As filed with the Securities and Exchange Commission on January 25, 2002
Registration No. 333-75860
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HOLLIS-EDEN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3697002
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation
or organization)
9333 Genesee Avenue, Suite 200
San Diego, California 92121
(858) 587-9333
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Richard B. Hollis
Chairman of the Board and Chief Executive Officer
HOLLIS-EDEN PHARMACEUTICALS, INC.
9333 Genesee Avenue, Suite 200
San Diego, California 92121
(858) 587-9333
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Eric J. Loumeau, Esq.
HOLLIS-EDEN PHARMACEUTICALS, INC.
9333 Genesee Avenue, Suite 200
San Diego, California 92121
(858) 587-9333
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
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. [_]
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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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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 or until the registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
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The information contained in this prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated January 25, 2002
PROSPECTUS
1,570,641 Shares
HOLLIS-EDEN PHARMACEUTICALS, INC.
Common Stock
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Selling stockholders identified in this prospectus are selling 1,570,641
shares of Hollis-Eden Pharmaceuticals, Inc. common stock. Hollis-Eden will not
receive any of the proceeds from the sale of shares by the selling
stockholders. Hollis-Eden's common stock is listed on The Nasdaq National
Market under the symbol HEPH. The closing sale price of the common stock, as
reported on The Nasdaq National Market on January 24, 2002, was $10.58 per
share.
Investing in the common stock involves a high degree of risk. See Risk
Factors, beginning on page 1.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
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The date of this prospectus is .
TABLE OF CONTENTS
Page
----
Hollis-Eden Pharmaceuticals....... 1
Use of Proceeds................... 1
Risk Factors...................... 1
Where You Can Get More Information 8
Forward-Looking Statements........ 8
Selling Stockholders.............. 10
Plan of Distribution.............. 11
Legal Matters..................... 11
Experts........................... 12
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information
contained in or incorporated by reference in this prospectus. The SEC allows us
to incorporate by reference information that we file with them, which means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part
of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information.
HOLLIS-EDEN PHARMACEUTICALS
Hollis-Eden is a pharmaceutical company in the development stage. We intend
to discover, develop and commercialize products for the treatment of a wide
array of infectious diseases and immune system disorders including HIV/AIDS,
hepatitis, and malaria.
Hollis-Eden's executive offices are located at 9333 Genesee Avenue, Suite
200, San Diego, California 92121, telephone number (858) 587-9333.
USE OF PROCEEDS
Hollis-Eden will not receive any proceeds from the sale of the shares of
common stock offered by the selling stockholders.
RISK FACTORS
Any investment in shares of our common stock involves a high degree of risk.
You should consider carefully the following information about these risks,
together with the other information contained in this prospectus before you
decide to buy our common stock. If any of the following risks actually occurs,
our business, financial condition, results of operations and future growth
prospects would likely be materially adversely affected. In these
circumstances, the market price of our common stock could decline, and you may
lose all or part of the money you paid to buy our common stock.
If we do not obtain government regulatory approval for our products, we cannot
sell our products and we will not generate revenues.
Our principal development efforts are currently centered around immune
regulating hormones, a class of drug candidates which we believe shows promise
for the treatment of a variety of infectious diseases and immune system
disorders. However, all drug candidates require U.S. FDA and foreign government
approvals before they can be commercialized. Neither HE2000, our lead drug
candidate, nor any of our other drug candidates have been approved for
commercial sale. We expect to incur significant additional operating losses
over the next several years as we fund development, clinical testing and other
expenses while seeking regulatory approval. While limited clinical trials of
our drug candidates have to date produced favorable results, significant
additional trials are required, and we may not be able to demonstrate that
these drug candidates are safe or effective. If we are unable to demonstrate
the safety and effectiveness of a particular drug candidate to the satisfaction
of regulatory authorities, the product candidate will not obtain required
government approval. If we do not receive FDA or foreign approvals for our
products, we will not be able to sell our products and will not generate
revenues.
1
If we do not successfully commercialize our products, we may never achieve
profitability.
We have experienced significant operating losses to date because of the
substantial expenses we have incurred to acquire and fund development of our
drug candidates. We have never had operating revenues and have never
commercially introduced a product. Our accumulated deficit was approximately
$59.3 million through September 30, 2001. Our net losses for fiscal years 2000,
1999 and 1998 were $19.5 million, $15.3 million and $5.4 million, and our net
loss for the nine months ended September 30, 2001 was $11.1 million. Many of
our research and development programs are at an early stage. Potential drug
candidates are subject to inherent risks of failure. These risks include the
possibilities that no drug candidate will be found safe or effective, meet
applicable regulatory standards or receive the necessary regulatory clearances.
Even safe and effective drug candidates may never be developed into
commercially successful drugs. If we are unable to develop safe, commercially
viable drugs, we may never achieve profitability. If we become profitable, we
may not remain profitable.
As a result of our intensely competitive industry, we may not gain enough
market share to be profitable.
The biotechnology and pharmaceutical industries are intensely competitive.
We have numerous competitors in the United States and elsewhere. Because we are
pursuing potentially large markets, our competitors include major,
multinational pharmaceutical and chemical companies, specialized biotechnology
firms and universities and other research institutions. Several of these
entities have already successfully marketed and commercialized products that
will compete with our products, assuming that our products gain regulatory
approval. Companies such as Glaxo Wellcome Inc., Merck & Company, Roche
Pharmaceuticals, Pfizer Inc. and Abbott Laboratories have significant market
shares for the treatment of a number of infectious diseases such as HIV, and
Schering AG and Roche Pharmaceuticals are current leaders in hepatitis
therapies. In addition, biotechnology companies such as Gilead Sciences Inc.,
Chiron Corporation and Vertex Pharmaceuticals Inc., as well as many others,
have research and development programs in these fields. A large number of
companies, including Merck & Company, Pfizer Inc., Pharmacia Corporation,
Johnson & Johnson Inc. and Immunex Corporation are also developing and
marketing new drugs for the treatment of chronic inflammatory conditions.
Many of these competitors have greater financial and other resources, larger
research and development staffs and more effective marketing and manufacturing
organizations than we do. In addition, academic and government institutions
have become increasingly aware of the commercial value of their research
findings. These institutions are now more likely to enter into exclusive
licensing agreements with commercial enterprises, including our competitors, to
develop and market commercial products.
Our competitors may succeed in developing or licensing technologies and
drugs that are more effective or less costly than any we are developing. Our
competitors may succeed in obtaining FDA or other regulatory approvals for drug
candidates before we do. If competing drug candidates prove to be more
effective or less costly than our drug candidates, our drug candidates, even if
approved for sale, may not be able to compete successfully with our
competitors' existing products or new products under development. If we are
unable to compete successfully, we may never be able to sell enough products at
a sufficient price that would permit us to generate profits.
We will need to raise additional money before we expect to achieve
profitability; if we fail to raise additional money, it would be difficult to
continue our business.
As of September 30, 2001 our cash and cash equivalents totaled approximately
$23.2 million. In addition, in December 2001 we completed a private placement
of common stock and warrants in which we received net proceeds of approximately
$10.7 million. Based on our current plans, we believe these financial
resources, and interest earned thereon, will be sufficient to meet our
operating expenses and capital requirements at least well into 2003. However,
changes in our research and development plans or other events affecting our
operating expenses may result in the expenditure of such cash before that time.
We will require substantial additional funds
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in order to finance our drug discovery and development programs, fund operating
expenses, pursue regulatory clearances, develop manufacturing, marketing and
sales capabilities, and prosecute and defend our intellectual property rights.
We intend to seek additional funding through public or private financing or
through collaborative arrangements with strategic partners. You should be aware
that in the future:
. we may not obtain additional financial resources when necessary or on
terms favorable to us, if at all; and
. any available additional financing may not be adequate.
If we cannot raise additional funds when needed or on acceptable terms, we
would not be able to continue to develop HE2000 or any of our other product
candidates.
If we raise additional money by issuing equity securities, your investment will
be diluted.
If we raise additional funding by issuing more equity securities, the new
shares will dilute the voting power of your investment on a percentage basis.
Failure to protect our proprietary technology could impair our competitive
position.
As of the date of this prospectus, we own or have obtained a license to over
60 issued U.S. and foreign patents and over 100 pending U.S. and foreign patent
applications. Our success will depend in part on our ability to obtain
additional United States and foreign patent protection for our drug candidates
and processes, preserve our trade secrets and operate without infringing the
proprietary rights of third parties. We place considerable importance on
obtaining patent protection for significant new technologies, products and
processes. Legal standards relating to the validity of patents covering
pharmaceutical and biotechnology inventions and the scope of claims made under
such patents are still developing. Our patent position is highly uncertain and
involves complex legal and factual questions. The applicant or inventors of
subject matter covered by patent applications or patents owned by or licensed
to us may not have been the first to invent or the first to file patent
applications for such inventions. Due to uncertainties regarding patent law and
the circumstances surrounding our patent applications, the pending or future
patent applications we own or have licensed may not result in the issuance of
any patents. Existing or future patents owned by or licensed to us may be
challenged, infringed upon, invalidated, found to be unenforceable or
circumvented by others. Further, any rights we may have under any issued
patents may not provide us with sufficient protection against competitive
products or otherwise cover commercially valuable products or processes.
Litigation or other disputes regarding patents and other proprietary rights may
be expensive, cause delays in bringing products to market and harm our ability
to operate.
The manufacture, use or sale of our drug candidates may infringe on the
patent rights of others. If we are unable to avoid infringement of the patent
rights of others, we may be required to seek a license, defend an infringement
action or challenge the validity of the patents in court. Patent litigation is
costly and time consuming. We may not have sufficient resources to bring these
actions to a successful conclusion. In addition, if we do not obtain a license,
develop or obtain non-infringing technology, and fail to successfully defend an
infringement action or to have infringing patents declared invalid, we may:
. Incur substantial money damages;
. Encounter significant delays in bringing our drug candidates to market;
and/or
. Be precluded from participating in the manufacture, use or sale of our
drug candidates or methods of treatment without first obtaining licenses
to do so.
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We may not be able to obtain any required license on favorable terms, if at all.
In addition, if another party claims the same subject matter or subject
matter overlapping with the subject matter that we have claimed in a United
States patent application or patent, we may decide or be required to
participate in interference proceedings in the United States Patent and
Trademark Office in order to determine the priority of invention. Loss of such
an interference proceeding would deprive us of patent protection sought or
previously obtained and could prevent us from commercializing our products.
Participation in such proceedings could result in substantial costs, whether or
not the eventual outcome is favorable. These additional costs could adversely
affect our financial results.
Confidentiality agreements with employees and others may not adequately prevent
disclosure of trade secrets and other proprietary information.
In order to protect our proprietary technology and processes, we also rely
in part on confidentiality agreements with our corporate partners, employees,
consultants, outside scientific collaborators and sponsored researchers and
other advisors. These agreements may not effectively prevent disclosure of
confidential information and may not provide an adequate remedy in the event of
unauthorized disclosure of confidential information. In addition, others may
independently discover trade secrets and proprietary information. Costly and
time-consuming litigation could be necessary to enforce and determine the scope
of our proprietary rights, and failure to obtain or maintain trade secret
protection could adversely affect our competitive business position.
Existing pricing regulations and reimbursement limitations may reduce our
potential profits from the sale of our products.
The requirements governing product licensing, pricing and reimbursement vary
widely from country to country. Some countries require approval of the sale
price of a drug before it can be marketed. In many countries, the pricing
review period begins after product licensing approval is granted. As a result,
we may obtain regulatory approval for a product candidate in a particular
country, but then be subject to price regulations that reduce our profits from
the sale of the product. In some foreign markets pricing of prescription
pharmaceuticals is subject to continuing government control even after initial
marketing approval. In addition, certain governments may grant third parties a
license to manufacture our product without our permission. Such compulsory
licenses typically would be on terms that are less favorable to us and would
have the effect of reducing our profits.
Varying price regulation between countries can lead to inconsistent prices
and some re-selling by third parties of products from markets where products
are sold at lower prices to markets where those products are sold at higher
prices. This practice of exploiting price differences between countries could
undermine our sales in markets with higher prices and reduce the sales of our
future products, if any. While we do not have any applications for regulatory
approval of our products currently pending, the decline in the size of the
markets in which we may in the future sell commercial products could cause the
perceived market value of our business and the price of our common stock to
decline.
Our ability to commercialize our products successfully also will depend in
part on the extent to which reimbursement for the cost of our products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. Third-party
payors are increasingly challenging the prices charged for medical products and
services. If we succeed in bringing any of our potential products to the
market, such products may not be considered cost effective and reimbursement
may not be available or sufficient to allow us to sell such products on a
competitive basis.
4
Delays in the conduct or completion of our clinical trials or the analysis of
the data from our clinical trials may result in delays in our planned filings
for regulatory approvals, or adversely affect our ability to enter into
collaborative arrangements.
The current status of our drug candidates is as follows:
. We are conducting Phase II clinical trials with HE2000 in South Africa
and Phase I/II clinical trials with HE2000 in the United States for the
treatment of HIV/AIDS;
. We are conducting Phase II clinical trials with HE2000 in Thailand for
the treatment of malaria;
. We are conducting Phase II clinical trials with HE2000 in Singapore for
the treatment of Hepatitis B;
. We are conducting Phase I safety clinical trials with HE2200 in the
United States; and
. We have the right to acquire rights to HE2500, a compound that Aeson
Therapeutics is studying in Phase II clinical trials in the United
States for the treatment of cardiovascular disease and actinic keratosis.
We may encounter problems with some or all of our completed or ongoing
clinical studies that may cause us or regulatory authorities to delay or
suspend our ongoing clinical studies or delay the analysis of data from our
completed or ongoing clinical studies. If the results of our ongoing and
planned clinical studies for our clinical candidates are not available when we
expect or if we encounter any delay in the analysis of our clinical studies for
our clinical candidates:
. we may not have the financial resources to continue research and
development of any of our product candidates; and
. we may not be able to enter into collaborative arrangements relating to
any product subject to delay in regulatory filing.
Any of the following reasons could delay or suspend the completion of our
ongoing and future clinical studies:
. delays in enrolling volunteers;
. lower than anticipated retention rate of volunteers in a trial;
. unfavorable efficacy results; or
. serious side effects experienced by study participants relating to the
product candidate.
If the manufacturers of our products do not comply with current Good
Manufacturing Practices regulations, or cannot produce the amount of products
we need to continue our development, we will fall behind on our business
objectives.
An outside manufacturer, Hovione - Soc. Quimica, S.A., is currently our
primary producer of our drug candidates. Manufacturers producing our products
must follow current Good Manufacturing Practices regulations enforced by the
FDA and foreign equivalents. If a manufacturer of our products does not conform
to the Good Manufacturing Practices regulations and cannot be brought up to
such a standard, we will be required to find alternative manufacturers that do
conform. This may be a long and difficult process, and may delay our ability to
receive FDA or foreign regulatory approval of our products.
We also rely on our manufacturers to supply us with a sufficient quantity of
our drug candidates to conduct clinical trials. If we have difficulty in the
future obtaining our required quantity and quality of supply, we could
experience significant delays in our development programs and regulatory
process.
5
Our ability to achieve any significant revenue may depend on our ability to
establish effective sales and marketing capabilities.
Our efforts to date have focused on the development and evaluation of our
drug candidates. As we continue clinical studies and prepare for
commercialization of our drug candidates, we may need to build a sales and
marketing infrastructure. As a company, we have no experience in the sales and
marketing of our drug candidates. If we fail to establish a sufficient
marketing and sales force or to make alternative arrangements to have our
products marketed and sold by others on attractive terms, it will impair our
ability to commercialize our product candidates and to enter new or existing
markets. Our inability to effectively enter these markets would materially and
adversely affect our ability to generate significant revenues.
If we were to lose the services of Richard B. Hollis, or fail to attract or
retain qualified personnel in the future, our business objectives would be more
difficult to implement, adversely affecting our operations.
Our ability to successfully implement our business strategy depends highly
upon our Chief Executive Officer, Richard B. Hollis. The loss of Mr. Hollis'
services could impede the achievement of our objectives. We also highly depend
on our ability to hire and retain qualified scientific and technical personnel.
The competition for these employees is intense. Thus, we may not be able to
continue to hire and retain the qualified personnel needed for our business.
Loss of the services of or the failure to recruit key scientific and technical
personnel could adversely affect our business, operating results and financial
condition.
We may face product liability claims related to the use or misuse of our
products, which may cause us to incur significant losses.
We are currently exposed to the risk of product liability claims due to
administration of our product candidates in clinical trials, since the use or
misuse of our product candidates during a clinical trial could potentially
result in injury or death. If we are able to commercialize our products, we
will also be subject to the risk of losses in the future due to product
liability claims in the event that the use or misuse of our commercial products
results in injury or death. We currently maintain liability insurance on a
claims-made basis in an aggregate amount of $5 million. Because we cannot
predict the magnitude or the number of claims that may be brought against us in
the future, we do not know whether the insurance policies' coverage limits are
adequate. The insurance is expensive, difficult to obtain and may not be
available in the future on acceptable terms, or at all. Any claims against us,
regardless of their merit, could substantially increase our costs and cause us
to incur significant losses.
Trading in our shares could be subject to extreme price fluctuations that could
adversely affect your investment.
The market prices for securities of life sciences companies, particularly
those that are not profitable, have been highly volatile, especially recently.
Publicized events and announcements may have a significant impact on the market
price of our common stock. For example:
. biological or medical discoveries by competitors;
. public concern about the safety of our product candidates;
. unfavorable results from clinical trials;
. unfavorable developments concerning patents or other proprietary rights;
or
. unfavorable domestic or foreign regulatory developments;
may have the effect of temporarily or permanently driving down the price of our
common stock. In addition, the stock market from time to time experiences
extreme price and volume fluctuations which particularly affect the market
prices for emerging and life sciences companies, such as ours, and which are
often unrelated to the
6
operating performance of the affected companies. For example, our stock price
has ranged from $2.12 to $19.25 between January 1, 2000 and January 24, 2002.
The table below shows, for the periods indicated, the reported high and low
trading prices of our common stock on The Nasdaq National Market.
PRICE RANGE
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HIGH LOW
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CALENDAR YEAR 1999
First Quarter.. $ 25.50 $ 13.25
Second Quarter. 18.75 10.00
Third Quarter.. 16.00 11.00
Fourth Quarter. 18.625 8.625
CALENDAR YEAR 2000
First Quarter.. $ 19.25 $10.125
Second Quarter. 17.438 7.75
Third Quarter.. 13.375 7.719
Fourth Quarter. 9.188 4.00
CALENDAR YEAR 2001
First Quarter.. $ 6.125 $ 2.75
Second Quarter. 7.99 2.125
Third Quarter.. 7.36 4.01
Fourth Quarter. 14.25 6.00
These broad market fluctuations may adversely affect the ability of a
stockholder to dispose of his shares at a price equal to or above the price at
which the shares were purchased. In addition, in the past, following periods of
volatility in the market price of a company's securities, securities
class-action litigation has often been instituted against those companies. This
type of litigation, if instituted, could result in substantial costs and a
diversion of management's attention and resources, which could materially
adversely affect our business, financial condition and results of operations.
Because stock ownership is concentrated, you and other investors will have
minimal influence on stockholders' decisions.
Assuming that outstanding warrants and options have not been exercised,
Richard B. Hollis, our Chief Executive Officer, owns approximately 21% of our
outstanding common stock. Assuming the exercise of our outstanding warrants and
options, Mr. Hollis would own approximately 19% of our outstanding common
stock. As a result, Mr. Hollis may be able to significantly influence the
management of Hollis-Eden and all matters requiring stockholder approval,
including the election of directors. Such concentration of ownership may also
have the effect of delaying or preventing a change in control of Hollis-Eden.
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WHERE YOU CAN GET MORE INFORMATION
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 rooms in Washington, D.C., New York, NY and Chicago, IL. You can
request copies of these documents by writing to the SEC and paying a fee for
the copying cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the public reference rooms. Our SEC filings are also
available at the SEC's Web site at http://www.sec.gov.
We incorporate by reference the documents listed below, except as modified
by this registration statement, 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:
. Annual Report on Form 10-K for the year ended December 31, 2000;
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001,
June 30, 2001, and September 30, 2001;
. Notice of Annual Meeting and Proxy Statement for the 2000 Annual Meeting
of Stockholders held on June 29, 2001;
. Current Reports on Form 8-K filed December 18, 2001; and
. Our registration statement on Form S-4, No. 333-18725, as amended, which
includes a description of our common stock.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address or telephone number:
Hollis-Eden Pharmaceuticals, Inc.
9333 Genesee Avenue, Suite 200
San Diego, CA 92121
Attn: Chief Accounting Officer
(858) 587-9333
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. These include statements about our expectations, plans,
objectives, assumptions or future events. In some cases, you can identify
forward-looking statements by terminology such as ''anticipate,'' ''estimate,''
''plans,'' ''potential,'' ''projects,'' ''continuing,'' ''ongoing,''
''expects,'' ''management believes,'' ''we believe,'' ''we intend'' and similar
expressions. These statements involve estimates, assumptions and uncertainties
that could cause actual results to differ materially from those expressed for
the reasons described in this prospectus. You should not place undue reliance
on these forward-looking statements.
You should be aware that our actual results could differ materially from
those contained in the forward-looking statements due to a number of factors,
including:
. failure to achieve positive results in clinical trials;
. failure to obtain government regulatory approvals;
. competitive factors;
. our ability to raise additional capital;
8
. uncertainty regarding our patents and patent rights;
. relationships with our consultants, academic collaborators and other
third-party service providers; and
. our ability to enter into future collaborative arrangements.
You should also consider carefully the statements under ''Risk Factors'' and
other sections of this prospectus, which address additional factors that could
cause our actual results to differ from those set forth in the forward-looking
statements and could materially and adversely affect our business, operating
results and financial condition. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the applicable cautionary
statements.
The forward-looking statements speak only as of the date on which they are
made, and, except to the extent required by federal securities laws, we
undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events. 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.
We use data and industry forecasts throughout this prospectus, which we have
obtained from internal surveys, market research, publicly available information
and industry publications. Industry publications generally state that the
information they provide has been obtained from sources believed to be reliable
but that the accuracy and completeness of such information is not guaranteed.
Similarly, we believe that the surveys and market research we or others have
performed are reliable, but we have not independently verified this
information. We do not represent that any such information is accurate.
9
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders, and
the number of shares of common stock owned beneficially by them as of December
14, 2001 which may be offered under the terms of this prospectus. This
information is based upon information provided by each selling stockholder. The
applicable percentages of ownership are based on an aggregate of 12,895,803
shares issued and outstanding on December 14, 2001. The number of shares
beneficially owned by each selling stockholder is determined under rules
promulgated by the SEC, and is not necessarily indicative of beneficial
ownership for any other purpose. The term selling stockholders includes the
stockholders listed below and their transferees, pledges, donees or other
successors. Each selling stockholder is offering all of the shares they
beneficially own, and assuming they sell every share, will not beneficially own
any shares of Hollis-Eden after the offering. None of the selling stockholders
has, or within the past three years has had, any position, office or other
material relationship with Hollis-Eden or any of its predecessors or affiliates.
Percent of Shares
Beneficially
Shares Being Owned Prior to
Selling Stockholders Offered the Offering
-------------------- ------------ -----------------
Vertical Ventures Investments LLC.......................... 550,000(1) 4.2%
Rochdale Investment Management, LLC........................ 61,111(2) *
Jackson Square Partners 2002, L.P.......................... 165,000(3) 1.3%
ANDA Partnership........................................... 165,000(4) 1.3%
BlackRock Funds, Micro-Cap Equity Portfolio................ 513,334(5) 4.0%
BlackRock Funds, Global Science and Technology Portfolio... 513,334(6) 4.0%
The Lynch Foundation....................................... 30,556(7) *
Clarion Capital Corporation................................ 66,000(8) *
Clarion Partners, L.P...................................... 66,000(9) *
Clarion Offshore Fund Ltd.................................. 22,000(10) *
H.C. Wainwright & Co., Inc................................. 162,640(11) 1.2%
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* less than 1%
(1) Includes 50,000 shares issuable upon the exercise of warrants.
(2) Includes 5,556 shares issuable upon the exercise of a warrant.
(3) Includes 7,500 shares issuable upon the exercise of a warrant. Also
includes 75,000 shares owned by ANDA Partnership, and 7,500 shares
issuable upon the exercise of a warrant issued to ANDA Partnership. ANDA
Partnership is an affiliate of Jackson Square Partners 2002, L.P.
(4) Includes 7,500 shares issuable upon the exercise of a warrant. Also
includes 75,000 shares owned by Jackson Square Partners 2002, L.P., and
7,500 shares issuable upon the exercise of a warrant issued to Jackson
Square Partners 2002, L.P. Jackson Square Partners 2002, L.P. is an
affiliate of ANDA Partnership.
(5) Includes 35,667 shares issuable upon the exercise of a warrant. Also
includes 100,000 shares owned by BlackRock Funds, Global Science and
Technology Portfolio, and 10,000 shares issuable upon the exercise of a
warrant issued to BlackRock Funds, Global Science and Technology
Portfolio. BlackRock Funds, Global Science and Technology Portfolio is an
affiliate of BlackRock Funds, Micro-Cap Equity Portfolio.
(6) Includes 10,000 shares issuable upon the exercise of a warrant. Also
includes 366,667 owned by BlackRock Funds, Micro-Cap Equity Portfolio,
and 36,667 shares issuable upon the exercise of a warrant issued to
BlackRock Funds, Micro-Cap Equity Portfolio. BlackRock Funds, Micro-Cap
Equity Portfolio is an affiliate of BlackRock Funds, Global Science and
Technology Portfolio.
(7) Includes 2,778 shares issuable upon the exercise of a warrant.
(8) Includes 4,000 shares issuable upon the exercise of a warrant. Also
includes 20,000 shares owned by Clarion Partners, L.P., and 2,000 shares
issuable upon the exercise of a warrant issued to Clarion Partners, L.P.
Clarion Partners, L.P. is an affiliate of Clarion Capital Corporation.
(9) Includes 2,000 shares issuable upon the exercise of a warrant. Also
includes 40,000 shares owned by Clarion Capital Corporation, and 4,000
shares issuable upon the exercise of a warrant issued to Clarion Capital
Corporation. Clarion Capital Corporation is an affiliate of Clarion
Partners, L.P.
(10) Includes 2,000 shares issuable upon the exercise of a warrant.
(11) All of such shares are issuable upon the exercise of warrants.
10
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
stockholders in one or more transactions at fixed prices, at market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The selling stockholders may offer their shares of common
stock in one or more of the following transactions:
. on any national securities exchange or quotation service at which the
common stock may be listed or quoted at the time of sale, including The
Nasdaq National Market;
. in the over-the-counter market;
. in private transactions;
. through options; and
. by pledge to secure debts and other obligations, or a combination of any
of the above transactions.
If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering.
The shares of common stock described in this prospectus may be sold from
time to time directly by the selling stockholders. Alternatively, the selling
stockholders may from time to time offer shares of common stock to or through
underwriters, broker/dealers or agents. The selling stockholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be underwriters within the meaning
of the Securities Act of 1933. Any profits on the resale of shares of common
stock and any compensation received by any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under rule 144 rather
than under the terms of this prospectus. The selling stockholders may transfer,
will or gift such shares by other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock may not simultaneously engage in market-making
activities with respect to the common stock for nine business days prior to the
start of the distribution. In addition, each selling stockholder and any other
person participating in a distribution will be subject to the Securities
Exchange Act of 1934 which may limit the timing of purchases and sales of
common stock by the selling stockholders or any such other person. These
factors may affect the marketability of the common stock and the ability of
brokers or dealers to engage in market-making activities.
We will pay all expenses of this registration. These expenses include the
SEC's filing fees and fees under state securities or blue sky laws. We estimate
that our expenses in connection with this offering will be approximately
$28,000.
LEGAL MATTERS
Cooley Godward LLP, San Diego, California will pass upon the validity of the
issuance of the common stock offered by this prospectus.
11
EXPERTS
The financial statements of Hollis-Eden Pharmaceuticals, Inc. as of December
31, 2000 and 1999, and for each of the years ended December 31, 2000, 1999 and
1998, and for the period from August 15, 1994, the day we started doing
business, to December 31, 2000, have been audited by BDO Seidman, LLP, as set
forth in their report included in our Annual Report on Form 10-K for the year
ended December 31, 2000. We incorporate these financial statements by reference
into this prospectus in reliance upon such report given upon the authority of
BDO Seidman, LLP as experts in accounting and auditing.
We have not authorized any dealer, salesperson or other person to give any
information or to make any representations not contained in this prospectus or
any prospectus supplement. You must not rely on any unauthorized information.
This prospectus is not an offer of these securities in any state where an offer
is not permitted. The information in this prospectus is current as of January
24, 2002. You should not assume that this prospectus is accurate as of any
other date.
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee and the listing fee are estimated):
SEC Registration Fee........... $ 4,178
Legal fees and expenses........ 20,000
Accounting fees and expenses... 2,000
Miscellaneous and printing fees 1,822
-------
Total.......................... $28,000
=======
Item 15. Indemnification of Officers and Directors.
Under Section 145 of the Delaware General Corporation Law, the registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
The registrant's bylaws provide that the registrant shall indemnify its
directors and executive officers and may indemnify its other officers,
employees and other agents to the fullest extent permitted by Delaware law. The
registrant is also empowered under its bylaws to enter into indemnification
contracts with its directors and officers and to purchase insurance on behalf
of any person whom it is required or permitted to indemnify. In addition, the
registrant is required, subject to certain exceptions, to advance all expenses
incurred by any director or executive officer in connection with a completed,
pending or threatened action, suit or proceeding upon receipt of an undertaking
by such director or executive officer to repay all amounts advanced by the
registrant on such person's behalf if it is ultimately determined that such
person is not entitled to be indemnified under the bylaws or otherwise.
The registrant's Certificate of Incorporation provides that to the fullest
extent permitted under Delaware law, the registrant's directors will not be
personally liable to the registrant and its stockholders for monetary damages
for any breach of a director's fiduciary duty. The Certificate of Incorporation
does not, however, eliminate the duty of care, and in appropriate
circumstances, equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director is
subject to liability for breach of the director's duty of loyalty to the
registrant, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, for any transaction from which the
director derived an improper personal benefit and for improper distributions to
stockholders and loans to directors and officers. This provision does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
The registrant maintains directors' and officers' liability insurance.
II-1
Item 16. Exhibits.
Exhibit
No. Description
--- -----------
4.1 Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-4 (No. 333-18725), as amended (the "Form S-4")).
4.2 Bylaws of Registrant (incorporated by reference to Exhibit 4.2 to the Form S-4).
4.3 Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.4 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001).
4.4 Form of Stock and Warrant Purchase Agreement, dated as of December 11, 2001, between the
Registrant and the purchasers listed on Schedule I attached thereto.*
4.5 Form of Warrant, dated December 11, 2001, issued to the purchasers listed on Schedule I attached
thereto.*
4.6 Form of Warrant issued to H.C. Wainwright & Co., Inc. in the amounts and on the dates listed on
Schedule I attached thereto.*
5.1 Opinion of Cooley Godward LLP.*
10.1 Patent License Agreement dated December 1, 1999 between the Registrant and Dr. Roger M. Loria.+
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.*
24.1 Power of Attorney. Reference is made to page II-4.*
--------
+ Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
* Previously filed.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
pursuant to the provisions described in Item 15, the registrant has been
informed 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or person controlling the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or person controlling the registrant in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this registration statement, a post-effective amendment to this
registration statement 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;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
II-2
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
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 amendment No. 1 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Diego, County of San Diego, State
of California, on January 25, 2002.
/s/ ROBERT W. WEBER
By: _______________________________
Robert W. Weber
Vice President-Controller/
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* Chairman of the Board, Chief January 25, 2002
--------------------------- Executive Officer and Director
Richard B. Hollis (Principal Executive Officer)
* Chief Operating Officer/Chief January 25, 2002
--------------------------- Financial Officer
Daniel D. Burgess (Principal Financial Officer)
/S/ ROBERT W. WEBER Vice President-Controller/Chief January 25, 2002
--------------------------- Accounting Officer
Robert W. Weber (Principal Accounting Officer)
* Director January 25, 2002
---------------------------
J. Paul Bagley III
* Director January 25, 2002
---------------------------
Leonard Makowka
* Director January 25, 2002
---------------------------
Brendan R. McDonnell
* Scientific Advisor and Director January 25, 2002
---------------------------
Thomas Charles Merigan, Jr.
--------------------------- Director
William H. Tilley
* Director January 25, 2002
---------------------------
Salvatore J. Zizza
/s/ ROBERT W. WEBER
* By: _____________________
Robert W. Weber
Attorney-In-Fact
II-4
EXHIBIT INDEX
Exhibit
Number Description of Document
------ -----------------------
4.1 Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-4 (No. 333-18725), as amended (the "Form S-4")).
4.2 Bylaws of Registrant (incorporated by reference to Exhibit 4.2 to the Form S-4).
4.3 Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.4 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001).
4.4 Form of Stock and Warrant Purchase Agreement, dated as of December 11, 2001, between the
Registrant and the purchasers listed on Schedule I attached thereto.*
4.5 Form of Warrant, dated December 11, 2001, issued to the purchasers listed on Schedule I attached
thereto.*
4.6 Form of Warrant issued to H.C. Wainwright & Co., Inc. in the amounts and on the dates listed on
Schedule I attached thereto.*
5.1 Opinion of Cooley Godward LLP.*
10.1 Patent License Agreement dated December 1, 1999 between the Registrant and Dr. Roger M. Loria.+
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.*
24.1 Power of Attorney. Reference is made to page II-4.*
--------
+ Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
* Previously filed.
II-5