no
assurance of the availability of third-party insurance reimbursement coverage to
enable us to establish and maintain price levels sufficient for realization of a
profit
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on our investment in developing pharmaceutical and biological products.
Government and other third-party payers are increasingly attempting to contain
health care costs by limiting both coverage and the level of reimbursement for
new drug or biologic products approved for marketing by the FDA and by refusing,
in some cases, to provide any coverage for uses of approved products for disease
indications for which the FDA has not granted marketing approval. If adequate
coverage and reimbursement levels are not provided by government and third-party
payers for uses of our anticipated products, the market acceptance of these
products would be adversely affected.
Healthcare reform proposals have previously been introduced in Congress
and in various state legislatures and there is no guarantee that such proposals
will not be introduced in the future. We cannot predict when any proposed
reforms will be implemented, if ever, or the effect of any implemented reforms
on our business. There can be no assurance that any implemented reforms will not
have a material adverse effect on our business. Such reforms, if enacted, may
affect the availability of third-party reimbursement for our anticipated
products as well as the price levels at which we are able to sell such products.
In addition, if we are able to commercialize products in overseas markets, then
our ability to achieve success in such markets may depend, in part, on the
health care financing and reimbursement policies of such countries.
POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE.
Sales of our Common Stock (including the issuance of shares upon
conversion of preferred stock, the exercise of outstanding options and warrants
at prices substantially below the current closing market price and the sale of
shares upon expiration of restrictions on resale) in the public market could
materially and adversely affect the market price of shares of our Common Stock.
Such sales also might make it more difficult for us to sell equity securities or
equity-related securities in the future at a time and price that we deem
appropriate.
As of November 27, 2002, we had 6,349,669 shares of Common Stock
outstanding (not including 852,940 shares of Common Stock reserved for
conversion of Series A Convertible Preferred Stock, 497,531 Shares of Common
Stock reserved for conversion of Series B Convertible Preferred Stock, 505,474
shares of Common Stock reserved for exercise of outstanding options and
2,657,062 shares of Common Stock reserved for exercise of outstanding warrants
held by certain investors). Of the shares of Common Stock outstanding, 4,338,631
shares of Common Stock are freely tradable without restriction. All of the
remaining 2,011,038 shares are restricted from resale except pursuant to certain
exceptions under the Securities Act of 1933, as amended (the "Securities Act").
POTENTIAL ADVERSE EFFECT OF OUTSTANDING COMMON STOCK OPTIONS AND WARRANTS.
We have outstanding options and warrants for the purchase of shares of our
Common Stock which may adversely affect our ability to consummate future equity
financings. Further, the holders of such warrants and options may exercise them
at a time when we would otherwise be able to obtain additional equity capital on
more favorable terms. To the extent any such options and warrants are exercised,
the outstanding shares of our Common Stock may be diluted.
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THE LISTING OF OUR COMMON STOCK HAS BEEN TRANSFERRED FROM THE NASDAQ NATIONAL
MARKET SYSTEM TO THE NASDAQ SMALLCAP MARKET.
On March 6, 2002, we received notice from a NASDAQ listing review panel
that our stock would be transferred from the NASDAQ National Market System to
the NASDAQ SmallCap Market effective March 8, 2002. On March 8, 2002, our Common
Stock began trading on the NASDAQ SmallCap Market. Our ability to remain listed
on the NASDAQ SmallCap Market is contingent upon compliance with all NASDAQ
SmallCap Market requirements, including but not limited to (i) $35 million
market capitalization or (ii) stockholders' equity of $2.5 million.
NASDAQ HAS GRANTED THE COMPANY AN EXCEPTION TO REMAIN LISTED ON THE SMALLCAP
MARKET.
Pursuant to an exception granted by NASDAQ on October 10, 2002, we may
remain listed on the SmallCap Market. However, under the exception, we must
maintain shareholders' equity above SmallCap Market maintenance standards. To
comply with the terms of the exception, we must show shareholders' equity of at
least $3.5 million (on a proforma basis as of September 30, 2002) in our second
quarter Quarterly Report on Form 10-Q filed with the SEC on November 14, 2002,
shareholders' equity of at least $5.4 million on or before December 31, 2002 and
shareholders' equity of at least $5.1 million for the fiscal quarter ending
December 31, 2002. We will be subject to additional NASDAQ listing panel review
if we are unable to timely make any of the required disclosures. If we comply
with the above disclosures, we will remain subject to traditional NASDAQ
SmallCap Market maintenance standards.
WE DID NOT MEET THE TERMS OF NASDAQ'S EXCEPTION ON NOVEMBER 14, 2002.
On November 14, 2002 we filed with the SEC a Quarterly Report on Form 10-Q
reporting shareholders' equity of approximately $1.65 million without pro forma
adjustments. We have requested from NASDAQ additional time to raise funds
through equity sales to meet the elevated equity requirements of the exception.
NASDAQ had not responded to our request as of the date of this Prospectus.
IF WE CANNOT SATISFY THE MAINTENANCE REQUIREMENTS OF THE NASDAQ SMALLCAP MARKET,
NASDAQ MAY TRANSFER OUR COMMON STOCK TO THE ELECTRONIC BULLETIN BOARD.
If we fail to meet the listing maintenance requirements of the NASDAQ
SmallCap Market and NASDAQ rules, which require, among other things, minimum
shareholders' equity of $2.5 million or $35 million market capitalization and a
minimum bid price for our Common Stock of $1.00, we may be subject to transfer
from the NASDAQ SmallCap Market. Trading, if any, of our Common Stock would
thereafter be conducted in the over-the-counter market in the so-called "pink
sheets" or on the National Association of Securities Dealers, Inc. ("NASD")
"electronic bulletin board" (the "OTC Bulletin Board"). As a consequence of any
such transfer, a stockholder would likely find it more difficult to dispose of,
or to obtain accurate quotations as to the prices of, our Common Stock.
Effective January 1, 2003, the OTC Bulletin Board will no longer offer companies
a market on which to trade. The NASD's new Bulletin Board Exchange ("BBX
Exchange"), which is intended to replace the OTC Bulletin Board, may have
stricter listing standards. If we fail to meet the BBX Exchange listing
requirements, then we would be forced to trade on the pink sheets, a market with
very limited liquidity and minimal listing standards.
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IF OUR COMMON STOCK IS TRANSFERRED TO THE PINK SHEETS OR THE OTC BULLETIN BOARD
(OR THE BBX EXCHANGE), IT MAY BECOME SUBJECT TO THE SEC'S "PENNY STOCK" RULES,
WHICH MAY MAKE SHARES OF OUR COMMON STOCK MORE DIFFICULT TO SELL.
SEC rules require brokers to provide certain information to purchasers of
securities traded at less than $5.00 and not traded on a national securities
exchange or quoted on the NASDAQ Stock Market (a "penny stock"). If our Common
Stock becomes a penny stock that is not exempt from these SEC rules, these
disclosure requirements may have the effect of reducing trading activity in our
Common Stock and making it more difficult for investors to sell. The rules
require a broker to deliver a risk disclosure document that provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker must also give bid and offer quotations and broker and salesperson
compensation information to the customer orally or in writing before or with the
confirmation. The SEC rules also require a broker to make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction before
completion of the transaction.
THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE SIGNIFICANT VOLATILITY.
The securities markets from time to time experience significant price and
volume fluctuations unrelated to the operating performance of particular
companies. In addition, the market prices of the common stock of many publicly
traded pharmaceutical and biotechnology companies have been and can be expected
to be especially volatile. Announcements of technological innovations or new
products by us or our competitors, developments or disputes concerning patents
or proprietary rights, publicity regarding actual or potential clinical trial
results relating to products under development by us or our competitors,
regulatory developments in both the United States and foreign countries, delays
in our testing and development schedules, public concern as to the safety of
vaccines or biological products and economic and other external factors, as well
as period-to-period fluctuations in our financial results, may have a
significant impact on the market price of our Common Stock. The realization of
any of the risks described in these "Risk Factors" may have a significant
adverse impact on such market price.
WE DO NOT PAY DIVIDENDS ON OUR COMMON STOCK.
We have never declared or paid dividends on our Common Stock and we do not
intend to pay any Common Stock dividends in the foreseeable future. Our Series A
Convertible Preferred Stock ("Series A Stock") earns a 6% per annum dividend and
our Series B Convertible Preferred Stock ("Series B Stock") earns an 8% per
annum dividend, in both cases payable semi-annually on each April 15th and
October 15th while any shares of Series A Stock or Series B Stock, as the case
may be, are outstanding. These dividends, at our option, may be paid in cash or
in shares of Common Stock.
THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS, AND WE MAY HAVE TO
INDEMNIFY OUR OFFICERS AND DIRECTORS IN CERTAIN INSTANCES.
Our Certificate of Incorporation limits, to the maximum extent permitted
by Delaware law, the personal liability of our directors for monetary damages
for breach of their fiduciary
S-10
duties as directors. Our Bylaws provide that we shall indemnify our officers and
directors and may indemnify our employees and other agents to the fullest extent
permitted by law. We have entered into indemnification agreements with our
officers and directors containing provisions which are in some respects broader
than the specific indemnification provisions contained in Delaware law. The
indemnification agreements may require us, among other things, to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors or officers (other than liabilities arising
from willful misconduct of a culpable nature), to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' insurance if available on
reasonable terms. Section 145 of the Delaware General Corporation Law provides
that a corporation may indemnify a director, officer, employee or agent made or
threatened to be made a party to an action by reason of the fact that he was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation, against expenses actually and reasonably incurred in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Delaware law does
not permit a corporation to eliminate a director's duty of care, and the
provisions of our Certificate of Incorporation have no effect on the
availability of equitable remedies, such as injunction or rescission, for a
director's breach of the duty of care.
ABOUT THIS PROSPECTUS
This document is called a Prospectus and is part of a registration
statement on Form S-3 (the "Registration Statement") that we filed with the SEC
using a "shelf" registration or continuous offering process. Under this shelf
Prospectus, the Selling Stockholders may from time to time collectively offer up
to 1,221,344 Shares of our Common Stock. This Prospectus provides you with a
general description of the securities the Selling Stockholders may offer. We may
file a prospectus supplement with the SEC via its Electronic Data Gathering,
Analysis, and Retrieval ("EDGAR") which may include a discussion of any risk
factors or other special considerations applicable to those securities. A
prospectus supplement may also add, update or change information in this
Prospectus. If there is any inconsistency between the information in this
Prospectus and any prospectus supplement, you should rely on the information in
the prospectus supplement. You should read both this Prospectus and any
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION OF DOCUMENTS BY REFERENCE
We file annual and quarterly reports, proxy statements and other
information required by the Securities Exchange Act of 1934, as amended
("Exchange Act") with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's website at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference rooms located at
450 Fifth Street, N.W., Washington, D.C. 20549, at 233 Broadway, 16th Floor, New
York, New York, 10279 and at Northwest Atrium Center, 5000 West Madison Street,
S-11
Suite 1400, Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.
We have filed with the SEC the Registration Statement on Form S-3 under
the Securities Act with respect to the Shares. This Prospectus, which
constitutes a part of that Registration Statement, does not contain all the
information contained in that Registration Statement and its exhibits. For
further information with respect to the Company and the Shares, you should
consult the Registration Statement and its exhibits. The Registration Statement
and any of its amendments, including exhibits filed as a part of the
Registration Statement or an amendment to the Registration Statement, are
available for inspection and copying through the SEC's public reference rooms
listed above.
The SEC allows us to "incorporate by reference" in this Prospectus the
information that we file with them, which means we can disclose important
information to you by referring you to other documents that contain that
information. The information we incorporate by reference is considered to be
part of this Prospectus and information we later file with the SEC will
automatically update and supersede the information in this Prospectus. The
following documents filed by us with the SEC pursuant to Section 13 of the
Exchange Act (File No. 000-25669) and any future filings under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act made before the termination of the
offering are incorporated by reference herein:
(i) our Annual Report on Form 10-K for the fiscal year ended March 31,
2002;
(ii) our Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2002;
(iii) the description of our Common Stock contained in our registration
statement filed with the SEC via Edgar under Section 12 of the
Exchange Act on September 28, 2002, including any amendments or
reports filed for the purpose of updating such description; and
(iv) our Current Report on Form 8-K filed on September 25, 2002.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment indicating that
all securities offered hereby have been sold or deregistering all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Prospectus and to be a part of this Prospectus from the date of filing of such
documents.
Nothing in this Prospectus shall be deemed to incorporate information
furnished but not filed with the SEC pursuant to Item 9 of Form 8-K.
Statements made in this Prospectus, in any prospectus supplement or in any
document incorporated by reference in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance we
refer you to the copy of the contract or other document filed as an exhibit to
the Registration Statement of which this Prospectus is a part or as an exhibit
to the documents incorporated by reference. Each statement about the contents of
any contract or other document is qualified in all material respects by
reference to such contract or other document.
S-12
We will provide to you a copy of any document incorporated by reference in
this Prospectus and any exhibits specifically incorporated by reference in those
documents at no cost. You may request copies by contacting us at the following
address or telephone number: Corporate Secretary, Immtech International, Inc.,
150 Fairway Drive, Suite 150, Vernon Hills, Illinois, 60061, Telephone No.:
(847) 573-0033.
Any statement incorporated or deemed incorporated herein by reference will
be deemed to be modified or superseded for the purpose of the Registration
Statement and this Prospectus to the extent that a statement contained in this
Prospectus or in any subsequently filed document modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus and in the documents
incorporated by reference in this Prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact may be deemed
to be forward-looking statements. Forward-looking statements frequently, but not
always, use the words "intends," "plans," "believes," "anticipates" or "expects"
or similar words and may include statements concerning our strategies, goals and
plans. Forward-looking statements involve a number of significant risks and
uncertainties that could cause our actual results or achievements or other
events to differ materially from those reflected in such forward-looking
statements. Such factors include, among others described in the Prospectus, the
following: (i) we are in an early stage of product development, (ii) our
technology is in the research and development stage and therefore its potential
benefits for human therapy are unproven, (iii) the possibility that favorable
relationships with collaborators cannot be established or, if established, will
be abandoned by the collaborators before completion of product development, (iv)
the possibility that we or our collaborators will not successfully develop any
marketable products, (v) the possibility that advances by competitors will cause
our product candidates not to be viable, (vi) uncertainties as to the
requirement that a drug product be found to be safe and effective after
extensive clinical trials and the possibility that the results of such trials,
if commenced and completed, will not establish the safety or efficacy of our
drug product candidates, (vii) risks relating to requirements for approvals by
governmental agencies, such as the FDA, before products can be marketed and the
possibility that such approvals will not be obtained in a timely manner or at
all or will be conditioned in a manner that would impair our ability to market
our product candidates successfully, (viii) the risk that our patents could be
invalidated or narrowed in scope by judicial actions or that our technology
could infringe upon the patent or other intellectual property rights of third
parties, (ix) the possibility that we will not be able to raise adequate capital
to fund our operations through the process of developing and testing a
successful product or that future financing will be completed on unfavorable
terms, (x) the possibility that any products successfully developed by us will
not achieve market acceptance and (xi) other risks and uncertainties which may
not be described in this Prospectus.
S-13
THE COMPANY
AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION
PROVIDED UNDER "RISK FACTORS" BEGINNING ON PAGE S-1. A GLOSSARY WHICH DEFINES
VARIOUS TERMS USED IN THIS PROSPECTUS BEGINS ON PAGE S-24.
We are a pharmaceutical company focused on the development and
commercialization of drugs to treat infectious diseases that include fungal
infections, malaria, tuberculosis, hepatitis C, pneumonia, diarrhea and African
sleeping sickness, and cancer. We hold worldwide patents, licenses and rights to
license worldwide patents, patent applications and technologies from third
parties that are integral to our business.
Since our formation in October 1984, we have engaged in research and
development programs, expanding our network of scientists and scientific
advisors, negotiating and consummating technology licensing agreements and
advancing technology platform toward commercialization. We use the expertise and
resources of strategic partners and contracted parties in a number of areas,
including: (i) laboratory research, (ii) pre-clinical and human clinical trials
and (iii) the manufacture of pharmaceutical products. We have licensing and
exclusive commercialization rights to a dicationic anti-infective pharmaceutical
platform and are developing drugs intended for commercial use based on that
platform. These dication pharmaceuticals work by blocking life-sustaining
enzymes from binding to the key sites in the "minor groove" of an organism's
deoxyribonucleic acid ("DNA"), thereby killing the infectious organisms that
cause fungal, parasitic, bacterial and viral diseases. The minor groove or key
site on an organism's DNA is an area where enzymes interact with the DNA as part
of their normal life cycle. We do not have any commercially available products
nor do we expect to have any commercially available products for sale until
after March 31, 2003, if at all.
Our pharmaceutical program is based on technology for developing a class
of compounds known as dications. The dication technology is the result of a
research program designed to understand how dications bind to the DNA of
infectious microorganisms. The dication platform was developed by scientists at
The University of North Carolina at Chapel Hill ("UNC"), Duke University
("Duke"), Auburn University ("Auburn") and Georgia State University ("Georgia
State") (collectively, the "Consortium"). We entered into an agreement with the
Consortium, dated January 15, 1997, as amended, and a License Agreement, dated
as of January 28, 2002 (collectively, the "Consortium Agreements"), to
commercialize product candidates resulting from the Consortium's research,
including the dication technology.
Structurally, dications are chemical molecules which have two positively
charged ends that are held together by a chemical linker. The composition of the
dications, with positive charges on both ends (shaped like molecular barbells),
allows dications to bind (similar to a bandaid) to the negatively charged active
sites (sites where enzymes interact with DNA) in certain areas of an infectious
microorganism's DNA. The bound dications prevent enzymes necessary to the life
of the microorganism from attaching to certain of its DNA's active sites.
Research has shown that once a site is occupied by a dication, enzymes necessary
to the life of the infectious microorganism are blocked and the infectious
microorganism dies.
S-14
STRATEGY
Our strategy is to develop drugs effective against infectious diseases and
cancer by utilizing the dicationic platform technology developed by Consortium
scientists. Our plan is to commercialize dications first in certain niche
markets by taking advantage of fast-track FDA approvals permitted in those areas
due to the absence of currently available effective treatment in such markets.
We believe that our first products will demonstrate the power and versatility of
the dication platform technology. We then intend to work on developing
treatments for other infectious diseases which afflict large populations of
people.
We intend to continue to cooperate with and oversee the results of
independent researchers and to use business-sponsored research programs, joint
ventures and other forms of collaborative programs for product development,
manufacturing and, subject to regulatory review of a product candidate,
marketing. We consider our current collaborative relationships significant to
the successful development of our business and we believe that we will enter
into additional arrangements in the future to develop, manufacture and market
not only the product candidates on which we are currently focusing, but also
those dications which the Consortium members are developing (and are expected to
develop in the future) for future commercialization.
PRODUCT CANDIDATES
The information below is a summary of our product candidates.
Pharmaceutical Products - Dications
The platform technology, the result of the Consortium's research programs,
is focused on understanding how dications bind to the DNA of infectious
microorganisms. Through the Consortium Agreements, we have been granted certain
exclusive rights to the platform technology (and the dications created with such
technology) and to develop and commercialize dications. The methodology used by
the Consortium researchers to develop dications evolved into the Consortium's
platform technology for designing dications to treat infectious diseases. The
Consortium is using this platform technology to design new treatments for a
range of infectious diseases, including protozoan, fungal, bacterial and viral
infections.
In May 2001, we completed single- and multi-dose safety trials of the
dication DB289 in human volunteers. In these trials, DB289 was shown to be safe
to humans at dosage levels expected to be effective against disease. DB289 is
designed to be delivered orally to patients without toxic side effects. Since
DB289 can be given orally, we anticipate that it will be self-administered, thus
making it practical to deliver and substantially less expensive than competitive
products. On March 27, 2002, we were granted FDA approval to export DB289 to the
Democratic Republic of the Congo to open a second Phase II clinical site which
allowed us to increase the enrollment of patients in our clinical trial for
African sleeping sickness and expedite DB289's Phase II testing process.
In September 2002, we completed a Phase IIa human clinical trial of DB289
for the treatment of Trypanosomiasis (African sleeping sickness). Initial trial
results showed that DB289 was well tolerated and approximately 95% of the
patients treated were cured. Trial
S-15
participants were requested to attend a follow-up exam three months after the
conclusion of their treatment; all of the patients who returned continued to be
parasite-free.
Trypanosomiasis is a parasitic disease transmitted by the tsetse fly.
Individuals infected with the disease suffer from symptoms starting with fever,
itchy skin, joint pain and lethargy. Weeks after contracting the disease, when
the parasite migrates through the circulatory system to the brain,
Trypanosomiasis may cause trembling, hallucinations and erratic behavior.
Trypanosomiasis can result in coma and death if left untreated. Sixty million
people in sub-Sahara Africa are exposed to Trypanosomiasis and approximately
500,000 new cases are reported each year. DB289 is a dicationic pharmaceutical
compound designed to be the first oral drug to treat, as well as to prevent,
this potentially fatal disease.
This Phase IIa study was the first human trial to test the efficacy of our
anti-infective, dication pharmaceutical platform and its patented prodrug (oral
delivery) technology. The Phase IIa study was conducted at testing facilities in
The Democratic Republic of the Congo and Angola. Later this year, we plan to
commence a Phase IIb clinical trial to test the efficacy of DB289 for treatment
of Trypanosomiasis in a larger patient population. The clinical trial program is
part of a clinical research subcontract between us and UNC ("Clinical Research
Agreement") funded by $9.8 million of a $15.1 million grant to UNC from the Bill
& Melinda Gates Foundation ("Gates Foundation"). DB289 has demonstrated improved
safety and effectiveness when compared to existing treatments in animal models.
We have initiated a second Phase IIa study of DB289 in South Africa and
Peru for the treatment of Pneumocystis carinii pneumonia ("PCP") with HIV and
AIDS patients. PCP, a disease which affects immuno-suppressed patients, can be
fatal if not treated. The primary use of the drug would be for long-term
prophylaxis of patients at risk for PCP. This Phase IIa human trial will be
managed by Quintiles Transnational Corporation, a company that provides global
clinical trial services for all phases of human drug development.
Additionally, we are planning a Phase II clinical trial that will target
malaria. Our goal is to commence this study at an established clinical site in
Thailand by the end of 2002. The dication compound selected for the malaria
study has displayed excellent activity in vitro against both common and
drug-resistant forms of the disease. The proposed dosage for this trial is
similar to dosages demonstrated to be safe in the recently completed African
sleeping sickness studies. According to an article published in 2002 by "Nature"
magazine, over two billion people live in areas where malaria is prevalent.
Malaria is a parasitic disease spread by mosquitoes that affects about 500
million people per year and is often fatal when contracted by children. The New
York Times reported (May 28, 2002) that over 2,000 African children die each day
of malaria. The World Health Organization highlighted the dangerous growth of
malaria's drug-resistant strains and has ranked malaria at the top of a list of
diseases urgently in need of better treatments.
We believe DB289 is well suited to demonstrate the power and versatility
of the dicationic technology platform and the effectiveness of the dicationic
oral drug delivery ("pro-drug") technology.
S-16
Other Pharmaceutical Programs
Our other pharmaceutical research programs include antifungal,
Mycobacterium tuberculosis ("TB"), hepatitis C, Leishmaniasis, H. Pylori and
cancer programs. Our antifungal program focuses on developing a new orally
delivered dication with effectiveness against the three most common forms of
fungi, which are Candida, Asperigillus and Cryptococcus. During the previous 12
months, the Consortium screened a series of new compounds for effectiveness
against the three strains of fungi and the Consortium researchers identified
several new dicationic compounds that showed promising results.
We, in cooperation with scientists from Consortium members Duke, UNC and
Georgia State, are progressing on the selection of a new antifungal drug
candidate. The estimated annual market for such drug is $4 billion. Together
with Immtech, Consortium scientists have identified several exciting new
compounds with potential to treat both Candida and Aspergillus, two infections
that in the aggregate account for over 90% of the systemic fungal infection drug
market. We plan to advance a lead compound into pre-clinical development in
2003.
In the TB program, the National Institutes of Health ("NIH") researchers
have also been evaluating the Consortium's dications for effectiveness against
TB, having screened over 500 of the Consortium's dications. The NIH screening
test has identified approximately 10 to 15 dications with activity comparable,
or superior, in performance to drugs currently available for the treatment of
TB.
Additionally, Dr. Scott G. Franzblau of the University of Illinois-Chicago
("UIC"), a recognized expert in TB research, has joined the Consortium to test
dications for effectiveness against TB. We will assist Dr. Franzblau to obtain
new grants and we have given a grant of approximately $74,000 to UIC to fund Dr.
Franzblau's studies. Tests conducted at UIC have identified several compounds
that have displayed excellent activity against most common and drug-resistant
forms of TB. According to the World Health Organization (the "WHO"),
approximately 2 billion people are infected with TB and approximately 10% will
develop the disease at some point in their lives. The WHO estimates that there
will be 8 million new cases of TB each year and, of these, 2.5 million infected
persons will die. TB affects 2 billion people, infects 8 million new cases per
year and results in over 2 million annual deaths worldwide. TB has a 25%
mortality rate due primarily to unavailability of or inadequate treatment. We
anticipate advancing a lead compound into pre-clinical/clinical development in
2003.
In the hepatitis program, scientists at Auburn have developed a laboratory
screening test using the bovine viral diarrhea virus ("BVDV") as a substitute
for the hepatitis C virus ("HCV") to gauge the potential for effectiveness of
dications against HCV. The Auburn scientists have advanced the dicationic
candidates believed to have the greatest potential for effectiveness into a
special animal (mouse) model that develops a chronic viral infection of BVDV.
The results of this animal model are expected to help the researchers determine
which dications will be further studied or advanced into primate or other
advanced animal models of HCV.
In the Leishmaniasis program, also part of the Gates Foundation grant, we
are working with The London School of Hygiene and Tropical Medicine in England
("The London School"), Ohio State University ("OSU"), UNC and Georgia State to
develop a drug to treat Leishmaniasis. The U.S. military supported initial work
of the Leishmaniasis program with a
S-17
grant of approximately $80,000 to Georgia State to develop dications that were
screened in the military's laboratory for potential for effectiveness. The
London School and OSU have sub-contracted with the Consortium to screen the drug
candidates supplied by Georgia State and UNC. The London School researchers have
screened Consortium dications for effectiveness in animal tests and have
identified compounds with notable activity. The identified dications have shown
potential for effectiveness equivalent to or better than drugs currently used to
treat Leishmaniasis. We are responsible (under the Clinical Research Agreement
with UNC in connection with the Gates Foundation grant) for the pre-clinical
development of a new drug resulting from the Consortium, OSU and The London
School research for treatments of Leishmaniasis.
In the H. Pylori program, our scientific collaborators performed in vivo
tests to identify antibiotics currently on the market that have synergy with
DB289 for the treatment of H. pylori. Currently, a combination of antibiotics
are used to treat this disease, but over 30% of those treated under current
methods have chronic reoccurrence of the disease. H. pylori is a bacteria
commonly found in the stomach gastric intestinal track that causes 90% of
gastric ulcers worldwide. We are planning to conduct a Phase II pilot study of
patients with H. pylori in 2003.
In the cancer program, the National Cancer Institute (the "NCI") has
tested over 550 of the Consortium's dications for anti-cancer activity,
reporting that a significant number of the dications tested have either retarded
or killed cancer cells. The NCI has identified 47 of the Consortium's dications
as displaying specificity (effectiveness against specific cancer types) and
potency as anti-cancer agents. Eighteen have been identified by the NCI to
advance to animal (mouse) model testing. Early test results show that specific
dications may be effective against different cancer types and that most of the
dications tested had some effectiveness even at low doses. While the
Consortium's dications have shown effectiveness against cancer, this research is
at an early stage and the treatment of cancer is a highly specialized endeavor
that is outside the scope of our current expertise. We intend to seek partners
to jointly develop and commercialize the dications in our cancer program.
We are energized by the successes of our studies and the demand for
treatments for our targeted diseases. Our focus is to meet the tremendous need
for new drugs by safely and rapidly advancing compounds for each of our targeted
diseases through the clinic and into commercialization. Building on those tests
and demands, we intend to dedicate efforts and resources in 2003 to the
following goals:
o the commencement of a Phase IIb clinical trial to treat African sleeping
sickness in four to five sub-Sahara African sites,
o completion of a Phase IIa study of the efficacy of DB289 against PCP,
o commencement of a Phase IIa trial to treat malaria in Thailand with
completion expected within the first half of 2003, and
o completion of preclinical evaluation on DB289's synergy with other
antibiotics in the first quarter of 2003 and to start a human trial for
the treatment of H. pylori. The trial is designed to show the
effectiveness of combining DB289 with other drugs used to treat gastric
ulcers to cure H. pylori, a disease with a high rate of reoccurrence.
S-18
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares
offered by the Selling Stockholders under this Prospectus.
SELLING STOCKHOLDERS
The Selling Stockholders listed below, other than (i) Pacific Dragons
Group, Ltd. ("Pacific Dragons"), (ii) Ace Champion Investments, Ltd. ("Ace
Champion") and (iii) Mr. Cheung Ming Tak ("Mr. Tak"), acquired our Series B
Stock and warrants to purchase Common Stock in private placements on or about
September 25, 2002. Such Selling Stockholders have the right to acquire Shares
(i) upon conversion of the Series B Stock, (ii) upon exercise of the warrants
(upon payment in full for the warrants) or (iii) upon issuance of Common Stock
as stock dividends to holders of Series B Stock, granted to them in connection
with their participation in the private placements.
On or about September 25, 2002, the Selling Stockholders, other than
Pacific Dragons, Ace Champion and Mr. Tak, purchased in the aggregate 76,725
shares of our Series B Stock and were granted warrants to purchase 191,812
shares of Common Stock for gross proceeds to us of $1,903,010. Subject to
adjustment for dilution protection, each share of Series B Stock is convertible
into 6.25 shares of Common Stock and each such Selling Stockholder was granted a
warrant to purchase 2.5 shares of Common Stock for each share of Series B Stock
purchased. The Series B Stock earns an 8% per annum dividend payable
semi-annually each April 15th and October 15th, in cash or Common Stock at the
Company's option for so long as any Series B Stock remains outstanding. If
Common Stock is to be used to pay the Series B Stock dividend, such Common Stock
is to be valued at the 10-day volume-weighted average price immediately prior to
the date of payment. We agreed to use reasonable efforts to register the resale
by the Selling Stockholders of the Shares of Common Stock issuable upon
conversion of the Series B Stock or exercise of the warrants within 100 days
after the date of purchase of the Series B Stock, and to keep such registration
effective for the lesser of one year or until all of such Shares are sold.
On February 1, 2002, we entered into an agreement with Pacific Dragons and
Ace Champion for strategic advice to be provided by Pacific Dragons and Ace
Champion in connection with raising equity capital for the consideration of
warrants to purchase 400,000 shares of Common Stock in the aggregate. Pacific
Dragons was granted a warrant to purchase 300,000 shares of Common Stock and Ace
Champion was granted a warrant to purchase 100,000 shares of Common Stock. The
terms of the warrants provide for an exercise price of $6.00 per share. Pursuant
to the terms of the agreement, we agreed to use reasonable efforts to register
the resale by Pacific Dragons and Ace Champion of the Shares issuable upon
exercise of the warrants, and to keep such registration effective for the lesser
of two years from the date of grant or until all of such Shares are sold.
On June 28, 2002, we entered into an agreement with Mr. Tak for services
to be provided to identify, qualify and develop potential strategic partners to
assist us with the testing and commercialization of drug product candidates and
to develop the pharmaceutical market in China. The Company issued 150,000 shares
of Common Stock to Mr. Tak as compensation for
S-19
his services. The Company has agreed to use commercially reasonable efforts to
register those Shares.
The following table sets forth for each Selling Stockholder the number of
Shares being registered by this Prospectus. Except for T. Stephen Thompson, who
has been our President, Chief Executive Officer and a director of Immtech since
April 1991, and Cecilia Chan, who has been our Executive Vice President since
March 2001 and a director of Immtech since October 2001, no Selling Stockholder
has been an officer, director or employee of Immtech for the past three years.
Because the Selling Stockholders may offer all, some or none of their Shares, we
cannot provide a definitive estimate of the number of Shares they will hold
after such registration. This Prospectus is filed at our expense.
-----------------------------------------------------------------------------------------------------------------------
SHARES SHARES PERCENT
SHARES OF BENEFIC- REGIST- OF
SERIES B COMMON IALLY ERED Class(1)
NAME STOCK STOCK WARRANTS OWNED
-----------------------------------------------------------------------------------------------------------------------
Pacific Dragons Group, Ltd. 0 0 300,000 300,000 300,000 3.8%
-----------------------------------------------------------------------------------------------------------------------
Cheung Ming Tak 0 150,000 0 150,000 150,000 2.0%
-----------------------------------------------------------------------------------------------------------------------
Ace Champion Investments, Ltd. 0 0 100,000 100,000 100,000 1.3%
-----------------------------------------------------------------------------------------------------------------------
E-World Investment Holding, Ltd. 14,000 87,500 35,000 122,500 122,500 1.6%
-----------------------------------------------------------------------------------------------------------------------
Yeung Ming Kwong, Tony 12,000 75,000 30,000 105,000 105,000 1.4%
-----------------------------------------------------------------------------------------------------------------------
Wiscon Overseas, Inc. 8,000 50,000 20,000 70,000 70,000 *
-----------------------------------------------------------------------------------------------------------------------
Fukoku Asset Management 8,000 50,000 20,000 150,000 70,000 1.9%
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Keats Ltd. 7,200 45,000 18,000 63,000 63,000 *
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Cheung Yuk Chor Dickie 6,000 37,500 15,000 96,310 52,500 1.2%
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John R. Harrington, Sr. 4,000 25,000 10,000 35,000 35,000 *
-----------------------------------------------------------------------------------------------------------------------
Hui Chin Ki 2,000 12,500 5,000 17,500 17,500 *
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Lai Nin, Alan 2,000 12,500 5,000 17,500 17,500 *
-----------------------------------------------------------------------------------------------------------------------
Yue Chung Yee 2,000 12,500 5,000 17,500 17,500 *
-----------------------------------------------------------------------------------------------------------------------
Liu Yuk Tong 2,000 12,500 5,000 17,500 17,500 *
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T. Stephen Thompson 2,000 12,500 5,000 389,364 17,500 5.0%
-----------------------------------------------------------------------------------------------------------------------
Kam Choi Fung Flora 1,200 7,500 3,000 10,500 10,500 *
-----------------------------------------------------------------------------------------------------------------------
Ho Cho Sing 1,200 7,500 3,000 10,500 10,500 *
-----------------------------------------------------------------------------------------------------------------------
Li Lo Kwong 1,200 7,500 3,000 10,500 10,500 *
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John J. Lux, Jr. 1,000 6,250 2,500 13,350 8,750 *
---------------------------------------------------------------------------------- ------------ ------------ ----------
Cecilia Chan 925 5,781 2,312 235,125 8,094 3.0%
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Tsang Wai Ping Alfred 800 5,000 2,000 30,543 7,000 *
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Lau Shun Shing 400 2,500 1,000 3,500 3,500 *
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Lee Hon Kit Raymond 400 2,500 1,000 3,500 3,500 *
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Mau Yau Ming 400 2,500 1,000 3,500 3,500 *
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Totals 76,725 629,531 591,812 1,221,344
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(1) The corresponding percentages are the quotient of (x) the number of shares
beneficially owned and (y) the sum of the 6,349,669 shares of Common Stock
outstanding, the number shares of Common Stock issuable upon conversion of
Series A Stock and Series B Stock and such holder's options and warrants
exercisable within 60 days of the date of calculation.
* Less than 1.00%.
S-20
DESCRIPTION OF CAPITAL STOCK
GENERAL
The following descriptions are summaries of the material terms of our
capital stock. You should refer to the applicable provisions of Delaware law,
our amended and restated Certificate of Incorporation, our Certificate of
Designation Series A Convertible Preferred Stock, our Certificate of Designation
Series B Convertible Preferred Stock, our Bylaws and, if applicable, any
prospectus supplement filed with the SEC via EDGAR, for additional information
about our capital stock. See "Where You Can Find More Information."
Under our Certificate of Incorporation, as amended, our authorized capital
stock consists of:
30,000,000 shares of Common Stock; and
5,000,000 shares of preferred stock, par value $0.01 per share.
As of November 27, 2002, we had 6,349,669 shares of Common Stock
outstanding (not including 852,940 shares of Common Stock reserved for
conversion of Series A Stock, 497,531 Shares of Common Stock reserved for
conversion of Series B Stock, 505,474 shares of Common Stock reserved for
exercise of outstanding options and 2,657,062 shares of Common Stock reserved
for exercise of outstanding warrants held by certain investors). Of the shares
of Common Stock outstanding, 4,338,631 shares of Common Stock are freely
tradable without restriction. All of the remaining 2,011,038 shares are
restricted from resale except pursuant to certain exceptions under the
Securities Act. All of the Common Stock underlying the outstanding Series B
Stock is registered by this Prospectus.
COMMON STOCK
Our Common Stock is traded on the NASDAQ SmallCap Market under the symbol
"IMMT." Each share of our Common Stock entitles the holder to one vote on all
matters on which holders are permitted to vote. There is no cumulative voting
for election of directors. Accordingly, the holders of a majority of the shares
voted can elect all of the nominees for director.
Subject to preferences that may be applicable to any outstanding series of
preferred stock, the holders of our Common Stock are entitled to dividends when,
as and if declared by the Board of Directors out of funds legally available for
that purpose. Upon liquidation, dissolution or winding up, subject to
preferences that may be applicable to any outstanding series of preferred stock,
the holders of our Common Stock are entitled to a pro rata share in any
distribution to stockholders. Our Common Stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to our Common Stock. All outstanding shares of our Common
Stock are fully paid and nonassessable.
SERIES A STOCK
Our Series A Stock is not registered under the Securities Act. Each share
of Series A Stock has a stated value of $25.00 and an initial conversion rate of
$4.42, subject to adjustment
S-21
for dilution protection, which initially equals 5.6561 shares of Common Stock
per share of Series A Stock. Our Series A Stock earns a 6% per annum dividend
payable in cash or shares of Common Stock, at the Company's option, on each
April 15th and October 15th so long as any Series A Stock remains outstanding.
The Company has the right (i) to redeem some or all of the Series A Stock any
time after 30 days' notice at the stated value plus accrued and unpaid dividends
or (ii) to convert some or all of the Series A Stock into Common Stock upon 30
days' notice any time after February 14, 2003 (x) at the stated value plus
accrued and unpaid dividends if the closing bid price for our Common Stock
exceeds $9.00 for 20 consecutive "trading days" (days the principal exchange on
which the Common Stock is listed or traded is open for business or, if the
Common Stock is no longer listed or traded on an exchange, business days) within
180 days prior to notice of conversion or (y), if the requirements of (x) are
not met, at 110% of the stated value plus accrued and unpaid dividends. Holders
of Series A Stock have the right to convert their Series A Stock to Common Stock
during the above-mentioned 30-day notice periods.
SERIES B STOCK
Our Series B Convertible Preferred Stock is not registered under the
Securities Act. Each share of Series B Convertible Preferred Stock has a stated
value of $25.00 and an initial conversion rate of $4.00, subject to adjustment
for dilution protection, which initially equals 6.25 shares of Common Stock per
share of Series B Stock. Our Series B Stock earns an 8% per annum dividend
payable in cash or shares of Common Stock, at the Company's option, on each
April 15th and October 15th so long as any Series B Stock remains outstanding.
The Company has the right (i) to redeem some or all of the Series B Stock any
time after 30 days' notice at the stated value plus accrued and unpaid dividends
or (ii) to convert some or all of the Series B Stock into Common Stock upon 30
days' notice any time after September 25, 2003 (x) at the stated value plus
accrued and unpaid dividends if the closing bid price for our Common Stock
exceeds $9.00 for 20 consecutive "trading days" (defined above) within 180 days
prior to notice of conversion or (y), if the requirements of (x) are not met, at
110% of the stated value plus accrued and unpaid dividends. Holders of Series B
Stock have the right to convert their Series B Stock to Common Stock during the
above-mentioned 30-day notice periods.
PLAN OF DISTRIBUTION
We are registering the Shares on behalf of the Selling Stockholders. The
Selling Stockholders may, from time to time, effect the distribution of the
Shares described in this Prospectus in one or more transactions either (a) at a
fixed price or prices, which may be changed, (b) at market prices prevailing at
the time of sale, (c) at prices relating to the prevailing market prices or (d)
at negotiated prices. The Selling Stockholders may offer and sell the Shares
described in this Prospectus (i) through agents, (ii) through one or more
underwriters or dealers, (iii) through a block trade in which the broker or
dealer engaged to handle the block trade will attempt to sell the securities as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction, (iv) directly to one or more purchasers (through a
specific bidding or auction process or otherwise), (v) in "at the market
offerings," within the meaning of Rule 415(a)(4) of the Securities Act, (vi)
through a combination of any of these methods of sale, or (vii) at a fixed
exchange ratio in return for other of our securities.
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To our knowledge, the Selling Stockholders have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the Shares, nor is there an underwriter or
coordinating broker acting in connection with the proposed sales of Shares by
the Selling Stockholders. Any Shares covered by this Prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus. We will pay all costs and expenses
incurred in connection with the registration of the Shares offered by this
Prospectus. Any brokerage commissions and similar selling expenses attributable
to the sale of Shares by the Selling Stockholders will be borne by the Selling
Stockholders.
We have agreed to indemnify the Selling Stockholders and the Selling
Stockholders' respective officers, directors, employees and agents, and each
person who controls such Selling Stockholders, in certain circumstances against
certain liabilities, including liabilities arising under the Securities Act, and
the Selling Stockholders have agreed to indemnify us and our directors and
officers in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act, in each case in connection with
this offering.
If any Selling Stockholders offer and sell Shares through an underwriter
or underwriters, the Selling Stockholders will execute an underwriting agreement
with the underwriter or underwriters. The names of the specific managing
underwriter or underwriters, as well as any other underwriters, and the terms of
the transactions, including compensation of the underwriters and dealers, which
may be in the form of discounts, concessions or commissions, if any, will be
described in a prospectus supplement, if applicable, which will be used by the
underwriters to make resales of the Shares. If the Selling Stockholders offer
and sell the Shares through a dealer, then the Selling Stockholders or an
underwriter will sell the Shares to the dealer, as principal. The dealer may
then resell the Shares to the public at varying prices to be determined by the
dealer at the time of resale.
The Selling Stockholders, dealers acting in connection with the offering
and brokers executing sell orders on behalf of one or more Selling Stockholders
may be deemed to be "underwriters" within the meaning of the Securities Act. In
addition, any such broker or dealer may be required to deliver a copy of this
Prospectus to any person who purchases any of the Shares from or through such
broker or dealer.
LEGAL MATTERS
Legal matters in connection with the validity of the Shares offered by
this Prospectus will be passed upon for the Company by Cadwalader, Wickersham &
Taft, New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
our Annual Report on Form 10-K for the year ended March 31, 2002 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report (which report expresses an unqualified opinion and includes an
explanatory paragraph regarding substantial doubt about our ability to continue
as a going concern), which is incorporated in this Prospectus by reference, and
have been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
S-23
GLOSSARY
As used in this Prospectus, the following terms have the meanings set
forth below.
AIDS Acquired immune deficiency syndrome, a disease caused by
a virus.
DB075 The designation given to our dication designed to treat
diseases resident in the digestive tract.
DB289 The designation given to our lead dication.
Dication A chemical molecule with two positively charged ends
that are held together by a chemical linker. Dications
bind to the DNA of infectious organisms.
DNA A type of molecule made up of polymerized
deoxyribonucleotides linked together by phosphate bonds.
FDA U.S. Food and Drug Administration.
HCV Hepatitis C virus, or HCV, is one of the viruses that
causes acute and chronic hepatitis. Persons who are
chronically infected with Hepatitis C are at an
increased risk for the development of cirrhosis and
liver cancer.
HIV HIV is the human immunodeficiency virus most researchers
believe causes AIDS.
IND Investigational New Drug Application, or IND, is a
document required to be filed with the FDA prior to
performing clinical studies on human subjects in the
United States.
Leishmaniasis An infection caused by a protozoal parasite that affects
the skin and abdominal organs, causing ulcers or skin
disorders that resemble leprosy.
PCP Pneumocystis carinii pneumonia ("PCP") is a protozoal
infection of the lungs, and most common of the
AIDS-associated diseases.
Phase I Clinical testing in which the safety and pharmacological
profile of a new drug is established in humans.
Phase II Clinical testing in which the effectiveness of a new
drug is established in humans. This includes
establishing the dose amount and frequency required to
achieve a therapeutic effect, the metabolic rate of the
administered drug and the toxicity profile in specific
patient populations.
TB A disease caused by bacteria, Mycobacterium
tuberculosis, that is transmitted by breathing in or
eating infected droplets, usually affecting the lungs,
although infection of other organ systems can occur.
Trypanosomiasis An infection caused by a protozoal parasite and
transmitted usually by insect bites. Also known as
African sleeping sickness.
S-24
================================================
IMMTECH INTERNATIONAL,
INC.
1,221,344 SHARES
COMMON STOCK
------------------------------------------------
PROSPECTUS
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NOVEMBER 29, 2002
================================================
S-25