|
As
filed with the Securities and Exchange Commission March 1,
2007
|
Registration
No. 333-
|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ZIOPHARM
Oncology, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or jurisdiction
of
incorporation or organization)
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84-1475642
(I.R.S.
Employer
Identification
No.)
|
|
1180
Avenue of the Americas, 19th Floor
New
York, NY 10036
(646)
214-0700
(Address
and telephone number of registrant’s principal executive offices and
principal place of business)
|
|
Dr.
Jonathan Lewis
Chief
Executive Officer
ZIOPHARM
Oncology, Inc.
1180
Avenue of the Americas, 19th Floor
New
York, NY 10036
Telephone:
(646) 214-0700
Facsimile:
(646) 214-0711
(Name,
address and telephone number of agent for service)
|
Copies
to:
William
M. Mower, Esq.
Alan
M. Gilbert, Esq.
Maslon
Edelman Borman & Brand, LLP
90
South 7th Street, Suite 3300
Minneapolis,
Minnesota 55402
Telephone:
(612) 672-8200
Facsimile:
(612) 642-8381
|
Approximate
date of proposed sale to the public: From
time
to time after the effective date of this Registration Statement, as shall be
determined by the selling stockholders identified herein.
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: x
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o _________
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o _________
If
this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b)under the Securities Act, check
the
following box. o
CALCULATION
OF REGISTRATION FEE
|
Title
Of Each Class Of
Securities
To Be Registered
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Amount
To Be Registered (1)(2)
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|
Proposed
Maximum Offering Price Per Unit(3)
|
|
Proposed
Maximum
Aggregate
Offering
Price(3)
|
|
Amount
Of
Registration
Fee(3)
|
||||||
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Common
stock, par value $.001 per share
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7,269,366
shares
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$
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5.53
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$
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40,199,593.98
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$
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1,234.13
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||||||
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(1)
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There
is also being registered hereunder an indeterminate number of additional
shares of common stock as shall be issuable pursuant to Rule 416
to
prevent dilution resulting from stock splits, stock dividends or
similar
transactions.
|
|
(2)
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Includes
1,359,317
shares
of
common stock issuable upon the exercise of outstanding
warrants.
|
|
(3)
|
Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457 of the Securities Act based upon a $5.53
per
share average of high and low prices of the Registrant's common stock
on
the NASDAQ Capital Market on February 23,
2007.
|
The
Registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall file
a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
state.
Subject
to completion, dated March 1, 2007
OFFERING
PROSPECTUS
ZIOPHARM
Oncology, Inc.
7,269,366
Shares
Common
Stock
The
selling stockholders identified on pages 17-18 of this prospectus are offering
on a resale basis a total of 7,269,366 shares of our common stock, of which
1,359,317 shares are issuable upon the exercise of outstanding warrants. We
will
not receive any proceeds from the sale of these shares by the selling
stockholders.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “ZIOP.” On
February 23, 2007, the last sale price for our common stock as reported on
the
NASDAQ Stock Market, Inc. was $5.53.
The
securities offered by this prospectus involve a high degree of
risk.
See
“Risk Factors” beginning on page 6.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved these securities or determined that this prospectus
is
truthful or complete. A representation to the contrary is a criminal
offense.
The
date
of this Prospectus is ,
2007.
Table
of Contents
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Page
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||||
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Prospectus
Summary
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1 | |||
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Risk
Factors
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6 | |||
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Note
Regarding Forward Looking Statements
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15 | |||
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Use
of Proceeds
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16 | |||
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Selling
Stockholders
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17 | |||
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Plan
of Distribution
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20 | |||
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Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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22 | |||
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About
This Prospectus
|
23 | |||
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Where
You Can Find More Information
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23 | |||
|
Validity
of Common Stock
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24 | |||
|
Experts
|
24 | |||
i
PROSPECTUS
SUMMARY
This
summary provides a brief overview of the key aspects of this offering. Because
it is only a summary, it does not contain all of the detailed information
contained elsewhere in this prospectus or in the documents incorporated by
reference into this prospectus or included as exhibits to the registration
statement that contains this prospectus. Accordingly, you are urged to carefully
review this prospectus (including all documents incorporated by reference into
this prospectus) in its entirety.
Our
Company
We
are a
biopharmaceutical company that is seeking to develop and commercialize a
diverse, risk-sensitive portfolio of in-licensed cancer drugs that address
unmet
medical needs. Our principal focus is on the licensing and development of
proprietary drug candidate families that are related to cancer therapeutics
that
are already on the market or in development. We believe this strategy will
result in lower risk and expedited drug development programs. We expect to
commercialize our products on our own in North America but recognize that
promising clinical trial results in cancers with a high incidence and prevalence
might also be addressed in a commercial partnership with another company with
the requisite financial resources. Currently, we are in phase I and/or II
studies for three product candidates identified as ZIO-101, ZIO-201, and
ZIO-301. We intend to continue with clinical development to register ZIO-101
for
the treatment of advanced myeloma, ZIO-201 to treat advanced sarcoma and ZIO-301
for an as yet undetermined solid tumor indication. We will continue with
preclinical study of our products and back-up candidates, dosing forms and
schedules, while evaluating additional later stage clinical
candidates.
None
of
our product candidates have been approved by the United States Food and Drug
Administration (the “FDA”) or any other regulatory body. Further, we have not
received any commercial revenues to date, and until we receive the necessary
approvals from the FDA or a similar foreign regulatory authority, we will not
have any commercial revenues.
Our
Product Candidates
ZIO-101
General.
ZIO-101 is an organic arsenic compound covered by issued U.S. patents and U.S.
and international applications. A commercially available inorganic arsenic
(arsenic trioxide (Trisenox ® ) or ATO) has been approved for the
treatment of acute promyelocytic leukemia (APL) and is on the compendia listing
for the therapy of multiple myeloma as well as having been studied for the
treatment of various other cancers. ATO has been shown to be toxic to the heart,
nerves and liver, limiting its use as a broad anti-cancer agent. Our preclinical
studies demonstrated that ZIO-101 is considerably less toxic than ATO,
particularly with regard to heart toxicity. In phase I testing, significantly
higher doses of ZIO-101 have been safely administered than the approved dose
of
Trisenox ®, confirming preclinical findings.
In
vitro
testing
of ZIO-101 using the National Cancer Institute’s human cancer cell panel
detected activity against cell lines derived from multiple cancers including
lung, colon, brain, melanoma, ovarian and kidney cancer. Moderate activity
was
detected against breast and prostate cancer. In addition to cell lines derived
from solid tumors, in
vitro
testing
in both the National Cancer Institute’s cancer cell panel and in
vivo
testing
in a leukemia animal model demonstrated substantial activity against
hematological cancers (cancers of the blood and blood-forming tissues) such
as
leukemia, lymphoma, myelodysplastic syndromes and multiple myeloma. In addition,
ZIO-101 has potent anti-angiogenic activity as demonstrated in in
vitro
as well
as in
vivo
studies.
In
a
murine leukemia model, ZIO-101 demonstrated oral activity comparable to that
achieved with systemic administration. Subsequent pharmacokinetic studies in
dogs established oral bioavailability comparable to IV administration. Oral
administration of an effective cancer drug would allow prolonged and potentially
more effective dosing regimens.
Clinical
Lead Indication: Multiple
Myeloma.
We
expect that advanced myeloma, a hematologic cancer, will be the target
indication for our first regulatory approval for ZIO-101. Myeloma is a group
of
plasma cell cancers associated with the overproduction of monoclonal
immunoglobulin (M-protein). Each year approximately 17,000 patients are
diagnosed with multiple myeloma in the United States, while 65,000 patients
are
living with the disease. Primary treatment for myeloma is chemotherapy.
Approximately 15-20% of patients with myeloma are resistant to aggressive
primary treatment. Patients that initially respond to treatment usually develop
resistance to primary therapy after several years. The average survival of
patients with progressive or resistant disease is three to four
years.
1
The
standard of care for progressive or resistant multiple myeloma is in transition.
Velcade ® and Revlimid ® are approved to treat patients
with myeloma that have had at least one prior therapy. Recent clinical trials
offer evidence supporting the use of these therapies either alone or in
combination with other agents. However, neither treatment is universally
effective. The ongoing need for new and non-cross resistant therapies for the
treatment of myeloma suggests that as new therapeutic options come to market,
the market will continue to grow. Penetration into the market for new agents
is
to a large extent independent of the number of therapies available, as most
patients generally will fail all available agents at some point. A more rapid
market penetration can be expected for new therapies with a wide therapeutic
window and where efficacy is equal to or greater than currently available
agents.
Clinical
Development Plan for ZIO-101.
ZIO-101
safety, pharmacokinetics, and drug activity continue to be evaluated in phase
I
studies. These trials have involved different patient populations, namely solid
tumors, multiple myeloma, and hematalogic malignancies. One study is completed
(multiple myeloma) while two studies are nearing completion. In summary, ZIO-101
has shown single agent activity in hematologic cancers (including multiple
myeloma) and solid tumors. Phase II clinical trials in each of these populations
have been initiated. In addition, a number of additional studies are planned,
including a phase I trial utilizing an oral formulation of ZIO-101.
Upon
the
completion of the phase II multiple myeloma program in 2007, the Company
anticipates having an end of phase II meeting with the FDA to discuss a Fast
Track development program for advanced myeloma under Special Protocol Assessment
(SPA).
ZIO-201
General.
ZIO-201, or isophosphoramide mustard (IPM), is a proprietary active metabolite
of the pro-drug ifosfamide. A number of patent applications have been filed
in
the U.S. and internationally. Ifosfamide, as well as the related drug
cyclophosphamide, are alkylating agents. Cyclophosphamide is believed to be
the
most widely used alkylating agent in cancer therapy. Ifosfamide has been shown
to be effective at high doses by itself, or in combination with other agents,
in
treating sarcoma and lymphoma and it is approved in the U.S for the treatment
of
testicular cancer. Although ifosfamide-based treatment generally represents
the
standard of care for sarcoma, it is not licensed for this indication by the
FDA.
Our
preclinical studies have shown that, in animal and laboratory models, ZIO-201
evidences activity against leukemia and solid tumors. These studies also
indicate that ZIO-201 has a better pharmacokinetic and safety profile than
ifosfamide or cyclophosphamide, offering the possibility of safer and more
efficacious therapy with ZIO-201.
In
addition to IPM, other metabolites of ifosfamide are produced including
acrolein, which is toxic to the kidneys and bladder. The presence of acrolein
mandates the administration of a protective agent called mesna, which is
inconvenient to use and expensive. Chloroacetaldehyde, another metabolite of
ifosfamide, is toxic to the central nervous system, causing “fuzzy brain”
syndrome for which there is currently no protective measure. Similar toxicity
concerns pertain to high-dose cyclophosphamide, which is widely used in bone
marrow and blood cell transplantation. Because ZIO-201 is independently
active—without acrolein or chloroacetaldehyde metabolites—the Company believes
that the administration of ZIO-201 (without the administration of mesna) may
avoid many of the toxicities of ifosfamide without compromising
efficacy.
In
addition to anticipated lower toxicity, ZIO-201 may have other advantages over
ifosfamide and cyclophosphamide. ZIO-201 cross-links DNA differently than the
active metabolite of cyclophosphamide, resulting in a different activity
profile. Moreover, in some preclinical studies, ZIO-201 shows activity in
cisplatin-, ifosfamide- and/or cyclophosphamide-resistant cancer cells. In
xenografts of human breast cancer and in a mouse leukemia model, ZIO-201 has
anti-tumor activity when administered orally, a potential additional advantage
over ifosfamide and cyclophosphamide.
2
Clinical
Lead Indications: Sarcomas.
Sarcomas are cancers of the bone, cartilage, fat, muscle, blood vessels, or
other connective or supportive tissue. There are more than 50 histological
or
tissue types of soft tissue sarcomas. The prognosis for patients with soft
tissue sarcomas depends on several factors, including the patient’s age, size of
the primary tumor, histological grade, and stage of the tumor. Factors
associated with a poorer prognosis include age greater than 60 years, tumors
larger than five centimeters, and high-grade histology. While small, low-grade
tumors are usually curable by surgery alone; higher-grade or larger sarcomas
are
associated with higher local treatment failure rates and increased metastatic
potential.
ZIO-201
may be a useful agent that, either alone or in combination with other agents,
can deliver therapeutic activity with fewer side effects of the type that have
been associated with ifosfamide. In the United States, ifosfamide is regularly
included in combination regimens for the treatment of sarcomas, testicular
cancers, head and neck cancer and some types of non-Hodgkin’s lymphomas and
other solid tumors. The Company believes that ZIO-201 may be able to replace
ifosfamide in any or all of these combination protocols.
Clinical
Development Plan for ZIO-201.
ZIO-201
has now been evaluated in two phase I studies, one in advanced cancers and
one
in advanced sarcoma. In both phase I trials, ZIO-201 was given without mesna.
There was no hemorrhagic cystitis or CNS-toxicity. Bone marrow toxicity was
modest. One subject with mesothelioma had stable disease >13 months and two
patients with sarcoma had a response of at least stable disease.
A
phase
II trial in advanced sarcoma has been initiated while the phase I study in
advanced cancers continues. A number of additional studies are planned for
2007
including a phase II study in lymphoma, a phase I/II study in pediatric
malignancies, and a possible phase I study with an oral formulation. Other
routes of administration where alkylating agents are active are being evaluated
i.e., intrathecal and intraperitoneal.
The
Company anticipates evaluating the phase II sarcoma study in the second half
of
2007, followed by an end of phase II meeting with the FDA to discuss a Fast
Track development program for advanced sarcoma under an SPA.
ZIO-301
General.
ZIO-301
(indibulin) is a novel small molecular weight tubulin polymerization inhibitor
that has been acquired from Baxter Healthcare. The microtubule component,
tubulin, is one of the best established anti-tumor targets in the treatment
of
cancer today. A number of other tubulin targeting drugs are currently on the
market, including paclitaxel (Taxol ®
) and
the vinca alkaloids (vincristine, vinorelbine). The use of these drugs is
associated with important toxicities, notably peripheral neuropathy. In
contrast, no peripheral neurotoxicity has been observed with ZIO-301 either
in
preclinical testing or in phase I testing to date. In addition, its activity
as
an oral formulation could offer significant patient convenience, since to date
no oral formulations of paclitaxel or related compounds have been
developed.
ZIO-301
has a different pharmacological profile from other tubulin inhibitors currently
on the market (paclitaxel, docetaxel, vinorelbine, vincristine and vinblastin).
It binds to a unique site on tubulin and is active in multi-drug (MDR-1, MRP-1)
and taxane resistant tumors. ZIO-301 binding causes destabilization of
microtubules in
vitro,
an
effect similar to that of the vinca alkaloid family or colchicine, but opposite
to that of paclitaxel and related drugs.
Testing
of ZIO-301 for in
vitro
growth
inhibitory activity against a panel of human and rodent tumor-derived cell
lines
revealed that the drug candidate is active in a broad spectrum of cell lines
of
different organ origin. In
vivo,
ZIO-301
is active in a number of xenograft and rodent tumor models. Its unique
pharmacodynamic properties in preclinical studies and its excellent safety
profile observed so far in the ongoing phase I study warrants further evaluation
in the clinic.
Potential
Lead Indications for ZIO-301. Bladder, head & neck, prostate, colorectal,
renal.
At the
current time, the Company anticipates pursuing a Fast Track development program
in a niche indication following the completion of phase II testing that would
initiate this year. Registration in one of these indications would then be
followed by label expansion trials that will have been already initiated in
anticipation of registration. In addition, the development of an IV formulation
could further expand the market opportunity.
3
Clinical
Development Plan for ZIO-301.
A phase
I study is currently underway in the Netherlands with ZIO-301 to evaluate
safety, pharmacokinetics (PK), maximum tolerated dose (MTD) and dose limiting
toxicity (DLT) in patients with advanced solid tumors. MTD has not yet been
reached in the phase I study. Drug activity has been observed in patients with
several histologic subtypes. The clinical regulatory strategy is to include
a
phase II study of ZIO-301 in the United States in 2007.
Our
History
We
were
originally incorporated in Colorado in September 1998 (under the name Net
Escapes, Inc.) and later changed our name to “EasyWeb, Inc.” in February 1999.
We were re-incorporated in Delaware on May 16, 2005 under the same name. On
September 13, 2005, we completed a “reverse” acquisition of privately held
ZIOPHARM, Inc., a Delaware corporation. To effect this transaction, we caused
ZIO Acquisition Corp., our wholly-owned subsidiary, to merge with and into
ZIOPHARM, Inc., with ZIOPHARM, Inc. surviving as our wholly-owned subsidiary.
In
accordance with the terms of the merger, the outstanding common stock of
ZIOPHARM, Inc. automatically converted into the right to receive an aggregate
of
approximately 97.3% of our outstanding Common Stock (after giving effect to
the
transaction). Following the merger, we caused ZIOPHARM, Inc. to merge with
and
into us and we changed our name to “ZIOPHARM Oncology, Inc.” Although Easy Web
was the legal acquirer in the transaction, ZIOPHARM, Inc. became the registrant
with the Securities and Exchange Commission because under generally accepted
accounting principles the transaction was accounted for as a reverse
acquisition. Accordingly, the historical financial statements of ZIOPHARM,
Inc.
have become our historical financial statements.
Our
Corporate and Business Offices
Our
corporate office is located at 1180 Avenue of the Americas, 19th Floor, New
York, NY 10036, and our telephone number is (646) 214-0700. Our business and
development operations are located in Charlestown, Massachusetts. Our internet
site is www.ziopharm.com. None of the information on our internet site is part
of this prospectus.
Recent
Developments
February
2007 Financing
On
February 23, 2007, we issued and sold in a private placement transaction an
aggregate of 5,910,049 shares of our common stock at a price of $5.225 per
share. In addition to the shares of common stock, we also issued to each
investor a five-year warrant to purchase, at an exercise price of $5.75 per
share, an additional number of shares of our common stock equal to 20 percent
of
the shares purchased by such investor in the offering. In the aggregate, these
warrants entitle investors to purchase an additional 1,182,015 shares of our
common stock. The total gross proceeds resulting from the sale of these shares
and warrants was approximately $30.9 million, before deducting selling
commissions and expenses.
We
engaged Oppenheimer & Co. Inc., Paramount BioCapital, Inc. and Griffin
Securities, Inc. as co-placement agents in connection with the offering. In
consideration with the offering, we paid aggregate cash commissions and fees
of
approximately $1.9 million and issued five-year placement agent warrants to
purchase an aggregate of 177,302 shares (three percent of the shares sold in
the
private placement) at an exercise price of $5.75 per share.
The
shares being offered hereby are comprised of the 5,910,049 shares of common
stock and the 1,182,015 shares issuable upon exercise of the warrants issued
to
the investors in the private placement, as well as the 177,302 shares issuable
upon exercise of the placement agent warrants.
Risk
Factors
As
with
most pharmaceutical product candidates, the development of ZIO-101,
ZOI-201
and
ZIO-301is
subject to numerous risks, including the risk of delays in or discontinuation
of
development from lack of financing, inability to obtain necessary regulatory
approvals to market the products, unforeseen safety issues relating to the
products and dependence on third party collaborators to conduct research and
development of the products. Because we are a development stage company with
a
limited history of operations, we are also subject to many risks associated
with
early-stage companies. For a more detailed discussion of the risks you should
consider before purchasing shares of our common stock, you are urged to
carefully review and consider the section entitled “Risk Factors” beginning on
page 6 of this prospectus.
4
The
Offering
The
selling stockholders identified on pages 17-18 of this prospectus are offering
on a resale basis a total of 7,269,366 shares of our common stock, of which
1,359,317 shares are issuable upon the exercise of outstanding warrants.
|
Common
stock offered
|
7,269,366
shares
|
|||
|
Common
stock outstanding before the offering(1)
|
21,182,948
shares
|
|||
|
Common
stock outstanding after the offering(2)
|
22,542,265
shares
|
|||
|
Common
Stock NASDAQ Capital Market symbol
|
ZIOP
|
|
(1)
|
Based
on the number of shares outstanding as of February 26, 2007, not
including
7,038,628 shares issuable upon exercise of various warrants and options
to
purchase common stock.
|
| (2) |
Assumes
the issuance of all shares offered hereby that are issuable upon
exercise
of outstanding warrants.
|
5
RISK
FACTORS
An
investment in our common stock is very risky. You may lose the entire amount
of
your investment. Prior to making an investment decision, you should carefully
review this entire prospectus and consider the following risk
factors:
Risks
Related to our Business
We
may not be able to commercialize any products, generate significant revenues
or
attain profitability.
We
have
never generated revenue and have incurred significant net losses in each year
since our inception. For the year ended December 31, 2006, we had a net loss
of
$17.9 million and we had incurred approximately $33.2 million of cumulative
net
losses since our inception in 2003. We expect to continue to incur significant
operating and capital expenditures and anticipate that our expenses will
increase substantially in the foreseeable future as we:
| · |
Continue
to undertake preclinical development and clinical trials for product
candidates;
|
| · |
Scale
up the formulation and manufacturing of our product
candidates;
|
| · |
Scale
up the formulation and manufacturing of our product
candidates;
|
| · |
Seek
regulatory approvals for product
candidates;
|
| · |
Implement
additional internal systems and infrastructure;
and
|
| · |
Hire
additional personnel.
|
Because
we expect to incur losses for the foreseeable future, we will need to generate
significant revenues in order to achieve and maintain profitability. Even if
we
succeed in developing and commercializing one or more of our product candidates,
which success is not assured, we may not be able to generate significant
revenues. If we do generate significant revenues, we may never achieve or
maintain profitability. Our failure to achieve or maintain profitability could
negatively impact the trading price of our common stock.
If
we are not able to successfully develop and commercialize our product
candidates, we may not generate sufficient revenues to continue our business
operations.
To
date,
none of our product candidates have been approved for commercial sale in any
country. The process to develop, obtain regulatory approval for and
commercialize potential drug candidates is long, complex and costly. Until
and
unless we receive approval from the FDA and/or other regulatory authorities
for
our product candidates, we cannot sell our drugs and will not have product
revenues. Even if we obtain regulatory approval for one or more of our product
candidates, if we are unable to successfully commercialize our products, we
may
not be able to earn sufficient revenues to continue our business without raising
significant additional capital, which may not be available.
We
may need to raise additional capital to fund our operations. If we are unable
to
raise additional capital when needed, we may have to discontinue our product
development programs. The manner in which we raise any additional funds may
affect the value of your investment in our common
stock.
As
of
December 31, 2006, we had incurred approximately $33.2 million of cumulative
net
losses and had approximately $28.4 million of cash, cash equivalents, and
short-term investments. In February 2007, we completed an offering of common
stock and warrants in which we received proceeds of approximately $29.0 million
after paying cash commissions, fees and offering expenses. Currently, we expect
that we will have sufficient cash to fund our operations late into the fourth
quarter of 2008. Although we expect our cash on-hand to fund our operations
late
into the fourth quarter of 2008, changes may occur that would consume our
existing capital prior to that time, including the progress of our research
and
development efforts, changes in governmental regulation and acquisitions of
additional product candidates.
Currently,
we have no committed sources of additional capital. We do not know whether
additional financing will be available on terms favorable to us when needed,
if
at all. If we fail to advance our current product candidates to later stage
clinical trials, successfully commercialize one or more of our product
candidates, or acquire new product candidates for development, we may have
difficulty obtaining additional financing. To the extent that we raise
additional capital by issuing equity securities, our stockholders may experience
dilution. We may grant future investors rights superior to those of our common
stockholders. If we raise additional funds through collaborations and licensing
arrangements, it may be necessary to relinquish some rights to our technologies,
product candidates or products, or grant licenses on terms that are not
favorable to us. If we raise additional funds by incurring debt, we could incur
significant interest expense and become subject to covenants in the related
transaction documentation that could affect the manner in which we conduct
our
business.
6
If
we do
not succeed in raising additional funds on acceptable terms, we may be unable
to
complete planned preclinical and clinical trials or obtain approval of any
product candidates from the FDA and other regulatory authorities. In addition,
we could be forced to discontinue product development, reduce or forego sales
and marketing efforts or forego attractive business opportunities, or
discontinue our operations altogether.
We
have a limited operating history upon which to base an investment
decision.
We
are a
development-stage company that was incorporated in September 2003. To date,
we
have not demonstrated an ability to perform the functions necessary for the
successful commercialization of any product candidates. The successful
commercialization of any product candidates will require us to perform a variety
of functions, including:
| · |
Continuing
to undertake preclinical development and clinical
trials;
|
| · |
Participating
in regulatory approval processes;
|
| · |
Formulating
and manufacturing products;
and
|
| · |
Conducting
sales and marketing activities.
|
Our
operations have been limited to organizing and staffing our Company, acquiring,
developing and securing our proprietary product candidates, undertaking
preclinical trials and clinical trials of our product candidates ZIO-101,
ZIO-201 and ZIO-301, and manufacturing ZIO-101 and ZIO- 201 and, in the near
future, ZIO-301. These operations provide a limited basis for you to assess
our
ability to commercialize our product candidates and the advisability of
investing in our securities.
We
intend to acquire rights to develop and commercialize additional product
candidates. Because we currently neither have nor intend to establish internal
research capabilities, we are dependent upon pharmaceutical and biotechnology
companies and academic and other researchers to sell or license us their product
candidates. The success of our strategy depends upon our ability to identify,
select and acquire pharmaceutical product candidates.
Proposing,
negotiating and implementing an economically viable product acquisition or
license is a lengthy and complex process. We compete for partnering arrangements
and license agreements with pharmaceutical, biopharmaceutical and biotechnology
companies, many of which have significantly more experience than us and have
significantly more financial resources than we do. Our competitors may have
stronger relationships with certain third parties with whom we are interested
in
partnering, such as academic research institutions, and may, therefore, have
a
competitive advantage in entering into partnering arrangements with those third
parties. We may not be able to acquire rights to additional product candidates
on terms that we find acceptable, or at all.
We
expect
that any product candidate to which we acquire rights will require significant
additional development and other efforts prior to commercial sale, including
extensive clinical testing and approval by the FDA and applicable foreign
regulatory authorities. All product candidates are subject to the risks of
failure inherent in pharmaceutical product development, including the
possibility that the product candidate will not be shown to be sufficiently
safe
or effective for approval by regulatory authorities. Even if our product
candidates are approved, they may not be manufactured or produced economically
or commercialized successfully. If we are unable to successfully manage our
growth, our business may be harmed.
In
the
future, if we are able to advance our product candidates to the point of, and
thereafter through, clinical trials, we will need to expand our development,
regulatory, manufacturing, marketing and sales capabilities or contract with
third parties to provide these capabilities. Any future growth will place a
significant strain on our management and on our administrative, operational
and
financial resources. Our future financial performance and our ability to
commercialize our product candidates and to compete effectively will depend,
in
part, on our ability to manage any future growth effectively. We actively
evaluate additional product candidates to acquire for development. Such
additional product candidates, if any, could significantly increase our capital
requirements and place further strain on the time of our existing personnel,
which may delay or otherwise adversely affect the development of our existing
product candidates. We must manage our development efforts and clinical trials
effectively, and hire, train and integrate additional management, administrative
and sales and marketing personnel. We may not be able to accomplish these tasks,
and our failure to accomplish any of them could prevent us from successfully
growing our Company.
7
We
may not be able to successfully manage our growth.
Our
success will depend upon the expansion of our operations and the effective
management of our growth, which will place a significant strain on our
management and on our administrative, operational and financial resources.
To
manage this growth, we must expand our facilities, augment our operational,
financial and management systems and hire and train additional qualified
personnel. If we are unable to manage our growth effectively, our business
may
be harmed.
Our
business will subject us to the risk of liability claims associated with the
use
of hazardous materials and chemicals.
Our
contract research and development activities may involve the controlled use
of
hazardous materials and chemicals. Although we believe that our safety
procedures for using, storing, handling and disposing of these materials comply
with federal, state and local laws and regulations, we cannot completely
eliminate the risk of accidental injury or contamination from these materials.
In the event of such an accident, we could be held liable for any resulting
damages and any liability could have a materially adverse effect on our
business, financial condition and results of operations. In addition, the
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of hazardous or radioactive materials and waste
products may require our contractors to incur substantial compliance costs
that
could materially adversely affect our business, financial condition and results
of operations.
We
rely on key executive officers and scientific and medical advisors, and their
knowledge of our business and technical expertise would be difficult to
replace.
We
are
highly dependent on Dr. Jonathan Lewis, our Chief Executive Officer, Richard
E.
Bagley, our Chief Operating Officer and Chief Financial Officer, and our
principal scientific, regulatory and medical advisors. Dr. Lewis’ and Mr.
Bagley’s employment are governed by written employment agreements that provide
for terms that expire in January 2008 and July 2007, respectively. Dr. Lewis
and
Mr. Bagley may terminate their employment with us at any time, subject, however,
to certain non-compete and non-solicitation covenants. The loss of the technical
knowledge and management and industry expertise of any of our key personnel
could result in delays in product development, loss of customers and sales
and
diversion of management resources, which could adversely affect our operating
results. We do not carry "key person" life insurance policies on any of our
officers or key employees. If we are unable to hire additional qualified
personnel, our ability to grow our business may be harmed.
If
we are unable to hire additional qualified personnel, our ability to grow our
business may be harmed.
We
will
need to hire additional qualified personnel with expertise in preclinical and
clinical research and testing, government regulation, formulation and
manufacturing, and eventually sales and marketing. We compete for qualified
individuals with numerous biopharmaceutical companies, universities and other
research institutions. Competition for such individuals is intense, and we
cannot be certain that our search for such personnel will be successful.
Attracting and retaining qualified personnel will be critical to our
success.
We
may incur substantial liabilities and may be required to limit commercialization
of our products in response to product liability
lawsuits.
The
testing and marketing of medical products entail an inherent risk of product
liability. If we cannot successfully defend ourselves against product liability
claims, we may incur substantial liabilities or be required to limit
commercialization of our products, if approved. Even successful defense would
require significant financial and management resources. Regardless of the merit
or eventual outcome, liability claims may result in:
8
| · |
Decreased
demand for our product candidates;
|
| · |
Injury
to our reputation;
|
| · |
Withdrawal
of clinical trial participants;
|
| · |
Conducting
sales and marketing activities;
|
| · |
Costs
of related
litigation;
|
| · |
Substantial
monetary awards to patients;
|
| · |
Product
recalls;
|
| · |
Loss
of revenue; and
|
| · |
The
inability to commercialize our product
candidates.
|
Our
inability to obtain sufficient product liability insurance at an acceptable
cost
to protect against potential product liability claims could prevent or inhibit
the commercialization of pharmaceutical products we develop, alone or with
collaborators. We currently carry clinical trial insurance and product liability
insurance.
Risks
Related to the Clinical Testing, Regulatory Approval and Manufacturing of Our
Product Candidates
If
we are unable to obtain the necessary U.S. or worldwide regulatory approvals
to
commercialize any product candidate, our business will
suffer.
We
may
not be able to obtain the approvals necessary to commercialize our product
candidates, ZIO-101, ZIO-201 and ZIO-301, or any product candidate that we
may
acquire or develop in the future for commercial sale. We will need FDA approval
to commercialize our product candidates in the U.S. and approvals from
regulatory authorities in foreign jurisdictions equivalent to the FDA to
commercialize our product candidates in those jurisdictions. In order to obtain
FDA approval of any product candidate, we must submit to the FDA a New Drug
Application (NDA), demonstrating that the product candidate is safe for humans
and effective for its intended use. This demonstration requires significant
research and animal tests, which are referred to as preclinical studies, as
well
as human tests, which are referred to as clinical trials. Satisfaction of the
FDA’s regulatory requirements typically takes many years, depending upon the
type, complexity and novelty of the product candidate, and will require
substantial resources for research, development and testing. We cannot predict
whether our research, development, and clinical approaches will result in drugs
that the FDA considers safe for humans and effective for their intended uses.
The FDA has substantial discretion in the drug approval process and may require
us to conduct additional preclinical and clinical testing or to perform
post-marketing studies. The approval process may also be delayed by changes
in
government regulation, future legislation or administrative action or changes
in
FDA policy that occur prior to or during our regulatory review. Delays in
obtaining regulatory approvals may:
| · |
Delay
commercialization of, and our ability to derive product revenues
from, our
product candidates;
|
| · |
Impose
costly procedures on us; and
|
| · |
Diminish
any competitive advantages that we may otherwise
enjoy.
|
Even
if
we comply with all FDA requests, the FDA may ultimately reject one or more
of
our NDAs. We cannot be sure that we will ever obtain regulatory clearance for
our product candidates, ZIO-101, ZIO-201 and ZIO-301. Failure to obtain FDA
approval of our product candidates will severely undermine our business by
leaving us without a saleable product, and therefore without any potential
revenue source, until another product candidate can be developed. There is
no
guarantee that we will ever be able to develop or acquire another product
candidate.
In
foreign jurisdictions, we similarly must receive approval from applicable
regulatory authorities before we can commercialize any drugs. Foreign regulatory
approval processes generally include all of the risks associated with the FDA
approval procedures described above.
Our
product candidates are in early stages of clinical trials, which are very
expensive and time-consuming. We cannot be certain when we will be able to
file
an NDA with the FDA and any failure or delay in completing clinical trials
for
our product candidates could harm our business.
9
Our
product candidates, ZIO-101, ZIO-201, and ZIO-301 are in early stages of
development and require extensive clinical testing. Notwithstanding our current
clinical trial plans for each of our existing product candidates, we may not
be
able to commence additional trials or see results from these trials within
our
anticipated timelines. As such, we cannot predict with any certainty if or
when
we might submit an NDA for regulatory approval of our product candidates or
whether such an NDA will be accepted.
Clinical
trials are very expensive, time-consuming and difficult to design and
implement.
Human
clinical trials are very expensive and difficult to design and implement, in
part because they are subject to rigorous regulatory requirements. The clinical
trial process is also time consuming. We estimate that clinical trials of our
product candidates will take at least several years to complete. Furthermore,
failure can occur at any stage of the trials, and we could encounter problems
that cause us to abandon or repeat clinical trials. The commencement and
completion of clinical trials may be delayed by several factors,
including:
| · |
Unforeseen
safety issues;
|
| · |
Determination
of dosing issues;
|
| · |
Lack
of effectiveness during clinical
trials;
|
| · |
Slower
than expected rates of patient
recruitment;
|
| · |
Inability
to monitor patients adequately during or after treatment;
and
|
| · |
Inability
or unwillingness of medical investigators to follow
our clinical
protocols.
|
We
are
hopeful that we may be able to obtain “Fast Track” and or “Orphan Drug” status
from the FDA for one or more of our product candidates. Fast Track allows the
FDA to facilitate development and expedite review of drugs that treat serious
and life-threatening conditions so that an approved product can reach the market
expeditiously. Fast Track status does not apply to a product alone, but applies
to a combination of a product and the specific indications for which it is
being
studied. Therefore, it is a drug’s development program for a specific indication
that receives Fast Track designation. Orphan Drug status promotes the
development of products that demonstrate the promise for the diagnosis and
treatment of one disease or condition and affords certain financial and market
protection benefits to successful applicants. However, there is no guarantee
that any of our product candidates will be granted Fast Track or Orphan Drug
status by the FDA or that, even if such product candidate is granted such
status, the product candidate’s clinical development and regulatory approval
process will not be delayed or will be successful.
In
addition, we or the FDA may suspend our clinical trials at any time if it
appears that we are exposing participants to unacceptable health risks or if
the
FDA finds deficiencies in our IND submission or in the conduct of these trials.
Therefore, we cannot predict with any certainty the schedule for future clinical
trials.
The
results of our clinical trials may not support our product candidate
claims.
Even
if
our clinical trials are completed as planned, we cannot be certain that their
results will support approval of our product candidates. Success in preclinical
testing and early clinical trials does not ensure that later clinical trials
will be successful, and we cannot be sure that the results of later clinical
trials will replicate the results of prior clinical trials and preclinical
testing. The clinical trial process may fail to demonstrate that our product
candidates are safe for humans and effective for indicated uses. This failure
would cause us to abandon a product candidate and may delay development of
other
product candidates. Any delay in, or termination of, our clinical trials will
delay the filing of our NDAs with the FDA and, ultimately, our ability to
commercialize our product candidates and generate product revenues. In addition,
our clinical trials involve small patient populations. Because of small sample
size, the results of these clinical trials may not be indicative of future
results.
Even
if
the FDA approves our product candidates, physicians and patients may not accept
and use them. Acceptance and use of our products will depend upon a number
of
factors including:
| · |
Perceptions
by members of the health care community, including physicians,
regarding
the safety and effectiveness of our
drugs;
|
| · |
Cost-effectiveness
of our products relative to competing
products;
|
| · |
Availability
of reimbursement for our products from government or other
healthcare
payers; and
|
| · |
Effectiveness
of marketing and distribution efforts by us and our licensees
and
distributors, if
any.
|
10
Because
we expect sales of our current product candidates, if approved, to generate
substantially all of our product revenues for the foreseeable future, the
failure of a drug to find market acceptance would harm our business and could
require us to seek additional financing in order to fund the development of
future product candidates.
Because
we are dependent on clinical research institutions and other contractors for
clinical testing and for research and development activities, the results of
our
clinical trials and such research activities are, to a certain extent, beyond
our control.
We
materially rely upon independent investigators and collaborators, such as
universities and medical institutions, to conduct our preclinical and clinical
trials under agreements with us. These collaborators are not our employees
and
we cannot control the amount or timing of resources that they devote to our
programs. These investigators may not assign as great a priority to our programs
or pursue them as diligently as we would if we were undertaking such programs
ourselves. If outside collaborators fail to devote sufficient time and resources
to our drug development programs, or if their performance is substandard, the
approval of our FDA applications, if any, and our introduction of new drugs,
if
any, will be delayed. These collaborators may also have relationships with
other
commercial entities, some of whom may compete with us. If our collaborators
assist our competitors to our detriment, our competitive position would be
harmed.
Our
reliance on third parties to formulate and manufacture our product candidates
exposes us to a number of risks that may delay the development, regulatory
approval and commercialization of our products or result in higher product
costs.
We
do not
have experience in drug formulation or manufacturing and do not intend to
establish our own manufacturing facilities. We lack the resources and expertise
to formulate or manufacture our own product candidates. We currently are
contracting for the manufacture of our product candidates. We intend to contract
with one or more manufacturers to manufacture, supply, store and distribute
drug
supplies for our clinical trials. If a product candidate we develop or acquire
in the future receives FDA approval, we will rely on one or more third-party
contractors to manufacture our drugs. Our anticipated future reliance on a
limited number of third-party manufacturers exposes us to the following
risks:
·
We
may be
unable to identify manufacturers on acceptable terms or at all because the
number of potential manufacturers is limited and the FDA must approve any
replacement contractor. This approval would require new testing and compliance
inspections. In addition, a new manufacturer would have to be educated in,
or
develop substantially equivalent processes for, production of our products
after
receipt of FDA approval, if any;
·
Our
third-party manufacturers might be unable to formulate and manufacture our
drugs
in the volume and of the quality required to meet our clinical needs and
commercial needs, if any;
·
Our
future contract manufacturers may not perform as agreed or may not remain in
the
contract manufacturing business for the time required to supply our clinical
trials or to successfully produce, store and distribute our products;
·
Drug
manufacturers are subject to ongoing periodic unannounced inspection by the
FDA,
the Drug Enforcement Administration (the “DEA”), and corresponding state
agencies to ensure strict compliance with good manufacturing practices and
other
government regulations and corresponding foreign standards. We do not have
control over third-party manufacturers’ compliance with these regulations and
standards; and
·
If
any
third-party manufacturer makes improvements in the manufacturing process for
our
products, we may not own, or may have to share, the intellectual property rights
to the innovation.
Each
of
these risks could delay our clinical trials, the approval, if any, of our
product candidates by the FDA or the commercialization of our product candidates
or result in higher costs or deprive us of potential product
revenues.
Risks
Related to Our Ability to Commercialize Our Product
Candidates
If
we are unable either to create sales, marketing and distribution capabilities
or
enter into agreements with third parties to perform these functions, we will
be
unable to commercialize our product candidates
successfully.
11
We
currently have no marketing, sales or distribution capabilities. If and when
we
become reasonably certain that we will be able to commercialize our current
or
future products, we anticipate allocating resources to the marketing, sales
and
distribution of our proposed products in North America, however, we cannot
assure that we will be able to market, sell and distribute our products
successfully. Our future success also may depend, in part, on our ability to
enter into and maintain collaborative relationships for such capabilities and
to
encourage the collaborator’s strategic interest in the products under
development and such collaborator’s ability to successfully market and sell any
such products. Although we intend to pursue certain collaborative arrangements
regarding the sale and marketing of our products, there can be no assurance
that
we will be able to establish or maintain our own sales operations or effect
collaborative arrangements, or that if we are able to do so, our collaborators
will have effective sales forces. There can also be no assurance that we will
be
able to establish or maintain relationships with third party collaborators
or
develop in-house sales and distribution capabilities. To the extent that we
depend on third parties for marketing and distribution, any revenues we receive
will depend upon the efforts of such third parties, and there can be no
assurance that such efforts will be successful. In addition, there can also
be
no assurance that we will be able to market and sell our products in the United
States or overseas.
If
we are
not able to partner with a third party and are not successful in recruiting
sales and marketing personnel or in building a sales and marketing
infrastructure, we will have difficulty commercializing our product candidates,
which would harm our business. If we rely on pharmaceutical or biotechnology
companies with established distribution systems to market our products, we
will
need to establish and maintain partnership arrangements, and we may not be
able
to enter into these arrangements on acceptable terms or at all. To the extent
that we enter into co-promotion or other arrangements, any revenues we receive
will depend upon the efforts of third parties which may not be successful and
which will be only partially in our control. Our product revenues would likely
be lower than if we marketed and sold our products directly.
If
we cannot compete successfully for market share against other drug companies,
we
may not achieve sufficient product revenues and our business will
suffer.
The
market for our product candidates is characterized by intense competition and
rapid technological advances. If a product candidate receives FDA approval,
it
will compete with a number of existing and future drugs and therapies developed,
manufactured and marketed by others. Existing or future competing products
may
provide greater therapeutic convenience or clinical or other benefits for a
specific indication than our products, or may offer comparable performance
at a
lower cost. If our products fail to capture and maintain market share, we may
not achieve sufficient product revenues and our business will
suffer.
We
will
compete against fully integrated pharmaceutical companies and smaller companies
that are collaborating with larger pharmaceutical companies, academic
institutions, government agencies and other public and private research
organizations. Many of these competitors have products already approved or
in
development. In addition, many of these competitors, either alone or together
with their collaborative partners, operate larger research and development
programs or have substantially greater financial resources than we do, as well
as significantly greater experience in:
-
Developing drugs;
-
Undertaking preclinical testing and human clinical trials;
-
Obtaining FDA and other regulatory approvals of drugs;
-
Formulating and manufacturing drugs; and
-
Launching, marketing and selling drugs.
If
physicians and patients do not accept and use our product candidates, our
ability to generate revenue from sales of our products will be materially
impaired.
Even
if
the FDA approves our product candidates, physicians and patients may not accept
and use them. Acceptance and use of our products will depend upon a number
of
factors including:
-
Perceptions by members of the health care community, including physicians, about the safety and effectiveness of our drugs;
-
Pharmacological benefit and cost-effectiveness of our products relative to competing products;
-
Availability of reimbursement for our products from government or other healthcare payors;
12
-
Effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any; and
-
The price at which we sell our products.
Our
ability to commercialize our drugs, alone or with collaborators, will depend
in
part on the extent to which reimbursement will be available from:
-
Government and health administration authorities;
-
Private health maintenance organizations and health insurers; and
-
Other healthcare payers.
Government
and other healthcare payers increasingly attempt to contain healthcare costs
by
limiting both coverage and the level of reimbursement for drugs. As a result,
we
cannot provide any assurances that third-party payors will provide adequate
coverage of and reimbursement for any of our product candidates. If we are
unable to obtain adequate coverage of and payment levels for our product
candidates from third-party payors, physicians may limit how much or under
what
circumstances they will prescribe or administer them and patients may decline
to
purchase them. This in turn could affect our ability to successfully
commercialize our products and impact our profitability and future
success.
In
both
the United States and certain foreign jurisdictions, there have been a number
of
legislative and regulatory policies and proposals in recent years to change
the
healthcare system in ways that could impact our ability to sell our products
profitably. On December 8, 2003, President Bush signed into law the Medicare
Prescription Drug, Improvement and Modernization Act of 2003, or the MMA, which
contains, among other changes to the law, a wide variety of changes that have
and will impact Medicare reimbursement of pharmaceuticals to physicians and
hospitals.
There
also likely will continue to be legislative and regulatory proposals that could
bring about significant changes in the healthcare industry. We cannot predict
what form those changes might take or the impact on our business of any
legislation or regulations that may be adopted in the future. The implementation
of cost containment measures or other healthcare reforms may prevent us from
being able to generate revenue, attain profitability or commercialize our
products.
In
addition, in many foreign countries, particularly the countries of the European
Union, the pricing of prescription drugs is subject to government control.
We
may face competition for our product candidates from lower priced products
in
foreign countries that have placed price controls on pharmaceutical products.
In
addition, there may be importation of foreign products that compete with our
own
products which could negatively impact our profitability.
Risks
Related to Our Intellectual Property
If
we fail to adequately protect or enforce our intellectual property rights or
secure rights to patents of others, the value of our intellectual property
rights would diminish.
Our
success, competitive position and future revenues will depend in part on our
ability and the abilities of our licensors to obtain and maintain patent
protection for our products, methods, processes and other technologies, to
preserve our trade secrets, to prevent third parties from infringing on our
proprietary rights and to operate without infringing the proprietary rights
of
third parties.
To
date,
we have exclusive rights to certain U.S. and foreign intellectual property.
We
anticipate filing additional patent applications both in the U.S. and in other
countries, as appropriate. However, we cannot predict:
-
The degree and range of protection any patents will afford us against competitors, including whether third parties will find ways to invalidate or otherwise circumvent our patents;
-
If and when patents will issue;
13
-
Whether or not others will obtain patents claiming aspects similar to those covered by our patents and patent applications; or
-
Whether we will need to initiate litigation or administrative proceedings which may be costly whether we win or lose.
Our
success also depends upon the skills, knowledge and experience of our scientific
and technical personnel, our consultants and advisors as well as our licensors
and contractors. To help protect our proprietary know-how and our inventions
for
which patents may be unobtainable or difficult to obtain, we rely on trade
secret protection and confidentiality agreements. To this end, it is our policy
generally to require our employees, consultants, advisors and contractors to
enter into agreements which prohibit the disclosure of confidential information
and, where applicable, require disclosure and assignment to us of the ideas,
developments, discoveries and inventions important to our business. These
agreements may not provide adequate protection for our trade secrets, know-how
or other proprietary information in the event of any unauthorized use or
disclosure or the lawful development by others of such information. If any
of
our trade secrets, know-how or other proprietary information is disclosed,
the
value of our trade secrets, know-how and other proprietary rights would be
significantly impaired and our business and competitive position would
suffer.
Third
party claims of intellectual property infringement would require us to spend
significant time and money and could prevent us from developing or
commercializing our products.
In
order
to protect or enforce patent rights, we may initiate patent litigation against
third parties. Similarly, we may be sued by others. We also may become subject
to proceedings conducted in the U.S. Patent and Trademark Office, including
interference proceedings to determine the priority of inventions, or
reexamination proceedings. In addition, any foreign patents that are granted
may
become subject to opposition, nullity, or revocation proceedings in foreign
jurisdictions having such proceedings opposed by third parties in foreign
jurisdictions having opposition proceedings. The defense and prosecution, if
necessary, of intellectual property actions are costly and divert technical
and
management personnel from their normal responsibilities.
No
patent
can protect its holder from a claim of infringement of another patent.
Therefore, our patent position cannot and does not provide any assurance that
the commercialization of our products would not infringe the patent rights
of
another. While we know of no actual or threatened claim of infringement that
would be material to us, there can be no assurance that such a claim will not
be
asserted.
If
such a
claim is asserted, there can be no assurance that the resolution of the claim
would permit us to continue marketing the relevant product on commercially
reasonable terms, if at all. We may not have sufficient resources to bring
these
actions to a successful conclusion. If we do not successfully defend any
infringement actions to which we become a party or are unable to have infringed
patents declared invalid or unenforceable, we may have to pay substantial
monetary damages, which can be tripled if the infringement is deemed willful,
or
be required to discontinue or significantly delay commercialization and
development of the affected products.
Any
legal
action against us or our collaborators claiming damages and seeking to enjoin
developmental or marketing activities relating to affected products could,
in
addition to subjecting us to potential liability for damages, require us or
our
collaborators to obtain licenses to continue to develop, manufacture or market
the affected products. Such a license may not be available to us on commercially
reasonable terms, if at all.
An
adverse determination in a proceeding involving our owned or licensed
intellectual property may allow entry of generic substitutes for our
products.
Other
Risks Related to Our Company
We
are subject to Sarbanes-Oxley and the reporting requirements of federal
securities laws, which can be expensive.
As
a
public reporting company, we are subject to the Sarbanes-Oxley Act of 2002,
as
well as the information and reporting requirements of the Securities Exchange
Act of 1934, as amended, and other federal securities laws. As a result, we
incur significant legal, accounting and other expenses that we did not incur
as
a private company, including costs associated with our public company reporting
requirements and corporate governance requirements. As an example of public
reporting company requirements, we evaluate the effectiveness of disclosure
controls and procedures and of our internal control over financing reporting
in
order to allow management to report on such controls.
14
As
a
company with limited capital and human resources, our management has identified
that there is a lack of segregation of duties due to the limited number of
employees within our company’s financial and administrative functions.
Management believes that, based on the employees involved and the control
procedures in place, risks associated with such lack of segregation are not
significant and that the potential benefits of adding employees to segregate
duties more clearly do not justify the associated added expense. However,
management continues to evaluate this segregation of duties. Our management
is
working to continuously monitor the segregation of duties as well as reviewing
internal controls. We have engaged the services of a Sarbanes-Oxley consultant
to tighten our internal controls and ensure adherence to the regulations once
finalized. In the event we identify significant deficiencies or material
weaknesses in our internal control over financial reporting that we cannot
remediate in a timely manner, investors and others may lose confidence in the
reliability of our financial statements and the trading price of our common
stock and ability to obtain any necessary equity or debt financing could
suffer.
There
is not now, and there may not ever be an active market for shares of our common
stock.
In
general, there has been limited trading activity in shares of our common stock.
The small trading volume may make it more difficult for our stockholders to
sell
their shares as and when they choose. Furthermore, small trading volumes
generally depress market prices. As a result, you may not always be able to
resell shares of our common stock publicly at the time and prices that you
feel
are fair or appropriate.
Because
we became public by means of a reverse merger, we may not be able to attract
the
attention of major brokerage firms.
Additional
risks may exist as a result of our becoming a public reporting company through
a
“reverse merger.” Security analysts of major brokerage firms may not provide
coverage of the Company. Because we became public through a reverse merger,
there is no incentive to brokerage firms to recommend the purchase of our common
stock. No assurance can be given that brokerage firms will want to provide
analyst coverage of our Company in the future.
Anti-takeover
provisions in our charter documents and under Delaware law may make an
acquisition of us, which may be beneficial to our stockholders, more
difficult.
Provisions
of our amended and restated certificate of incorporation and bylaws, as well
as
provisions of Delaware law, could make it more difficult for a third party
to
acquire us, even if doing so would benefit our stockholders. These provisions
authorize the issuance of "blank check" preferred stock that could be issued
by
our board of directors to increase the number of outstanding shares and hinder
a
takeover attempt, and limit who may call a special meeting of
stockholders.
In
addition, Section 203 of the Delaware General Corporation Law, which prohibits
business combinations between us and one or more significant stockholders unless
specified conditions are met, may discourage, delay or prevent a third party
from acquiring us.
Because
we do not expect to pay dividends, you will not realize any income from an
investment in our common stock unless and until you sell your shares at
profit.
We
have
never paid dividends on our capital stock and we do not anticipate that we
will
pay any dividends for the foreseeable future. Accordingly, any return on an
investment in our Company will be realized, if at all, only when you sell shares
of our common stock.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, including the documents that we incorporate by reference, contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and Section 21E
of the Exchange Act. Any statements about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical
facts
and may be forward-looking. These statements are often, but not always, made
through the use of words or phrases such as anticipate, estimate, plan, project,
continuing, ongoing, expect, management believes, we believe, we intend and
similar words or phrases. Accordingly, these statements involve estimates,
assumptions and uncertainties that could cause actual results to differ
materially from those expressed in them. Any forward-looking statements are
qualified in their entirety by reference to the factors discussed in this
prospectus or incorporated by reference.
15
Because
the factors discussed in this prospectus or incorporated by reference could
cause actual results or outcomes to differ materially from those expressed
in
any forward-looking statements made by us or on our behalf, you should not
place
undue reliance on any such forward-looking statements. These statements are
subject to risks and uncertainties, known and unknown, which could cause actual
results and developments to differ materially from those expressed or implied
in
such statements. Such risks and uncertainties relate to, among other factors:
the development of our drug candidates; the regulatory approval of our drug
candidates; our use of clinical research centers and other contractors; our
ability to find collaborative partners for research, development and
commercialization of potential products; acceptance of our products by doctors,
patients or payors; our ability to market any of our products; our history
of
operating losses; our ability to compete against other companies and research
institutions; our ability to secure adequate protection for our intellectual
property; our ability to attract and retain key personnel; availability of
reimbursement for our product candidates; the effect of potential strategic
transactions on our business; our ability to obtain adequate financing; and
the
volatility of our stock price. These and other risks are detailed in this
prospectus under the discussion entitled “Risk Factors,” as well as in our
reports filed from time to time under the Securities Act and/or the Exchange
Act. You are encouraged to read these filings as they are made.
Further,
any forward-looking statement speaks only as of the date on which it is made,
and we undertake no obligation to update any forward-looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is not possible for us to predict
which
factors will arise. In addition, we cannot assess the impact of each factor
on
our business or the extent to which any factor, or combination of factors,
may
cause actual results to differ materially from those contained in any
forward-looking statements.
USE
OF PROCEEDS
We
will
not receive any proceeds from the resale of any of the shares offered by this
prospectus by the selling stockholders.
16
SELLING
STOCKHOLDERS
This
prospectus covers the resale by the selling stockholders identified below of
7,269,366 shares of our common stock, including shares issuable upon the
exercise of warrants. This offering includes the 5,910,049 common shares and
1,359,317 common shares issuable upon the exercise of the warrants issued in
our
February 2007 private placement, of which 177,302 common shares are issuable
upon the exercise of warrants issued to placement agents and other consultants
that provided services to us in the private placement. The warrants received
by
the investors and by the placement agents and consultants in the private
placement are exercisable until February 23, 2012 at an exercise price of $5.75
per share.
The
following table sets forth the number of shares of the common stock owned by
the
selling stockholders as of February 26, 2007, and after giving effect to this
offering.
|
Shares
|
Number
of
|
Number
of Shares
|
Percentage
|
||||||||||
|
Beneficially
|
Outstanding
|
Offered
by Selling
|
Beneficial
|
||||||||||
|
Owned
|
Shares
|
Stockholder
Upon
|
Ownership
|
||||||||||
|
Before
|
Offered
by Selling
|
Exercise
of
|
After
|
||||||||||
|
Selling
Stockholder
|
Offering
(1)
|
Stockholder
|
Certain
Warrants
|
Offering
(2)
|
|||||||||
|
Harewood
Nominees Ltd
A/C
468 9000 (3)
|
33,072
|
(4)
|
27,560
|
5,512
|
0
|
%
|
|||||||
|
Diamondback
Master Fund, Ltd.
(5)
|
344,498
|
(6)
|
287,081
|
57,417
|
0
|
%
|
|||||||
|
Essex
Woodlands Health Ventures
Fund
VI, LP (7)
|
2,296,652
|
(8)
|
1,913,876
|
382,776
|
0
|
%
|
|||||||
|
Henderson
Global Multi-Strategy
Equity
Fund (3)
|
92,326
|
(9)
|
76,938
|
15,388
|
0
|
%
|
|||||||
|
Henderson
North American
Multi-Strategy
Equity
Fund (3)
|
23,885
|
(10)
|
19,904
|
3,981
|
0
|
%
|
|||||||
|
JP
Morgan Securities Inc. (11)
|
45,934
|
(12)
|
38,278
|
7,656
|
0
|
%
|
|||||||
|
LB
I Group Inc. (13)
|
1,467,607
|
(14)
|
287,081
|
57,417
|
5.22
|
%
|
|||||||
|
Man
Mac Todi MB Limited (15)
|
191,113
|
(16)
|
149,282
|
29,857
|
*
|
||||||||
|
Millennium
Partners, L.P. (17)
|
1,283,074
|
(18)
|
382,775
|
76,555
|
3.85
|
%
|
|||||||
|
Oppenheim
Pramerica Asset Management S.a.r.l.
on
behalf of FCP OP MEDICAL
BioHe@lth-Trends (19)
|
454,288
|
(20)
|
191,388
|
38,278
|
1.05
|
%
|
|||||||
|
PHARMA/wHEALTH
Management Company S.A.
on
behalf of PHARMAw/HEALTH
(21)
|
130,516
|
(22)
|
47,847
|
9,570
|
*
|
||||||||
|
ProQuest
Investments III, L.P. (23)
|
2,092,885
|
(24)
|
574,164
|
114,833
|
6.49
|
%
|
|||||||
|
PTV
Sciences II, L.P. (25)
|
1,837,320
|
(26)
|
1,531,100
|
306,220
|
0
|
%
|
|||||||
|
Special
Situations Life Sciences
Fund,
L.P. (27)
|
459,330
|
(28)
|
382,775
|
76,555
|
0
|
%
|
|||||||
|
Oppenheimer
& Co. Inc. (29)
|
47,910
|
(30)
|
0
|
47,910
|
0
|
%
|
|||||||
|
Adrian
Stycek
|
149,589
|
(31)
|
0
|
10,612
|
*
|
||||||||
|
Paramount
BioCapital, Inc. (32)
|
160,157
|
(33)
|
0
|
97,536
|
*
|
|
|||||||
|
ThinkEquity
Partners LLC (34)
|
21,244
|
(35)
|
0
|
21,244
|
0
|
%
|
|||||||
|
Total
|
5,910,049
|
1,359,317
|
|||||||||||
* Less
than
1%.
| (1) |
Beneficial
ownership is determined in accordance with SEC rules, beneficial
ownership
includes any shares as to which the security or stockholder has sole
or
shared voting power or investment power, and also any shares which
the
security or stockholder has the right to acquire within 60 days of
the
date hereof, whether through the exercise or conversion of any stock
option, convertible security, warrant or other right. The indication
herein that shares are beneficially owned is not an admission on
the part
of the security or stockholder that he, she or it is a direct or
indirect
beneficial owner of those shares.
|
17
| (2) |
Assumes
sales of all shares by the selling
stockholder.
|
| (3) |
C.
Castronero, as Fund Manager, has voting and investment control over
the
shares held by the selling
stockholder.
|
| (4) |
Includes
5,512 shares issuable upon the exercise of warrants.
|
| (5) |
Timothy
M. Higgins has voting and investment control over the shares held
by the
selling stockholder.
|
| (6) |
Includes
57,417 shares issuable upon the exercise of warrants.
|
| (7) |
Mark
Pacala, as Managing Director of Essex Woodlands Health Ventures Fund
VI,
LP, has voting and investment control over the shares held by the
selling
stockholder.
|
| (8) |
Includes
382,776 shares issuable upon the exercise of warrants.
|
| (9) |
Includes
15,388 shares issuable upon the exercise of warrants.
|
| (10) |
Includes
3,981 shares issuable upon the exercise of
warrants.
|
| (11) |
Avik
S. A. Roy has voting and investment control over the shares
held by the
selling stockholder.
|
| (12) |
Includes
7,656 shares issuable upon the exercise of warrants.
|
| (13) |
Jeffrey
Ferrell has voting and investment control over the shares
held by the
selling stockholder.
|
| (14) |
Includes
316,596 shares issuable upon the exercise of
warrants.
|
| (15) |
Edmund
Debler has voting and investment control over the shares
held by the
selling stockholder.
|
| (16) |
Includes
29,857 shares issuable upon the exercise of warrants.
|
| (17) |
Millennium
Management, L.L.C., a Delaware limited liability company,
is the managing
partner of Millennium Partners, L.P., a Cayman Islands
exempted limited
partnership, and, consequently, may be deemed to have
voting control and
investment discretion over securities owned by Millennium
Partner, L.P.
Israel A. Englander is the managing member of Millennium
Management,
L.L.C. As a result, Mr. Englander may be considered
the beneficial owner
of any shares deemed to be beneficially owned by Millennium
Management,
L.L.C. The foregoing should not be construed in and
of itself as an
admission by either of Millennium Management, L.L.C.
or Mr. Englander as
to the beneficial ownership of the shares held by Millennium
Partners,
L.P.
|
| (18) |
Includes
40,133 shares held by Millenco, L.P., an affiliate
of the selling
stockholder, and 206,145 shares issuable upon the exercise
of
warrants.
|
| (19) |
FCP
OP MEDICAL BioHe@lth-Trends is a sub-fund of FCP OP
MEDICAL, a Luxembourg
investment fund. FCP OP MEDICAL BioHe@lth-Trends is
managed by Oppenheim
Pramerica Asset Management S.a.r.l. Detlef Bierbaum,
Dr. Rupert Hengster,
Ferdinand-Alexander Leisten, Stephen Pelletier, Susan
M. Scheader, John P.
Smalling, Andreas Jockel, Harry Rosenbaum, Anita Zuleger,
Ute Becker,
Alexander Schulligen, Max van Frantzius, Peter Balle,
Thomas Becker, Julia
Brauckman, Otmar Gorges, Detlef Vallender, Johann Will,
Adreas Becker,
Katja Kirchen, Ralf Klein, Ulrike Sauer and Ronny Wagner
share voting and
investment control over the shares held by the selling
stockholder.
|
| (20) |
Includes
90,114 shares issuable upon the exercise of warrants.
|
| (21) |
PHARMA/wHEALTH
is a Luxembourg investment fund that is managed by PHARMAw/HEALTH
Management Company S.A. PHARMAw/HEALTH Management Company S.A has
delegated the management of a portion of the assets of PHARMAw/HEALTH
to
Medical Strategy. Dr. Michael Fischer Andreas Jockel and Alexander
Schulligen share voting and investment control over the shares held
by the
selling stockholder.
|
| (22) |
Includes
9,570 shares issuable upon the exercise of warrants.
|
| (23) |
ProQuest
Associates III LLC is the general partner of the selling stockholder.
Jay
Moorin and Alain Schreiber are managing members of ProQuest Investments
III, L.P. and share voting and investment control over the shares
held by
the selling stockholder.
|
| (24) |
Includes
438,807 shares issuable upon the exercise of warrants.
|
| (25) |
Evan
S. Melrose, M.D., as Managing Director of PTV Sciences II, L.P.,
has
voting and investment control over the shares held by the selling
stockholder.
|
| (26) |
Includes
306,220 shares issuable upon the exercise of warrants.
|
| (27) |
Austin
Marxe, as Managing Director of Special Situations Life Science Fund,
L.P.,
has voting and investment control over the shares held by the selling
stockholder.
|
18
| (28) |
Includes
76,555 shares issuable upon the exercise of warrants.
|
| (29) |
Albert
G. Lowenthal has voting and investment control over the shares
held by the
selling stockholder.
|
| (30) |
Includes
47,910 shares issuable upon the exercise of warrants.
|
| (31) |
Includes
10,612 shares issuable upon the exercise of warrants.
|
| (32) |
Lindsay
A. Rosenwald, M.D. has voting and investment control over the shares
held
by the selling stockholder.
|
| (33) |
Includes
160,157 shares issuable upon the exercise of warrants.
Excludes 1,484,920 shares beneficially owned by Lindsay A. Rosenwald,
M.D., the sole shareholder of Paramount BioCapital, Inc., of which
450,677
shares are held directly by Dr. Rosenwald, 470,947 shares are issuable
upon the exercise of warrants held by Dr. Rosenwald, and 563,296
shares
may be acquired by Dr. Rosenwald from existing stockholders under
certain
circumstances pursuant to the terms of pledge agreements between
Dr.
Rosenwald and such stockholders. Also excludes shares which may
be held by
certain trusts for the benefit of Dr. Rosenwald and his family
for which
Dr. Rosenwald disclaims beneficial ownership.
|
| (34) |
Michael
Moe has voting and investment control over the shares held by the
selling
stockholder.
|
| (35) |
Includes
21,244 shares issuable upon the exercise of warrants.
|
19
PLAN
OF DISTRIBUTION
We
are
registering the shares of Common Stock issued to the selling stockholders and
issuable upon exercise of the warrants to permit the resale of these shares
of
Common Stock by the holders of the shares of Common Stock and warrants from
time
to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling stockholders of the shares of Common
Stock. We will bear all fees and expenses incident to our obligation to register
the shares of Common Stock.
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of Common Stock
or
interests in shares of Common Stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may sell all or a portion of the shares of Common Stock beneficially
owned by them and offered hereby from time to time directly or through one
or
more underwriters, broker-dealers or agents. If the shares of Common Stock
are
sold through underwriters or broker-dealers, the selling stockholders will
be
responsible for underwriting discounts or commissions or agent's commissions.
The shares of Common Stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions.
To
the extent any of the selling stockholders gift, pledge or otherwise transfer
the shares offered hereby, such transferees may offer and sell the shares from
time to time under this prospectus, provided that this prospectus has been
amended under Rule 424(b)(3) or other applicable provision of the Securities
Act
to include the name of such transferee in the list of selling stockholders
under
this prospectus. The selling stockholders may use any one or more of the
following methods when selling shares:
|
·
|
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
|
·
|
in
the over-the-counter market;
|
|
·
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
|
·
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
|
·
|
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
20
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. If the selling stockholders effect such transactions
by
selling shares of Common Stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions
in
the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of the shares of Common Stock for whom they
may
act as agent or to whom they may sell as principal. Such commissions will be
in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction will not be in excess of a
customary brokerage commission in compliance with NASD Rule 2440; and in the
case of a principal transaction a markup or markdown in compliance with NASD
IM-2440.
In
connection with sales of the shares of Common Stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the shares
of
Common Stock in the course of hedging in positions they assume. The selling
stockholders may also sell shares of Common Stock short and if such short sale
shall take place after the date that this Registration Statement is declared
effective by the Commission, the selling stockholders may deliver shares of
Common Stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The selling
stockholders may also loan or pledge shares of Common Stock to broker-dealers
that in turn may sell such shares. The selling stockholders may also enter
into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution
may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The
selling stockholders may pledge or grant a security interest in some or all
of
the warrants or shares of Common Stock owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of Common Stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer and donate the shares of Common
Stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling stockholders participating in the distribution of the shares of Common
Stock may, and any broker-dealers participating in the distribution of the
shares of Common Stock will, be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of Common Stock is made, a prospectus supplement, if required, will
be
distributed which will set forth (i) the name of each such selling stockholder
and of the participating broker-dealer(s), (ii) the number of shares involved,
(iii) the price at which such the shares of Common Stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In no event
shall any broker-dealer receive fees, commission and markups which, in the
aggregate, would exceed eight percent (8%). In addition, upon the Company being
notified in writing by a Selling Stockholder that a donee or pledgee intends
to
sell more than 500 shares of Common Stock, a supplement to this prospectus
will
be filed if then required in accordance with applicable securities
law.
Under
the
securities laws of some states, the shares of Common Stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of Common Stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of Common Stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.
We
have
advised each selling stockholder that it may not use shares registered on the
registration statement of which this prospectus is a part to cover short sales
of common stock made prior to the date on which the registration statement
shall
have been declared effective by the SEC. If a selling stockholder uses this
prospectus for any sale of shares of our common stock, it will be subject to
the
prospectus delivery requirements of the Securities Act. The selling stockholders
and any other person participating in such distribution will be subject to
applicable provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of
any
of the shares of Common Stock by the selling stockholders and any other
participating person. Regulation M may also restrict the ability of any person
engaged in the distribution of the shares of Common Stock to engage in
market-making activities with respect to the shares of Common Stock. All of
the
foregoing may affect the marketability of the shares of Common Stock and the
ability of any person or entity to engage in market-making activities with
respect to the shares of Common Stock.
21
We
will
pay all expenses of the registration of the shares of Common Stock pursuant
to
the registration rights agreement, including, without limitation, Securities
and
Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided,
however,
that a
selling stockholder will pay all underwriting discounts and selling commissions,
if any and any related legal expenses incurred by it. We will indemnify the
selling stockholders against liabilities, including some liabilities under
the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be indemnified
by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to
us
by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution.
Shares
Eligible For Future Sale
Upon
completion of this offering and assuming the issuance of all of the shares
covered by this prospectus that are issuable upon the exercise of outstanding
warrants, there will be 22,542,265 shares of our common stock issued and
outstanding. The shares purchased in this offering will be freely tradable
without registration or other restriction under the Securities Act, except
for
any shares purchased by an “affiliate” of our Company (as defined under the
Securities Act).
Our
currently outstanding shares that were issued in reliance upon the “private
placement” exemptions provided by the Securities Act include the 6,967,941
outstanding shares issued in connection with our September 2005 merger
transaction with ZIOPHARM, Inc., the 7,991,392 shares issued in our May 3,
2006
private placement (the “2006 Offering”) and the 5,910,049 shares issued in our
February 23, 2007 private placement (the “2007 Offering”). These shares are
deemed “restricted securities” within the meaning of Rule 144. Restricted
securities may not be sold unless they are registered under the Securities
Act
or are sold pursuant to an applicable exemption from registration, including
an
exemption under Rule 144. In general, under Rule 144, any person (or persons
whose shares are aggregated) including persons deemed to be affiliates, whose
restricted securities have been fully paid for and held for at least one year
from the later of the date of issuance by us or acquisition from an affiliate,
may sell such securities in broker’s transactions or directly to market makers,
provided that the number of shares sold in any three-month period may not exceed
the greater of one percent of the then-outstanding shares of our common stock
or
the average weekly trading volume of our shares of common stock in the
over-the-counter market during the four calendar weeks preceding the sale.
Sales
under Rule 144 are also subject to certain notice requirements and the
availability of current public information about our Company. After two years
have elapsed from the later of the issuance of restricted securities by us
or
their acquisition from an affiliate, persons who are not affiliates under the
rule may sell such securities without any limitation. Assuming that all of
the
other requirements of Rule 144 are then satisfied: (i) the 6,967,941 restricted
shares of our common stock that were issued in connection with the Merger will
first be eligible for resale without registration in September 2007; (ii) the
7,991,392 restricted shares of our common stock that were issued in the 2006
Offering will first be eligible for resale without registration in May 2008;
and
(iii) 5,910,049 restricted shares of our common stock that were issued in the
2007 Offering will first be eligible for resale without registration in February
2009.
Following
the date of this prospectus, we cannot predict the effect, if any, that sales
of
our common stock or the availability of our common stock for sale will have
on
the market price prevailing from time to time. Nevertheless, sales by existing
stockholders of substantial amounts of our common stock could adversely affect
prevailing market prices for our stock.
DISCLOSURE
OF COMMISSION POSITION ON
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Pursuant
to our certificate of incorporation and bylaws, we may indemnify an officer
or
director who is made a party to any proceeding, because of his position as
such,
to the fullest extent authorized by Delaware General Corporation Law, as the
same exists or may hereafter be amended. In certain cases, we may advance
expenses incurred in defending any such proceeding.
22
To
the
extent that indemnification for liabilities arising under the Securities Act
may
be permitted to directors, officers or persons controlling our company pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer
or
controlling person of our company in the successful defense of any action,
suit
or proceeding) is asserted by any of our directors, officers or controlling
persons in connection with the securities being registered, we will, unless
in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of that issue.
ABOUT
THIS PROSPECTUS
This
prospectus is not an offer or solicitation in respect to these securities in
any
jurisdiction in which such offer or solicitation would be unlawful. This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission. The registration statement that contains this
prospectus (including the exhibits to the registration statement) contains
additional information about our company and the securities offered under this
prospectus. That registration statement can be read at the SEC web site or
at
the SEC’s offices mentioned under the heading “Where You Can Find More
Information.” We have not authorized anyone else to provide you with different
information or additional information. You should not assume that the
information in this prospectus, or any supplement or amendment to this
prospectus, is accurate at any date other than the date indicated on the cover
page of such documents.
WHERE
YOU CAN FIND MORE INFORMATION
Before
you decide whether to invest in our common stock, you should read this
prospectus and the information we otherwise file with the Securities and
Exchange Commission, or the SEC. We are a reporting company and file annual,
quarterly and current reports, proxy statements and other information with
the
SEC. You may read and copy these reports, proxy statements and other information
at the SEC's public reference room at 100 F. Street, N.E., Washington, D.C.
20549 or at the SEC's other public reference facilities. Please call the SEC
at
1-800-SEC-0330 for more information about the operation of the public reference
rooms. You can request copies of these documents by writing to the SEC and
paying a fee for the copying costs. In addition, the SEC maintains an Internet
site at http://www.sec.gov
that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. Our SEC filings are
available on the SEC's an Internet site.
We
are
allowed to incorporate by reference information contained in documents that
we
file with the SEC. This means that we can disclose important information to
you
by referring you to those documents and that the information in this prospectus
is not complete and you should read the information incorporated by reference
for more detail. We incorporate by reference in two ways. First, we list certain
documents that we have already filed with the SEC. The information in these
documents is considered part of this prospectus. Second, the information in
documents that we file in the future will update and supersede the current
information in, and incorporated by reference in, this prospectus.
We
incorporate by reference the documents listed below and any future filings
we
will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act (other than
any
Current on Reports on Form 8-K filed under Item 12):
|
·
|
Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2006,
filed on February 13, 2007;
|
|
·
|
Items
9 through 12 of the Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2005, filed on March 20, 2006 (including the
information incorporated therein by reference to the definitive proxy
statement filed March 20, 2006);
|
23
|
·
|
Current
Reports on Form 8-K filed on February 16, 2007 and February 26, 2007,
respectively; and
|
|
·
|
Registration
Statement on Form SB-2 filed November 14, 2005, as amended by
Post-effective Amendment No. 1 to Form SB-2 filed April 3, 2006,
containing the description of capital stock as set forth in the section
entitled “Description of Capital Stock,” as such description is amended in
the section entitled “Description of Capital Stock” in Prospectus
Supplement No. 1 filed April 26, 2006 pursuant to Rule 424(b) promulgated
under the Securities Act of 1933, as
amended.
|
We
will
provide to each person, including any beneficial owner, to whom a prospectus
is
delivered, a copy of any or all of the information that has been incorporated
by
reference in this prospectus but not delivered with this prospectus. You may
request a copy of this information at no cost, by writing or telephoning us
at
the following address or telephone number:
ZIOPHARM
Oncology, Inc.
1180
Avenue of the Americas, 19th Floor
New
York,
NY 10036
Attention:
President
Telephone:
(646) 214-0700
You
should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else to provide
you with different information. The selling stockholders will not make an offer
of these shares in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate
as
of any date other than the date on the front of these documents.
VALIDITY
OF COMMON STOCK
Legal
matters in connection with the validity of the shares offered by this prospectus
will be passed upon by Maslon Edelman Borman & Brand, LLP, Minneapolis,
Minnesota.
EXPERTS
The
financial statements of ZIOPHARM Oncology, Inc. as of December 31, 2006 and
2005, and for each of the years in the three year period then ended and the
period from inception (September 9, 2003) through December 31, 2006 included
in
this prospectus, have been included herein in reliance on the report, dated
February 6, 2007, of Vitale Caturano & Company, Ltd., independent registered
public accounting firm, given on the authority of that firm as experts in
auditing and accounting.
24
7,269,366
Shares
Common
Stock
ZIOPHARM
Oncology, Inc.
PROSPECTUS
March
1, 2007
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses Of Issuance And Distribution.
The
Registrant estimates that expenses payable by the Registrant is connection
with
the offering described in this Registration Statement will be as follows:
|
SEC
registration fee
|
$
|
1,234.13
|
||
|
Legal
fees and expenses
|
10,000.00
|
|||
|
Accounting
fees and expenses
|
10,000.00
|
|||
|
Printing
and engraving expenses
|
3,000.00
|
|||
|
Miscellaneous
|
2,000.00
|
|||
|
$
|
26,234.13
|
Item
15.
Indemnification of Directors and Officers.
The
Registrant’s amended and restated certificate of incorporation and bylaws
contain provisions indemnifying the Registrant’s directors and officers to the
fullest extent permitted by law. In addition, as permitted by Delaware law,
the
Registrant’s amended and restated certificate of incorporation provides that no
director will be liable to the Registrant or the Registrant’s stockholders for
monetary damages for breach of certain fiduciary duties as a director. The
effect of this provision is to restrict the Registrant’s rights and the rights
of its stockholders in derivative suits to recover monetary damages against
a
director for breach of certain fiduciary duties as a director, except that
a
director will be personally liable for:
-
Any breach of his or her duty of loyalty to the Registrant or its stockholders;
-
Acts or omissions not in good faith which involve intentional misconduct or a knowing violation of law;
-
The payment of dividends or the redemption or purchase of stock in violation of Delaware law; or
-
Any transaction from which the director derived an improper personal benefit.
This
provision does not affect a director’s liability under the federal securities
laws.
To
the
extent that our directors, officers and controlling persons are indemnified
under the provisions contained in our amended and restated certificate of
incorporation, Delaware law or contractual arrangements against liabilities
arising under the Securities Act, we have been advised that in the opinion
of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.
Section
145 of the Delaware General Corporation Law states:
(a) A
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action arising by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or
proceeding if he acted in good faith and in a manner he 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
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or
its equivalent, shall not, of itself, create a presumption that the person
did
not act in good faith and in a manner which he 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 reasonable cause to believe that his conduct
was unlawful.
(b) A
corporation shall have power to indemnify any person who was or is a party
or is
threatened to be made a party to any threatened, pending or completed action
or
suit by or in the right of the corporation to procure a judgment in its favor
by
reason of the fact that he is or was a director, officer, employee or agent
of
the corporation, or is or was serving at the request of the corporation as
a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses (including attorneys’ fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect to
any
claim, issue or matter as to which such person shall have been adjudged to
be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all
the circumstances of the case, such person is fairly and reasonably entitled
to
indemnity for such expense which the Court of Chancery or such other court
shall
deem proper.
II-1
Item
16. Exhibits.
The
following exhibits are filed as part of this Registration Statement:
|
Exhibit
No.
|
Description
of Document
|
|
|
2.1
|
Agreement
and Plan of Merger among the Registrant (formerly EasyWeb, Inc.),
ZIO
Acquisition Corp. and ZIOPHARM, Inc., dated August 3, 2005 (incorporated
by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed August 9,
2005).
|
|
|
3.1
|
Amended
and Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State on April 26, 2006 (incorporated by reference to
Exhibit
3.1 to the Registrant’s Current Report of Form 8-K filed April 26,
2006).
|
|
|
3.2
|
Certificate
of Merger dated September 13, 2005, relating to the merger of ZIO
Acquisition Corp. with and into ZIOPHARM, Inc. (incorporated by reference
to Exhibit 3.1 to the Registrant’s Form 8-K filed September 19,
2005).
|
|
|
3.3
|
Certificate
of Ownership of the Registrant (formerly EasyWeb, Inc.) dated as
of
September 14, 2005, relating the merger of ZIOPHARM, Inc. with and
into
the Registrant and changing the Registrant’s corporate name from EasyWeb,
Inc. to ZIOPHARM Oncology, Inc. (incorporated by reference to Exhibit
3.2
to the Registrant’s Form 8-K filed September 19, 2005).
|
|
|
3.4
|
Bylaws,
as amended to date (incorporated by reference to Exhibit 3.3 to the
Registrant’s Form 8-K filed September 19, 2005).
|
|
|
4.1
|
Specimen
common stock certificate. (incorporated by reference to Exhibit 4.1
to the
Registrant’s Registration Statement on Form SB-2 (SEC File No. 333-129020)
filed October 14, 2005).
|
|
|
4.2
|
Form
of Warrant issued to placement agents in connection with ZIOPHARM,
Inc.
2005 private placement (incorporated by reference to Exhibit 4.2
to the
Registrant’s Registration Statement on Form SB-2 (SEC File No. 333-129020)
filed October 14, 2005).
|
|
|
4.3
|
Schedule
identifying holders of Warrants in the form filed as Exhibit 4.2
to this
Report (incorporated by reference to Exhibit 4.3 to the Registrant’s
Registration Statement on Form SB-2 (SEC File No. 333-129020) filed
October 14, 2005).
|
|
|
4.4
|
Warrant
for the Purchase of Shares of Common Stock dated December 23, 2004.
(incorporated by reference to Exhibit 4.4 to the Registrant’s Registration
Statement on Form SB-2 (SEC File No. 333-129020) filed October 14,
2005).
|
|
|
4.5
|
Option
for the Purchase of Common Stock dated October 15, 2004 and issued
to
DEKK-Tec, Inc. (incorporated by reference to Exhibit 4.5 to the
Registrant’s Annual Report on Form 10-KSB filed (SEC File No. 000-32353)
March 20, 2006).
|
II-2
|
4.6
|
Form
of Option for the Purchase of Shares of Common Stock dated August
30, 2004
and issued to The University of Texas M.D. Anderson Cancer Center.
(incorporated by reference to Exhibit 4.6 to the Registrant’s Annual
Report on Form 10-KSB filed (SEC File No. 000-32353) March 20,
2006).
|
|
|
4.7
|
Schedule
identifying material terms of Options for the Purchase of Shares
of Common
Stock in the form filed as Exhibit 4.6 to this Report. (incorporated
by
reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-KSB
filed (SEC File No. 000-32353) March 20, 2006).
|
|
|
4.8
|
Form
of Common Stock Purchase Warrant issued to investors in connection
with
ZIOPHARM Oncology, Inc. 2006 private placement (incorporated by reference
to Exhibit 4.1 to the Registrant’s Current Report of Form 8-K filed May 3,
2006).
|
|
|
4.9
|
Form
of Common Stock Purchase Warrant issued to placement agents in connection
with ZIOPHARM Oncology, Inc. 2006 private placement (incorporated
by
reference to Exhibit 4.2 to the Registrant’s Current Report of Form 8-K
filed May 3, 2006).
|
|
|
4.10
|
Form
of Warrant to Purchase Common Stock issued to investors in connection
with
ZIOPHARM Oncology, Inc. February 2007 private placement (incorporated
by
reference to Exhibit 4.1 to the Registrant’s Current Report of Form 8-K
filed February 26, 2006).
|
|
|
4.11
|
Form
of Warrant to Purchase Common Stock issued to placement agents in
connection with ZIOPHARM Oncology, Inc. February 2007 private placement
(incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report of Form 8-K filed February 26, 2006).
|
|
|
5.1
|
Legal
opinion of Maslon Edelman Borman & Brand, LLP.
|
|
|
10.1
|
2003
Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to
the
Registrant’s Registration Statement on Form SB-2 (SEC File No. 333-129020)
filed October 14, 2005).
|
|
|
10.2
|
Amendment
No. 1 to 2003 Stock Incentive Plan of ZIOPHARM Oncology, Inc.
(incorporated by reference to Exhibit 3.1 to the Registrant’s Current
Report of Form 8-K filed April 26, 2006).
|
|
|
10.3
|
Employment
Agreement dated January 8, 2004, between the Registrant and Dr. Jonathan
Lewis (incorporated by reference to Exhibit 10.2 to the Registrant’s
Registration Statement on Form SB-2 (SEC File No. 333-129020) filed
October 14, 2005).
|
|
|
10.4
|
Employment
Agreement Extension dated December 21, 2006, between the Registrant
and
Dr. Jonathan Lewis (incorporated by reference to Exhibit 10.1 to
the
Registrant’s Current Report on Form 8-K filed December 26,
2007).
|
|
|
10.5
|
Employment
Agreement dated January 15, 2004, between the Registrant and Dr.
Robert
Peter Gale (incorporated by reference to Exhibit 10.3 to the Registrant’s
Registration Statement on Form SB-2 (SEC File No. 333-129020) filed
October 14, 2005).
|
|
|
10.6
|
Employment
Agreement dated July 21, 2004, between the Registrant and Richard
Bagley
(incorporated by reference to Exhibit 10.4 to the Registrant’s
Registration Statement on Form SB-2 (SEC File No. 333-129020) filed
October 14, 2005).
|
|
|
|
||
|
10.7
|
Patent
and Technology License Agreement dated August 24, 2004, among ZIOPHARM,
Inc. (predecessor to the Registrant), the Board of Regents of the
University of Texas System on behalf of the University of Texas M.D.
Anderson Cancer Center and the Texas A&M University System
(incorporated by reference to Exhibit 10.5 to the Registrant’s
Registration Statement on Form SB-2 (SEC File No. 333-129020) filed
October 14, 2005).++
|
|
|
|
||
|
10.8
|
License
Agreement dated October 15, 2004, between ZIOPHARM, Inc. (predecessor
to
the Registrant) and DEKK-Tec, Inc. (incorporated by reference to
Exhibit
10.6 to the Registrant’s Registration Statement on Form SB-2 (SEC File No.
333-129020) filed October 14, 2005).++
|
|
|
|
||
|
10.9
|
Form
of subscription agreement between the ZIOPHARM, Inc. and the investors
in
ZIOPHARM, Inc.’s private placement (incorporated by reference to Exhibit
10.7 to the Registrant’s Registration Statement on Form SB-2 (SEC File No.
333-129020) filed October 14,
2005).
|
II-3
|
10.10
|
Form
of Incentive Stock Option Agreement granted under 2003 Stock Option
Plan
(incorporated by reference to Exhibit 10.7 to the Registrant’s Annual
Report on Form 10-KSB (SEC File No. 000-32353) filed March 20,
2006).
|
|
|
|
||
|
10.11
|
Form
of Employee Non-Qualified Stock Option Agreement granted under 2003
Stock
Option Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s
Annual Report on Form 10-KSB (SEC File No. 000-32353) filed March
20,
2006).
|
|
|
|
||
|
10.12
|
Form
of Director Non-Qualified Stock Option Agreement granted under 2003
Stock
Option Plan (incorporated by reference to Exhibit 10.9 to the Registrant’s
Annual Report on Form 10-KSB (SEC File No. 000-32353) filed March
20,
2006).
|
|
|
|
||
|
10.13
|
Form
of Subscription Agreement by and between ZIOPHARM Oncology, Inc.
and
investors in the ZIOPHARM Oncology, Inc. 2006 private placement
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report of Form 8-K filed May 3, 2006).
|
|
|
|
||
|
10.14
|
Asset
Purchase Agreement dated November 3, 2006 by and among Baxter Healthcare
S.A., Baxter International, Inc., Baxter Oncology GmbH and ZIOPHARM
Oncology, Inc. (incorporated by reference to Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-QSB filed November 13, 2006).
+
|
|
|
|
||
|
10.15
|
License
Agreement dated November 3, 2006 by and among Baxter Healthcare S.A.,
Baxter International, Inc. and ZIOPHARM Oncology, Inc. (incorporated
by
reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-QSB filed November 13, 2006). +
|
|
|
|
||
|
10.16
|
Consulting
agreement dated January 15, 2007, between the Registrant and Robert
Gale.
(incorporated by reference to Exhibit 10.16 to the Registrant’s Annual
Report on Form 10-KSB filed February 13, 2007).
|
|
|
|
||
|
10.17
|
Amendment
to incentive stock option agreements between Registrant and Robert
Peter
Gale, M.D., PH.D. (incorporated by reference to Exhibit 10.17 to
the
Registrant’s Annual Report on Form 10-KSB filed February 13,
2007).
|
|
|
|
||
|
10.18
|
Form
of Securities Purchase Agreement by and between ZIOPHARM Oncology,
Inc.
and investors in the ZIOPHARM Oncology, Inc. February 2007 private
placement (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report of Form 8-K filed February 26, 2006).
|
|
|
|
||
|
10.19
|
Form
of Registration Rights Agreement by and between ZIOPHARM Oncology,
Inc.
and investors in the ZIOPHARM Oncology, Inc. February 2007 private
placement (incorporated by reference to Exhibit 10.2 to the Registrant’s
Current Report of Form 8-K filed February 26, 2006).
|
|
|
|
||
|
23.1
|
Consent
of Independent Registered Public Accounting Firm - Vitale, Caturano
&
Company, Ltd.
|
|
|
|
||
|
23.2
|
Consent
of Maslon Edelman Borman & Brand, LLP (included as part of Exhibit
5.1).
|
|
|
|
||
|
24.1
|
Power
of Attorney (included on signature
page).
|
| + |
Confidential
treatment has been requested as to certain portions of this exhibit
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
|
| ++ |
Confidential
treatment has been granted as to certain portions of this exhibit
pursuant
to Rule 406 of the Securities Act of 1933, as
amended.
|
Item
17.
Undertakings.
The
undersigned Registrant hereby undertakes:
(1) To
file,
during any period during which offers or sales are being made, a post-effective
amendment to this registration statement:
II-4
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum
offering price may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the
effective registration statement; and;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided,
however, that
subparagraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b) that is deemed
part of and included in the registration statement.
(2) That,
for
purposes of determining liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities to be offered therein, and the offering of such
securities at that time shall be deemed to be an initial bona
fide
offering
thereof.
(3) To
remove
from registration by means of a post-effective amendment any of the securities
being registered which shall remain unsold at the termination of the offering.
II-5
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
New
York, State of New York, on March 1, 2007.
|
ZIOPHARM
Oncology,
Inc.
|
||
| |
|
|
| By: | /s/ Jonathan Lewis | |
|
Jonathan
Lewis
Chief
Executive Officer
|
||
POWER
OF ATTORNEY
Each
person whose signature appears below hereby constitutes and appoints Jonathan
Lewis and Richard E. Bagley, and each of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as
he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitutes or substitute, may lawfully do
or
cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
|
Name
|
Title
|
Date
|
||
|
/s/
Jonathan Lewis
Jonathan
Lewis
|
Director
and Chief Executive Officer
(Principal
Executive Officer)
|
March
1, 2007
|
||
|
/s/
Richard Bagley
Richard
E. Bagley
|
Director,
President, Treasurer and
Chief
Operating Officer (Principal Accounting and
Financial
Officer)
|
March
1, 2007
|
||
|
/s/
Murray Brennan
Murray
Brennan
|
Director
|
March
1, 2007
|
||
|
/s/
James Cannon
James
Cannon
|
Director
|
March
1, 2007
|
||
|
/s/
Timothy McInerney
Timothy
McInerney
|
Director
|
March
1, 2007
|
||
|
/s/
Wyche Fowler, Jr.
Wyche
Fowler, Jr.
|
Director
|
March
1, 2007
|
||
|
/s/
Gary S. Fragin
Gary
S. Fragin
|
Director
|
March
1, 2007
|
||
|
/s/
Michael Weiser
Michael
Weiser
|
Director
|
March
1, 2007
|
II-6
EXHIBIT
INDEX
|
Exhibit
No.
|
Description
of Document
|
|
|
5.1
|
Legal
opinion of Maslon Edelman Borman & Brand, LLP.
|
|
|
|
||
|
23.1
|
Consent
of Independent Registered Public Accounting Firm - Vitale, Caturano
&
Company, Ltd.
|
Exhibit
5.1
March 1, 2007
ZIOPHARM
Oncology, Inc.
1180
Avenue of the Americas, 19th Floor
New
York,
NY 10036
RE: Statement
on Form S-3
Ladies
and Gentlemen:
We
have
acted as counsel to ZIOPHARM Oncology, Inc., a Delaware corporation (the
“Company”), in connection with the preparation and filing with the Securities
and Exchange Commission (the “Commission”) of a registration statement on Form
S-3 (the “Registration Statement”), pursuant to which the Company is registering
under the Securities Act of 1933, as amended (the “Securities Act”), 7,269,366
shares (the “Shares”) of the Company's common stock, $.001 par value (the
“Common Stock”), including 1,359,317 shares (the “Warrant Shares”) issuable upon
the exercise of certain outstanding warrants (the “Warrants”).
In
connection with the rendering of this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our satisfaction,
of (i) the Registration Statement; (ii) the Certificate of Incorporation and
the
Bylaws of the Company, as amended, each as currently in effect; (iii) certain
resolutions adopted by the Board of Directors of the Company relating to the
issuance of the Shares, Warrants and Warrant Shares, the preparation and filing
of the Registration Statement and certain related matters; (iv) certain
agreements, certificates of public officials, certificates of other officers
or
representatives of the Company or others; and (v) such other documents,
certificates and records as we deemed necessary or appropriate as a basis for
the opinions expressed herein.
In
our
examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to
us
as originals, the conformity to original documents of all documents submitted
to
us as certified, conformed or photostatic copies and the authenticity of the
originals of such copies. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives of
the
Company and others.
We
are
attorneys licensed to practice in the State of Minnesota and the opinions
expressed herein are limited to the laws of the State of Minnesota and the
federal securities laws of the United States.
Based
upon and subject to the limitations, qualifications, exceptions and assumptions
set forth herein, it is our opinion that:
1. The
Shares have been duly authorized and are validly issued, fully paid and
nonassessable; and
2.
The
Warrant Shares have been duly authorized and, when issued against payment of
the
requisite exercise price under the respective Warrants, will be validly issued,
fully paid and nonassessable.
The
opinion set forth above are subject to the following exceptions, limitations
and
qualifications: (i) the effect of bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to or affecting the rights and remedies of creditors; (ii)
the
effect of general principles of equity, whether enforcement is considered in
a
proceeding in equity or at law, and the discretion of the court before which
any
proceeding therefor may be brought; (iii) the unenforceability under certain
circumstances under law or court decisions of provisions providing for the
indemnification of, or contribution to, a party with respect to a liability
where such indemnification or contribution is contrary to public policy; and
(iv) we express no opinion concerning the enforceability of any waiver of rights
or defenses with respect to stay, extension or usury laws.
Please
note that we are opining only as to the matters expressly set forth herein,
and
no opinion should be inferred as to any other matters. This opinion is based
upon currently existing statutes, rules, regulations and judicial decisions,
and
we disclaim any obligation to advise you of any change in any of these sources
of law or subsequent legal or factual developments which might affect any
matters or opinions set forth herein after the Registration Statement has been
declared effective by the Commission.
We
hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement in accordance with the requirements of Item 601(b)(5) of Regulation
S-B under the Securities Act. We also consent to the reference to our name
under
the caption “Validity of Common Stock” in the prospectus filed as part of the
Registration Statement. In giving such consent, we do not hereby admit that
we
are in the category of persons whose consent is required under Section 7 of
the
Securities Act or the rules and regulations of the Commission.
This
opinion is furnished to you in connection with the filing of the Registration
Statement and, except as provided in the immediately preceding paragraph, is
not
to be used, circulated, quoted for any other purpose or otherwise referred
to or
relied upon by any other person without the express written permission of this
firm.
|
Very
truly yours,
|
||
| |
|
|
| /s/ Maslon Edelman Borman & Brand, LLP | ||
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As
independent registered public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 6, 2007 relating to the 2006 financial statements of ZIOPHARM Oncology,
Inc. and to all references to our Firm, included in or made part of this
registration statement on Form S-3.
VITALE,
CATURANO & COMPANY, LTD.
Boston,
Massachusetts
March
1,
2007