PROSPECTUS SUPPLEMENT |
Filed
Pursuant to Rule 424(b)(5) |
(To
Prospectus dated July 2, 2014) |
Registration
No. 333-196976 |
2,000,000
Shares of Common Stock
We
are offering 2,000,000 shares of our common stock.
Our
common stock is listed on The NASDAQ Capital Market under the symbol “ADMP.” On January 7, 2015, the last
reported sale price of our common stock on The NASDAQ Capital Market was $6.44 per share.
The aggregate market value of our outstanding common stock held by non-affiliates was $53,281,359 based on
10,667,780 outstanding shares of common stock, of which 8,273,503 shares are held by non-affiliates, and a per share price of
$6.44 based on the closing sale price of our common stock on The NASDAQ Capital Market on January 7,
2015.
Investing
in our securities involves significant risks. See “Risk Factors” beginning on page S-8 of this prospectus
supplement and on page 6 of the accompanying prospectus and the documents incorporated by reference herein.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
| |
| Per Share | | |
| Total | |
Price to the public | |
$ | 5.00 | | |
$ | 10,000,000 | |
Underwriting discounts and commissions (1) | |
$ | 0.30 | | |
$ | 600,000 | |
Proceeds, before expenses, to us | |
$ | 4.70 | | |
$ | 9,400,000 | |
| (1) | For
additional information about the expenses for which we have agreed to reimburse the underwriters
in connection with this offering, see “Underwriting” on page S-20 of this
prospectus supplement. |
We
have granted the underwriters an option for a period of 30 days to purchase up to an additional 300,000 shares of common stock
at a price of $5.00 per share, less underwriting discounts and commissions, to cover over-allotments, if any.
The
underwriters expect to deliver the shares of common stock on or about January 14, 2015, subject to customary closing
conditions.
____________________
Sole Book-Running Manager
Oppenheimer
& Co.
|
Co-Managers |
|
|
|
|
CRT Capital |
Maxim Group LLC |
Mizuho Securities |
The
date of this prospectus supplement is January 9, 2015.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT |
Page |
|
|
ABOUT
THIS PROSPECTUS SUPPLEMENT |
S-1 |
PROSPECTUS
SUPPLEMENT SUMMARY |
S-2 |
RISK
FACTORS |
S-8 |
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS |
S-13 |
USE
OF PROCEEDS |
S-14 |
DILUTION |
S-15 |
CAPITALIZATION |
S-17 |
PRICE
RANGE OF COMMON STOCK |
S-19 |
UNDERWRITING |
S-20 |
LEGAL
MATTERS |
S-26 |
EXPERTS |
S-26 |
WHERE
YOU CAN FIND MORE INFORMATION |
S-26 |
INCORPORATION
OF DOCUMENTS BY REFERENCE |
S-26 |
PROSPECTUS
ABOUT
THIS PROSPECTUS |
|
ABOUT
THE COMPANY |
1 |
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS |
4 |
RISK
FACTORS |
5 |
USE
OF PROCEEDS |
22 |
THE
SECURITIES WE MAY OFFER |
22 |
DESCRIPTION
OF CAPITAL STOCK |
23 |
DESCRIPTION
OF WARRANTS |
27 |
DESCRIPTION
OF UNITS |
30 |
PLAN
OF DISTRIBUTION |
30 |
LEGAL
MATTERS |
32 |
EXPERTS |
32 |
WHERE
YOU CAN FIND MORE INFORMATION |
33 |
INCORPORATION
OF DOCUMENTS BY REFERENCE |
34 |
You
should rely only on this prospectus supplement, the accompanying prospectus and the information incorporated or deemed to be
incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information that is in addition to or different from that contained or incorporated by reference in this
prospectus supplement and the accompanying prospectus. If anyone provides you with different or inconsistent information, you
should not rely on it. This prospectus supplement, the accompanying prospectus and any related free writing prospectus, if
any, do not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information
contained or incorporated by reference in this prospectus supplement or the accompanying prospectus is accurate as of any
date other than as of the date of this prospectus supplement
or the accompanying prospectus, as the case may be, or in the case of the documents incorporated by reference, the date of such
documents regardless of the time of delivery of this prospectus supplement and the accompanying prospectus or any sale of our
securities. Our business, financial condition, liquidity, results of operations and prospects may have changed since those dates.
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement is part of the registration statement on Form S-3 (File No. 333-196976) that we filed with the Securities
and Exchange Commission, or the SEC, using a “shelf” registration process to register sales of our securities, under
the Securities Act of 1933, as amended, or the Securities Act, and was declared effective by the SEC on July 2, 2014. This document
consists of two parts. The first part is this prospectus supplement, including the documents incorporated by reference, which
describes the specific terms of this offering. The second part is the accompanying prospectus filed with the SEC as part of the
registration statement that was declared effective by the SEC on July 2, 2014, including the documents incorporated by reference,
that gives more general information, some of which may not apply to this offering. Generally, when we refer only to the “prospectus,”
we are referring to both parts combined. This prospectus supplement may add to, update or change information in the accompanying
prospectus and the documents incorporated by reference into this prospectus supplement or the accompanying prospectus.
If
information in this prospectus supplement is inconsistent with any document incorporated by reference that was filed with the
SEC before the date of this prospectus supplement, you should rely on this prospectus supplement. This prospectus supplement,
the accompanying prospectus and the documents incorporated into each by reference include important information about us, the
securities being offered and other information you should know before investing in our securities. You should also read and consider
information in the documents to which we have referred you in the section of this prospectus entitled “Where You Can Find
More Information.”
We
sometimes refer to the shares of common stock offered hereby as the “securities.”
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference into this prospectus supplement or the accompanying prospectus were made solely for
the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to
such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants
should not be relied on as accurately representing the current state of our affairs.
Unless
otherwise indicated, all information contained or incorporated by reference in this prospectus supplement and the accompanying
prospectus concerning our industry in general or any portion thereof, including information regarding our general expectations
and market opportunity, is based on management’s estimates using internal data, data from industry related publications,
consumer research and marketing studies and other externally obtained data.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights selected information appearing elsewhere in this prospectus supplement or in the accompanying prospectus
or incorporated by reference into this prospectus supplement and the accompanying prospectus, and does not contain all of the
information that may be important to you or that you should consider before investing in our common stock. Before making an
investment decision, you should read this prospectus supplement, the accompanying prospectus and the information incorporated
by reference herein in their entirety, including “Risk Factors” beginning on page S-8 of this prospectus
supplement and on page 5 of the accompanying prospectus.
Company
Overview
Adamis
Pharmaceuticals Corporation (“we,” “us,” “our,” “Adamis” or the “company”)
is a pharmaceutical company focused on combining specialty pharmaceuticals and biotechnology to provide innovative medicines for
patients and physicians. We are currently primarily focused on our specialty pharmaceutical products. We are currently developing
four products in the allergy and respiratory markets, including one utilizing a dry powder inhaler technology that we acquired
from 3M Company, or 3M. Our goal is to create low cost therapeutic alternatives to existing treatments. Consistent across all
specialty pharmaceuticals product lines, we intend to submit Section 505(b)(2) New Drug Applications, or NDAs, to the U.S. Food
and Drug Administration, or FDA, whenever possible in order to potentially reduce the time to market and to save on costs, compared
to those associated with Section 505(b)(1) NDAs for new drug products. We also have a number of biotechnology product candidates
and technologies, including therapeutic vaccine and cancer product candidates and technologies intended to treat patients with
unmet medical needs in the global cancer market. To achieve our goals and support our overall strategy, we will need to raise
a substantial amount of funding and make significant investments in equipment, new product development and working capital.
The
current status of our development programs is as follows:
Product
Portfolio
Specialty Pharmaceutical Product Candidates |
Target Indication |
Development Status |
|
|
|
Epinephrine
PFS |
Anaphylaxis |
Submitted NDA |
APC-5000
DPI |
Asthma/COPD |
Phase 3 ready (1)(2) |
APC-1000 |
Asthma/COPD |
Phase
3 ready (1)(2) |
APC-3000 |
Allergic
Rhinitis |
Phase 3 ready (1)(2) |
Biotechnology Product Candidates |
Target Indication |
Development Status |
|
|
|
TeloB-VAX
(vaccine) |
Prostate
Cancer |
Phase 2 ready(1) |
APC-100 |
Prostate
Cancer |
Phase 1 trial(3) |
APC-200 |
Prostate
Cancer |
Preclinical |
APC-300 |
Prostate
Cancer |
Preclinical |
| (1) | Represents
the next development or regulatory stage that we intend to pursue, assuming that we have
the financial resources to pursue any of these opportunities. Even assuming the successful
completion of one or more offerings pursuant to the registration statement of which this
prospectus is a part, we may not have the financial resources to pursue these opportunities. |
| (2) | A
single Phase 3 trial, without previous Phase 1 or Phase 2 clinical trials, is anticipated. |
| (3) | Phase
1/2a clinical trial has commenced. |
We
have not received regulatory approval for any drugs or other products. Since our fiscal 2010 year, we have not generated commercial
revenues from marketing or selling any drugs or other products.
Anaphylaxis;
Epinephrine Pre-Filled Syringe
Our
most advanced product candidate, the Epinephrine Injection USP 1:1000 0.3mg Pre-filled Single Dose Syringe, or the
Epinephrine PFS, is a simple syringe designed to deliver a premeasured 0.3 mg dose of epinephrine for the treatment of
anaphylaxis. The American Academy of Allergy Asthma and Immunology, or AAAAI, defines anaphylaxis as a serious
life-threatening allergic reaction. The most common anaphylactic reactions are to foods, insect stings, medications and
latex. According to information published by AAAAI reporting on findings from a 2009-2010 study, up to 8% of U.S. children
under the age of 18 had a food allergy, and approximately 38% of those with a food allergy had a history of severe reactions.
Anaphylaxis requires immediate medical treatment, including an injection of epinephrine. We estimate that sales of
prescription epinephrine products in 2013 were at least $900 million, based on industry data. We cannot provide any
assurances concerning any possible future rates of annual growth or whether annual prescriptions will decline or grow. We
believe that there is an opportunity for a simple, low-cost, intuitive pre-filled syringe to compete in this market. With the
help of our contract manufacturer, on May 28, 2014, we submitted an NDA to the FDA pursuant to Section 505(b)(2) of the
Food, Drug & Cosmetic Act, as amended, or FDCA, for approval of our Epinephrine PFS product. Assuming no unexpected
regulatory delays, we hope to receive an approval by the end of the first calendar quarter of 2015, and we expect that our
first commercial sales could commence by the end of the second quarter of 2015, although there are no assurances that
this will be the case. Under goals established in connection with the Prescription Drug User Fee Act, or PDUFA, the
FDA’s guidance for the review and acting on standard NDA submissions that do not relate to new molecular entities,
which we believe will be the case with our Epinephrine PFS product, is 10 months from the date of receipt of the submission.
However, the FDA’s review processes can extend beyond, and in some cases significantly beyond, anticipated completion
dates due to FDA requests for additional information or clarification, difficulties scheduling an advisory committee meeting,
FDA workload issues or other reasons. As a result, the dates of regulatory approval, if obtained, and commercial introduction
of our product could be delayed beyond our expectations.
Asthma
and COPD
According
to the National Institute of Health, or NIH, asthma is a chronic lung disease that inflames and narrows the airways. Asthma causes
recurring periods of wheezing, chest tightness, shortness of breath, and coughing. Asthma affects people of all ages, but it most
often starts during childhood. According to information published by AAAAI reporting on findings from 2011, the number of people
in the U.S. with asthma is approximately 25 million and growing. COPD, or chronic obstructive pulmonary disease, is a progressive
disease that makes it difficult to breathe. COPD can cause coughing that produces large amounts of mucus, wheezing, shortness
of breath, chest tightness, and other symptoms. According to the NIH, cigarette smoking is the leading cause of COPD. However,
long-term exposure to other lung irritants such as air pollution, chemical fumes, or dust may also contribute to COPD.
APC-5000
DPI. On December 27, 2013, we acquired assets relating to 3M’s patented Taper dry powder inhaler, or DPI, technology
under development by 3M for the treatment of asthma and COPD. The Taper DPI technology was under development by 3M as a device
designed to efficiently deliver dry powder by utilizing a 3M proprietary microstructured carrier tape. We intend to utilize the
Taper DPI assets initially to develop a pre-metered inhaler device, referred to as APC-5000 DPI, for the treatment of asthma and
COPD to deliver the same active ingredients as GlaxoSmithKline’s Advair Diskus®. The Advair Diskus® is a dry powder
inhaler, or DPI, product that combines fluticasone propionate, or fluticasone and salmeterol xinafoate, or salmeterol. Fluticasone
belongs to the family of medicines known as corticosteroids or steroids. We believe that, once developed, the device can be utilized
to deliver a variety of different drug compounds.
Upon
completion of product development and clinical trials and if required regulatory approvals are obtained, we intend to commercially
market the APC-5000 DPI product to compete for a share of the Advair Diskus market with a branded generic version utilizing the
acquired technology. Pursuant to our agreement with 3M, the microstructured carrier tape will be supplied by 3M under a separate
supply agreement to be negotiated with 3M. We have initiated a pharmacokinetic study comparing APC-5000 with the Advair Diskus
and expect to complete the study and analysis of the results by the end of the first calendar quarter of 2015. We are currently
preparing an investigational new drug application, or IND, to be submitted to the FDA to begin human testing of APC-5000 DPI.
Assuming receipt of sufficient funding and if clinical trials are initiated and successfully completed, we intend to pursue an
NDA under Section 505(b)(2) to seek approval for sale in the U.S. market. We also intend to seek to identify opportunities to
market APC-5000 DPI based products outside of the U.S. Pursuant to our August 1, 2013 agreement with 3M, we made an initial payment
of $3.0 million to 3M and acquired an exclusive license to the assets, and on December 27, 2013, we made a final payment to 3M
of $7.0 million and the Taper DPI assets were transferred to us. We currently have no in-house manufacturing capabilities, so
we intend to rely on third-party contract manufacturers to manufacture the
materials needed to produce APC-5000 DPI. We are in the process of identifying such manufacturers to produce APC-5000 DPI.
Additional
Allergy Products; APC-1000 and APC-3000. Additional product candidates in our allergy and respiratory product pipeline include
a steroid hydrofluoroalkane, or HFA, metered dose inhaler product, referred to as APC-1000, for asthma and COPD and an HFA pressurized
metered dose nasal steroid for the treatment of seasonal and perennial allergic rhinitis, referred to as APC-3000. Inhaled nasal
steroid, or INS, products are sold under prescription for seasonal allergic rhinitis. Our product candidates, if developed and
approved for marketing, will target a small niche within the larger market for INS products. To date, we have not made any regulatory
filings with the FDA for these products. We have initiated a pharmacokinetic study comparing APC-1000 with TEVA’s QVAR product
and expect to complete the study and analysis of the results by the end of the first calendar quarter of 2015. Assuming favorable
study results, we intend to commence a Phase 3 clinical trial for APC-1000 during the second half of 2015. We also intend to initiate
a Phase 3 clinical trial for APC-3000 during the second half of 2015.
Subject
to several factors, including the availability of sufficient funding, the success of future clinical trials, obtaining required
regulatory approvals and the absence of unexpected delays, we believe that up to four products, Epinephrine PFS, APC-5000 DPI,
APC-1000 and APC-3000, could be ready for launch or launched before the end of 2017, although there can be no assurances that
this will be the case.
Cancer
Although
we are currently primarily focused on our specialty pharmaceutical products, we believe that there is a significant need for new
products and therapies for the treatment of prostate cancer and other forms of cancer.
TeloB-VAX.
In April 2011, we acquired exclusive rights to patented telomerase-based cancer vaccine technology from the Regents of the University
of California, or UCSD, and the Dana-Farber/Harvard Cancer Center. We intend to pursue development of the technology initially
for what we believe may be a novel cell-based vaccine product candidate for cancer, tentatively named TeloB-VAX. The technology
is intended to activate the body’s natural defense machinery to stimulate an immune response against one of nature’s
most common tumor markers, telomerase reverse transcriptase, or telomerase. We believe that a vaccine product, if developed, will
utilize the patient’s own B cells to induce an immune response against telomerase. Telomerase is a marker found in approximately
85% of all cancers including prostate cancer. In a Phase 1 clinical trial completed at UCSD in castrate resistant prostate
cancer patients, the vaccine product candidate was shown to be safe and well tolerated. We believe that this technology may represent
an opportunity to program the immune system to mobilize killer lymphocytes to combat cancer cells.
Prostate
Cancer. According to the American Cancer Society, or ACS, and the National Cancer Institute, or NCI, prostate cancer is the
second-most common cancer in American men and the second leading cause of cancer death in American men. The ACS estimated that
for 2014 in the United States, approximately 233,000 new cases of prostate cancer will be diagnosed and about 29,480 men will
die of prostate cancer in 2014. In 2010, we licensed patents and related intellectual property relating to three cancer drug candidates
developed at the University of Wisconsin. We believe these drug candidates, named APC-100, -200 and -300, may offer new treatment
opportunities for prostate cancer.
APC-100
is the most advanced of the three drug candidates. In animal studies conducted to date, APC-100 demonstrated anti-androgenic and
anti-inflammatory activities against prostate tumors growing in animal models and showed a strong safety profile in preclinical
safety studies. In 2006, APC-100 was awarded the NCI Rapid Award. The award is given by the National Cancer Institutes for promising
new drugs for the treatment of cancer and resulted in significant funding for research and development of APC-100. APC-100 has
demonstrated desirable pharmacological characteristics as an oral or injectable anti-inflammatory and anti-androgenic drug candidate
with multiple mechanisms of action. In animal studies conducted to date, APC-100 decreased secretion of human PSA by human prostate
cancer cells growing in mice and also increased the time-to-tumor progression and survival of mice with prostate sensitive and
castrate resistant tumors. In August 2011, we announced the enrollment of the first patient in a Phase 1/2a prostate cancer clinical
trial relating to the use of the APC-100 product to treat men with castrate-resistant prostate cancer. The trial began at the
University of Wisconsin Carbone Cancer Center and was extended to the
Wayne State University Karmanos Cancer Institute. In the trial, each patient will be assessed for toxicity, biochemical responses
(PSA), radiographic and clinical responses.
APC-200
is a drug candidate for both castrate-sensitive and castrate resistant prostate cancer. In 2007, APC-200 was awarded the NCI Rapid
Award. APC-200 blocks androgen-induced hydrogen peroxide production and inflammation and inhibits mouse prostate cancer. In animal
studies conducted to date, APC-200 was an excellent inhibitor of chronic inflammation. It also completely inhibited oxidase mediated
high rates of hydrogen peroxide production in vivo and delayed prostate cancer progression and death in the standard mouse prostate
cancer model. If we conclude preclinical development activities, such as GMP manufacturing of drug substance and drug product,
as well as conclusion of the preclinical safety, pharmacology and toxicology studies, we anticipate that we would submit an Adamis-sponsored
IND for the clinical investigation of oral APC-200 in prostate cancer patients with castrate resistant prostate cancer, assuming
adequate funding and no unexpected delays, although there are no assurances that we will file or open such an IND.
APC-300
is a multi-targeted small molecule compound that we believe has the potential to demonstrate anti-inflammatory, pro-apoptotic
anti-cancer activities for prostate cancer patients, including men with advanced metastatic castrate resistance prostate cancer.
In preclinical in vitro studies conducted to date, APC-300 repeatedly demonstrated inhibition of human tumor cell growth and killed
both castrate-sensitive and castrate-resistant human prostate cancer tumors. It also materially decreased tumor volumes and suppressed
local metastasis in human to mouse xenograft models, where malignant human prostate, pancreas, or melanoma tumor tissue was grafted
onto athymic immunosuppressed experimental mice. For several reasons including funding limitations, we have not yet developed
a clinical protocol and other materials for submission of an IND.
We
are currently primarily focused on our specialty pharmaceutical products. We do not intend to use a material portion of the net
proceeds from this offering for research and development of our cancer and biotechnology product candidates and technologies.
Recent
Developments
Private
Placement in August 2014
On
August 19, 2014, we completed a private placement transaction with a small number of accredited investors pursuant to which we
issued 1,418,439 shares of Series A Convertible Preferred Stock and warrants to purchase up to 1,418,439 shares of common stock.
The shares of Series A Preferred and warrants were sold in units, with each unit consisting of one share and one warrant, at a
purchase price of $3.525 per unit. The Series A Preferred is convertible into shares of common stock at an initial conversion
rate of 1-for-1 (subject to stock splits, reverse stock splits and similar events) at any time at the discretion of the investors.
The exercise price of the warrants is $3.40 per share, and the warrants are exercisable for five years. Gross proceeds to us were
approximately $5,000,000 excluding transactions costs, fees and expenses. Pursuant to the transaction agreements, we filed a registration
statement with the SEC, which has been declared effective, to register the resale from time to time of shares of common stock
underlying the Series A Preferred and the warrants.
Change
in Fiscal Year
As
we have previously reported, on November 6, 2014, our board of directors approved a change in our fiscal year end from March 31
to December 31. In accordance with certain rules promulgated under the Securities Exchange Act of 1934, as amended, we will
file a Transition Report on Form 10-K for the nine-month period ended December 31, 2014, with the Securities and Exchange
Commission within the time period prescribed by such rules. After the filing of the Transition Report on Form 10-K, our annual
reports on Form 10-K will cover the calendar year January 1 to December 31.
Financial
Condition
We
had cash and cash equivalents of approximately $5.9 million as of September 30, 2014 and approximately $3.8 million as of December
31, 2014. We believe that our existing working capital and the proceeds of
this offering should be sufficient to fund our operations during the 2015 year. This estimate is based on our current planned
operations and is subject to changes in our plans and uncertainties inherent in our business, and we may need to seek to replenish
our existing cash and cash equivalents sooner than we expect.
Since
our fiscal 2010 year, we have not generated commercial revenues from marketing or selling any drugs or other products. We do not
expect to generate product revenue in the foreseeable future, except to the extent that the FDA grants marketing approval for
our Epinephrine PFS syringe product and we successfully commercialize that product in the United States. We expect to incur increased
operating losses as we undertake to commercialize our Epinephrine PFS product and continue to advance our product candidates through
the development and regulatory process. In addition to increasing research and development expenses, we expect general and administrative
costs to increase as we add personnel and other administrative expenses associated with our development and commercialization
efforts. We will need to generate significant revenues to achieve profitability, and might never do so.
In
the future, we will be dependent upon revenues from commercialization of our product candidates, funding from third parties such
as proceeds from debt or equity financings, funded research and development payments or payments under collaborative agreements,
in order to maintain our operations and meet our obligations. There is no guarantee that we will generate significant revenues
from the commercialization of our Epinephrine PFS product or any of our product candidates, or that additional debt equity or
other funding will be available to us on acceptable terms, or at all. If we fail to generate adequate revenues or obtain additional
funding when needed, we would be forced to scale back or terminate our operations, or to seek to merge with or to be acquired
by another company.
Company
Information
We
are incorporated under the laws of the State of Delaware. Our principal executive offices are located at 11682 El Camino Real,
Suite 300, San Diego, CA 92130, and our telephone number is (858) 997-2400. Our website address is: www.adamispharmaceuticals.com.
We have included our website address as a factual reference and do not intend it to be an active link to our website. The information
that can be accessed through our website is not part of this prospectus, and investors should not rely on any such information
in deciding whether to purchase our securities.
The
Offering |
Common
stock offered by us pursuant to this prospectus supplement |
2,000,000
shares. |
Common
stock to be outstanding after this offering |
12,667,780 shares. |
Over-allotment
option |
We
have granted the underwriters a 30-day option to purchase up to 300,000 additional shares of common stock at a price of $5.00
per share to cover over-allotments, if any. |
Use
of proceeds |
We
intend to use the net proceeds from the sale of the securities offered by this prospectus for general corporate purposes,
which include, without limitation, hiring additional personnel, and other expenditures relating to our anticipated commercial
launch of our Epinephrine PFS syringe product (if the FDA grants marketing approval for the product), research and development
and clinical trial expenditures, acquisitions of new technologies or products, the repayment, refinancing, redemption or repurchase
of future indebtedness or capital stock and working capital. |
Dividend
policy |
We
do not anticipate paying any cash dividends on our common stock. |
NASDAQ
Capital Market symbol |
Our
common stock is listed on The NASDAQ Capital Market under the symbol “ADMP.” |
Risk
factors |
Investing
in our securities involves significant risks. See “Risk Factors” beginning on page S-8 of this prospectus
supplement and on page 5 of the accompanying prospectus and the documents incorporated by reference herein. |
Unless
we indicate otherwise, all information in this prospectus is based on 10,651,940 shares of common stock outstanding as of December
31, 2014, and excludes:
|
• |
approximately 1,339,722
shares of our common stock issuable upon exercise of outstanding stock options under our equity incentive plans with
exercise prices ranging from $3.06 to $12.75 and having a weighted average exercise price of $5.41 per share as of
December 31, 2014, approximately 11,184 shares issuable upon the vesting of outstanding restricted stock units awarded
under our equity incentive plans, as of December 31, 2014, and approximately 6,434 shares of common stock that may be
issued in the future pursuant to a consulting agreement; |
|
|
|
|
• |
approximately 1,753,735 shares of our common stock issuable upon
the exercise of outstanding warrants, other than the warrants described in the bullet point below, at a weighted average exercise
price of $4.18 per share as of December 31, 2014; |
|
|
|
|
• |
approximately 647,314 shares of our common stock issuable upon
exercise of exercise of warrants that we issued in our June 2013 private placement transaction (the “June Warrants”)
at a current exercise price of $3.40 per share; and |
|
|
|
|
• |
1,418,439 shares of Series A Convertible Preferred Stock, convertible
on a one-for-one basis into 1,418,439 shares of common stock, and outstanding warrants to purchase up to 1,418,439 shares
of common stock at an exercise price of $3.40 per share (subject to certain beneficial ownership limitations), that we issued
in our August 2014 private placement transaction. |
The
exercise price of the June Warrants is subject to “full-ratchet” anti-dilution provisions, providing for an
adjustment to the exercise price of the June Warrants (and, in certain circumstances, the number of shares issuable upon
exercise) upon certain issuance by us of shares of our common stock or common stock equivalents at a price per share below
$3.40, the current exercise price of the June Warrants.
Unless
we specifically state otherwise, all information in this prospectus supplement assumes no exercise by the underwriters
of their option to purchase up to an additional 300,000 shares of common stock to cover over-allotments, if any. |
RISK
FACTORS
Any
investment in our common stock or other securities involves a high degree of risk. Investors should carefully consider the risks
described below and all of the information contained in this prospectus before deciding whether to purchase the securities offered
hereby. Our business, financial condition, results of operations and prospects could be materially and adversely affected by these
risks if any of them actually occur. The risks and uncertainties described below are not the only ones we face. Additional risks
not currently known to us or other factors not perceived by us to present significant risks to our business at this time also
could adversely affect our business, operating results and financial conditions, as well as adversely affect the value of an investment
in our securities. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the
risks we face as described below and elsewhere in this prospectus.
Risks
Related to our Business
We
have incurred losses since our inception, and we anticipate that we will continue to incur losses. We may never achieve or sustain
profitability.
We
incurred net losses of approximately $5.0 million for the six months ended September 30, 2014, approximately $8.2 million for
the year ended March 31, 2014, and approximately $7.2 million for the year ended March 31, 2013. From inception through September
30, 2014, we have an accumulated deficit of approximately $51.1 million. These losses will increase as we continue our research
and development activities, seek regulatory approvals for our product candidates and commercialize any approved products. These
losses will cause, among other things, our stockholders’ equity and working capital to decrease. Any future earnings and
cash flow from operations of our business are dependent on our ability to further develop our products and on revenues and profitability
from sales of products.
There
can be no assurance that we will be able to generate sufficient product revenue to become profitable at all or on a sustained
basis. Even if we generate revenues, we expect to have quarter-to-quarter fluctuations in revenues and expenses, some of which
could be significant, due to research, development, clinical trial, marketing and manufacturing expenses and activities. If our
product candidates fail in clinical trials or do not gain regulatory approval, or if our products do not achieve market acceptance,
we may never become profitable. As we commercialize and market products, we will need to incur expenses for product marketing
and brand awareness and conduct significant research, development, testing and regulatory compliance activities that, together
with general and administrative expenses, could result in substantial operating losses for the foreseeable future. Even if we
do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Our
auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain
further financing.
Our
audited financial statements for the year ended March 31, 2014, were prepared under the assumption that we would continue our
operations as a going concern. Our independent registered public accounting firm has included a “going concern” explanatory
paragraph in its report on our financial statements for the years ended March 31, 2014 and 2013, indicating that we have sustained
substantial losses from continuing operations and have used, rather than provided, cash in our continuing operations, and that
these factors raise substantial doubt about our ability to continue as a going concern. Uncertainty concerning our ability to
continue as a going concern may hinder our ability to obtain future financing. Continued operations and our ability to continue
as a going concern are dependent on our ability to obtain additional funding in the near future and thereafter, and there are
no assurances that such funding will be available at all or will be available in sufficient amounts or on reasonable terms. Our
financial statements do not include any adjustments that may result from the outcome of this uncertainty. Without additional funds
from debt or equity financings, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions,
we will exhaust our resources and will be unable to continue operations. If we cannot continue as a viable entity, our stockholders
would likely lose most or all of their investment in us.
In
preparing our consolidated financial statements, our management determined that our disclosure controls and procedures, and that
our internal controls over financial reporting, were ineffective as of March 31 and
September 30, 2014, which could result in material misstatements in our financial statements. If we continue to fail to comply
with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover additional
material weaknesses and other deficiencies in our internal controls over financial reporting, our stock price could decline and
raising capital could be more difficult.
Our
management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined
in Rule 13a-15(f) under the Exchange Act. As of March 31 and September 30, 2014, our management determined that our disclosure
controls and procedures were ineffective, and that there was a material weakness in our internal controls over financial reporting,
due to insufficient segregation of duties in our finance and accounting function because of limited personnel, based on the absence
of finance and accounting personnel other than the Chief Financial Officer. This resulted in not ensuring appropriate segregation
of duties between incompatible functions, and made it more difficult to ensure review of financial reporting issues sufficiently
in advance of the dates on which filings are required to be made with the SEC and to ensure that financial information is adequately
analyzed and reviewed on a timely basis to detect misstatements. These above deficiencies represent a material weakness in our
internal control over financial reporting given that they result in a reasonable possibility that a material misstatement to the
annual or interim financial statements would not have been prevented or detected. In addition, management determined that our
disclosure controls and procedures, and that our internal controls over financial reporting, had several significant deficiencies
which did not rise to the level of material weaknesses. Because the material weaknesses and significant deficiencies identified
by our management will require significant financial resources to address, we expect to continue to experience these material
weaknesses and significant deficiencies for the foreseeable future.
We
intend to address the weaknesses identified above by increasing the oversight and review procedures of the board of directors
with regard to financial reporting, financial processes and procedures and internal control procedures; where possible preparing
and reviewing SEC filings farther in advance of required filing dates; and when funding is available, hiring additional finance
and accounting personnel. Nevertheless, there can be no assurances that we will have enough financial resources to remedy our
current material weaknesses and significant deficiencies.
If
remedial measures that we intend to take are insufficient to address the ineffectiveness of our disclosure controls and procedures
and our internal controls over financial reporting, or if other material weaknesses or significant deficiencies in our internal
controls are discovered or occur in the future and the ineffectiveness of our disclosure controls and procedures continues, we
may fail to meet our future reporting obligations on a timely basis, our consolidated financial statements may contain material
misstatements, we could be required to restate our prior period financial results, our operating results may be harmed, and we
could become subject to class action litigation. Internal control deficiencies and ineffective disclosure controls and procedures
could also cause investors to lose confidence in our reported financial information. We can give no assurance that the measures
we plan to take in the future will remediate the ineffectiveness of our disclosure controls and procedures or that any material
weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate
internal control over financial reporting or adequate disclosure controls and procedures or circumvention of these controls. In
addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures
may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated
financial statements. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could
be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could
decline.
Risks
Related to this Offering
You
will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the
future.
You
will incur immediate and substantial dilution as a result of this offering. After giving effect to the sale by us of up to 2,000,000
shares offered in this offering a public offering price of $5.00 per share, and after deducting the underwriters’ discounts
and commissions and estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of
$3.97 per share. In addition, in the past, we issued options and warrants to acquire shares of common stock. To the extent these
securities are ultimately exercised or converted, you will sustain additional future dilution. In addition, exercise of the warrants
that we issued in our past private placement transactions,
or exercise of other outstanding options or warrants, could result in there being a significant number of additional shares outstanding
and dilution to our stockholders.
Because
we will have broad discretion and flexibility in how the net proceeds from this offering are used, we may use the net proceeds
in ways in which you disagree.
We
currently intend to use the net proceeds from this offering for general corporate purposes, which include, without
limitation, hiring additional personnel and other expenditures relating to our anticipated commercial launch of our
Epinephrine PFS syringe product (if the FDA grants marketing approval for the product), research and development and clinical
trial expenditures, the repayment, refinancing, redemption or repurchase of future indebtedness or capital stock. We may also
uses the proceeds to acquire or invest in complementary products, services, technologies or other assets, although we have no
agreements or understandings with respect to any acquisitions or investments at this time. See “Use of Proceeds”
on page S-14 of this prospectus supplement. Other than as described in the “Use of Proceeds” section, we have not
allocated specific amounts of the net proceeds from this offering for any of the foregoing purposes. Accordingly, our
management will have significant discretion and flexibility in applying the net proceeds of this offering. You will be
relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the
opportunity, as part of your investment decision, to assess whether the net proceeds are being used appropriately. It is
possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return for you. The failure
of our management to use such funds effectively could have a material adverse effect on our business, financial condition,
operating results and cash flow.
The
price of our common stock may be volatile.
The
market price of our common stock may fluctuate substantially. For example, from April 2013 to December 31, 2014, the market
price of our common stock, adjusted retroactively to give effect to our 1-for-17 reverse split of the common stock in December
2013, has fluctuated between $2.82 and $12.92. The price of our common stock that will prevail in the market after this offering
may be higher or lower than the price that you have paid, depending on many factors, some of which are beyond our control and
may not be related to our operating performance. Market prices for securities of early-stage pharmaceutical, biotechnology and
other life sciences companies have historically been particularly volatile. Some of the factors that may cause the market price
of our common stock to fluctuate include:
| • | relatively
low trading volume, which can result in significant volatility in the market price of
our common stock based on a relatively smaller number of trades and dollar amount of
transactions; |
| • | the
timing and results of our current and any future preclinical or clinical trials of our
product candidates; |
| • | the
entry into or termination of key agreements, including, among others, key collaboration
and license agreements; |
| • | the
results and timing of regulatory reviews relating to the approval of our product candidates; |
| • | the
initiation of, material developments in, or conclusion of, litigation to enforce or defend
any of our intellectual property rights; |
| • | failure
of any of our product candidates, if approved, to achieve commercial success; |
| • | general
and industry-specific economic conditions that may affect our research and development
expenditures; |
| • | the
results of clinical trials conducted by others on products that would compete with our
product candidates; |
| • | issues
in manufacturing our product candidates or any approved products; |
| • | the
loss of key employees; |
| • | the
introduction of technological innovations or new commercial products by our competitors; |
| • | changes
in estimates or recommendations by securities analysts, if any, who cover our common
stock; |
| • | future
sales of our common stock; |
| • | period-to-period
fluctuations in our financial results; |
| • | publicity
or announcements regarding regulatory developments relating to our products; |
| • | period-to-period
fluctuations in our financial results, including our cash and cash equivalents balance,
operating expenses, cash burn rate or revenue levels; |
| • | common
stock sales in the public market by one or more of our larger stockholders, officers
or directors; |
| • | our
filing for protection under federal bankruptcy laws; |
| • | a
negative outcome in any litigation or potential legal proceeding; or |
| • | other
potentially negative financial announcements, such as a review of any of our filings
by the SEC, changes in accounting treatment or restatement of previously reported financial
results or delays in our filings with the SEC. |
The
stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of
individual companies. These broad market fluctuations may also adversely affect the trading price of our common stock. In the
past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted
class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs
and diversion of management attention and resources, which could significantly harm our profitability and reputation.
Future
sales of substantial amounts of our common stock, or the possibility that such sales could occur, could adversely affect the market
price of our common stock.
Future
sales in the public market of our common stock, including shares offered by the prospectus supplement or shares issued upon exercise
of our outstanding stock options, warrants or convertible securities, or the perception by the market that these issuances or
sales could occur, could lower the market price of our common stock or make it difficult for us to raise additional capital. As
of December 31, 2014, we had approximately 10,651,940 shares of common stock issued and outstanding, substantially all of which
we believe may be sold publicly, subject in some cases to volume and other limitations, provisions or limitations in registration
rights agreements, or prospectus-delivery or other requirements relating to the effectiveness and use of registration statements
registering the resale of such shares.
As
of December 31, 2014, we had reserved for issuance approximately 1,339,722 shares of our common stock issuable upon the
exercise of outstanding stock options under our equity incentive plans at a weighted-average exercise price of $5.41 per
share, and we had outstanding warrants to purchase shares of common stock as described in the next paragraph below. Subject
to applicable vesting requirements, upon exercise of these options or warrants, the underlying shares may be resold into the
public market, subject in some cases to volume and other limitations or prospectus-delivery requirements pursuant to
registration statements registering the resale of such shares. In the case of outstanding options or warrants that have
exercise prices that are below the market price of our common stock from time to time, our stockholders would experience
dilution upon the exercise of these options.
Some
of our outstanding warrants may result in dilution to our stockholders.
As
of December 31, 2014, we had outstanding warrants, other than the warrants described in the next sentence, to purchase approximately
1,753,735 shares of common stock at a weighted average exercise price of $4.18 per share. As of December 31, 2014, approximately
647,314 shares of our common stock were issuable upon exercise of warrants that we issued in our June 2013 private placement transaction
(the “June Warrants”) at a current exercise price of $3.40 per share, approximately 1,418,439 shares of our common
stock were issuable (subject to certain beneficial ownership limitations) upon exercise of warrants that we issued in our August
2014 private placement transaction at an exercise price of $3.40 per share, and 1,418,439 shares of Series A Convertible Preferred
Stock were convertible on a one-for-one basis (subject to certain beneficial ownership limitations) into 1,418,439 shares of common
stock. The June Warrants contained full-ratchet anti-dilution provisions that will be triggered, and that will provide for a reduction
in the exercise price of the June Warrants (and, in certain circumstances, the number of shares issuable upon exercise), upon
any issuance by us of shares of our common stock or common stock equivalents at a price per share below the then-exercise price
of the June Warrants, subject to some exceptions. In the event of conversion of shares of Series A Preferred, or exercise of warrants
that have exercise prices that are below the market price of our common stock from time to time, our stockholders would experience
dilution upon the conversion of such shares or exercise of such warrants.
Our
principal stockholders have significant influence over us, they may have significant influence over actions requiring stockholder
approval, and your interests as a stockholder may conflict with the interests of those persons.
Based
on the number of outstanding shares of our common stock held by our stockholders as of December 31, 2014, our directors, executive
officers and their respective affiliates owned approximately 6% of our outstanding shares of common stock and our largest stockholder
owned approximately 16% of the outstanding shares of our common stock. As a result, those stockholders have the ability to exert
a significant degree of influence with respect to the outcome of matters submitted to our stockholders for approval, including
the election of directors and any merger, consolidation or sale of all or substantially all of our assets. The interests of these
persons may not always coincide with our interests or the interests of our other stockholders. This concentration of ownership
could harm the market price of our common stock by (i) delaying, deferring or preventing a change in corporate control, (ii) impeding
a merger, consolidation, takeover or other business combination involving us, or (iii) discouraging a potential acquirer
from making a tender offer or otherwise attempting to obtain control of us. The significant concentration of stock ownership may
adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist
or arise.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement contains forward-looking statements. Such statements may include, without limitation, statements relating
to: our expectations for growth; estimates of future revenue; our sources and uses of cash; our liquidity needs; our ability to
obtain sufficient funding to support our planned activities; our current or planned clinical trials or research and development
activities; product development timelines; our future products; regulatory matters; anticipated dates for commencement of clinical
trials; anticipated completion dates of clinical trials; anticipated dates for meetings with regulatory authorities and submissions
to obtain required regulatory marketing approvals’ anticipated dates for commercial introduction of products; expense, profits,
cash flow balance sheet; guidance on future periods; and other statements concerning our future operations and activities. Such
forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development
and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations
and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual
results and developments to differ materially from those expressed or implied in such statements.
In
some cases, you can identify forward-looking statements by terminology, such as “expects,” “anticipates,”
“intends,” “estimates,” “plans,” “believes,” “seeks,” “may,”
“should”, “could” or the negative of such terms or other similar expressions. 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 throughout this prospectus
supplement.
You
should read this prospectus supplement and the accompanying prospectus and the documents that we reference herein and therein
and have filed as exhibits to the registration statement of which this prospectus supplement is part, completely and with the
understanding that our actual future results may be materially different from what we expect. You should assume that the information
appearing in this prospectus supplement and the accompanying prospectus is accurate as of the date on the front cover of this
prospectus supplement only. Because the risk factors referred to elsewhere in the prospectus supplement 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 forward-looking statements. Further, any forward-looking statement speaks only as of the date
on which it is made, and except as may be required by applicable law, 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. 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. We qualify all of the information
presented in this prospectus supplement and the accompanying prospectus, and particularly our forward-looking statements, by these
cautionary statements.
USE
OF PROCEEDS
We
estimate that the net proceeds from this offering, after deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us, will be approximately $9,200,000 million (or approximately $10,610,000 million if the underwriters' over-allotment
option is exercised in full).
We
currently intend to use the net proceeds from this offering for general corporate purposes, which include, without limitation,
hiring additional personnel, and other expenditures relating to our anticipated commercial launch of our Epinephrine PFS syringe
product (if the FDA grants marketing approval for the product), research and development and clinical trial expenditures, the
repayment, refinancing, redemption or repurchase of future indebtedness or capital stock. We may also uses the proceeds to acquire
or invest in complementary products, services, technologies or other assets, although we have no agreements or understandings
with respect to any acquisitions or investments at this time. We do not intend to use a material portion of the net proceeds from
this offering for research and development of our cancer and biotechnology product candidates and technologies.
We
have not determined the amounts we plan to spend on any of the areas listed above or the timing of these expenditures. As a result,
our management will have broad discretion to allocate the net proceeds from this offering. Pending application of the net proceeds
as described above, we expect to invest the net proceeds in short-term, interest-bearing, investment-grade securities pursuant
to our investment policy.
DILUTION
If
you invest in our common stock, your investment will be diluted immediately to the extent of the difference between the public
offering price per share of common stock you purchase in this offering, and the pro forma net tangible book value per share of
common stock immediately after this offering.
Pro
forma net tangible book value represents the amount of our total tangible assets reduced by our total liabilities and
preferred stock. Tangible assets equal our total assets less goodwill and intangible assets. Pro forma net tangible book value per
share represents our pro forma net tangible book value divided by the number of shares of common stock outstanding. As of
September 30, 2014, our actual net tangible book value was $3,755,105 and our net tangible book value per share was
$0.36.
After
giving effect to the sale of the shares in this offering at the public offering price of $10,000,000, and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book
value as of September 30, 2014 would have been $12,955,105, or $1.03 per share. This represents an immediate increase in pro forma
net tangible book value of $0.67 per share to existing stockholders and immediate dilution of $3.97 per share to new investors
purchasing shares in the offering. The following table illustrates this per share dilution:
| | | |
| As of September 30, 2014 | | |
| Pro Forma, as Adjusted | |
| Assumed public offering price per share | | |
| | | |
$ | 5.00 | |
| Net tangible book value per share as of September 30, 2014 (1) | | |
$ | 0.36 | | |
| 0.36 | |
| Increase in pro forma net tangible book value per share attributable to new investors | | |
| | | |
$ | 0.67 | |
| Pro forma net tangible book value per share after giving effect to this offering | | |
| | | |
$ | 1.03 | |
| Dilution in net tangible book value per share to new investors | | |
| | | |
$ | 3.97 | |
| (1) | The
calculation of net tangible book value as of September 30, 2014, assumes no exercise
by the underwriters of their option to purchase up to additional 300,000 shares of common
stock to cover over-allotments, if any, and excludes the following: |
| • | approximately
1,339,722 shares of our common stock issuable upon exercise of outstanding stock options
under our equity incentive plans with exercise prices ranging from $3.06 to $12.75 and
having a weighted average exercise price of $5.41 per share as of December 31, 2014,
approximately 11,184 shares issuable upon the vesting of outstanding restricted stock units awarded under our equity
incentive
plans, as of December 31, 2014, and approximately 6,434 shares of common stock that
may be issued in the future pursuant to a consulting agreement; |
| • | approximately
1,753,735 shares of our common stock issuable upon the exercise of outstanding warrants,
other than the warrants described in the bullet point below, at a weighted average exercise
price of $4.18 per share as of December 31, 2014; |
| • | approximately
647,314 shares of our common stock issuable upon exercise of exercise of warrants that
we issued in our June 2013 private placement transaction (the “June Warrants”)
at a current exercise price of $3.40 per share; and |
| • | 1,418,439
shares of Series A Convertible Preferred Stock, convertible on a one-for-one basis into
1,418,439 shares of common stock, and outstanding warrants to purchase up to 1,418,439
shares of common stock at an exercise price of $3.40 per share (subject to certain beneficial
ownership limitations), that we issued in our August 2014 private placement transaction. |
The
exercise price of the June Warrants is subject to “full-ratchet” anti-dilution provisions, providing for an adjustment
to the exercise price of the June Warrants (and, in certain circumstances, the number of shares issuable upon exercise) upon certain
issuance by us of shares of our common stock or common stock equivalents at a price per share below $3.40, the current exercise
price of the June Warrants.
If
the underwriters’ over-allotment option is exercised in full, our adjusted pro forma net tangible book value following the
offering will be $1.12 per share, and the dilution to new investors in the offering will be $3.88 per share. If any shares are
issued upon exercise of outstanding options, warrants or convertible securities, new investors will experience further dilution.
CAPITALIZATION
The
following table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2014. Such information
is set forth on the following basis:
|
• |
on
an actual basis; and |
|
• |
on a pro forma
as adjusted basis, giving effect to the sale of the securities in this offering at a public offering price of $5.00 per share,
after deducting estimated underwriting discounts and commissions and estimated offering expenses. |
You
should read this table together with the section of this prospectus supplement entitled “Use of Proceeds” and with
the financial statements and related notes and the other information that we incorporated by reference into this prospectus supplement
and the accompanying prospectus, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that we file
from time to time with the SEC.
|
| As of September
30, 2014 |
|
| Actual | |
| Pro Forma as Adjusted | |
|
(in thousands, except per share amounts) |
Cash and cash equivalents |
$ | 5,943 | |
$ | 15,143 | |
|
| | |
| | |
Total indebtedness |
| 2,320 | |
| 2,320 | |
Stockholders’ equity: |
| | |
| | |
Preferred Stock, par value $0.0001 per share; 10,000,000 shares authorized; 1,418,439 shares of Series A Convertible Preferred Stock issued and outstanding |
| — | |
| — | |
Common Stock, par value $0.0001 per share; authorized, 100,000,000 shares; 10,859,059 shares issued; 10,551,519 shares outstanding; 12,551,519 shares outstanding as adjusted |
| | |
| | |
Additional paid-in capital |
| 63,927 | |
| 73,927 | |
|
| | |
| | |
Total stockholders’ equity (deficit) |
| 12,784 | |
| 21,984 | |
|
| | |
| | |
Total capitalization |
| 15,105 | |
| 24,305 | |
The
calculation in the table above, as of September 30, 2014, assumes no exercise by the underwriters of their option to purchase
up to additional 300,000 shares of common stock to cover over-allotments, if any, and excludes the following:
| • | approximately
1,339,722 shares of our common stock issuable upon exercise of outstanding stock options
under our equity incentive plans with exercise prices ranging from $3.06 to $12.75 and
having a weighted average exercise price of $5.41 per share as of December 31, 2014,
approximately 11,184 shares issuable upon the vesting of outstanding restricted stock units awarded under our equity
incentive
plans, as of December 31, 2014, and approximately 6,434 shares of common stock that
may be issued in the future pursuant to a consulting agreement; |
| • | approximately
1,753,735 shares of our common stock issuable upon the exercise of outstanding warrants,
other than the warrants described in the bullet point below, at a weighted average exercise
price of $4.18 per share as of December 31, 2014; |
| • | approximately
647,314 shares of our common stock issuable upon exercise of exercise of warrants that
we issued in our June 2013 private placement transaction (the “June Warrants”)
at a current exercise price of $3.40 per share; and |
| • | 1,418,439
shares of Series A Convertible Preferred Stock, convertible on a one-for-one basis into
1,418,439 shares of common stock, and outstanding warrants to purchase up to 1,418,439
shares of common stock at an exercise price of $3.40 per share (subject to certain beneficial
ownership limitations), that we issued in our August 2014 private placement transaction. |
The
exercise price of the June Warrants is subject to “full-ratchet” anti-dilution provisions, providing for an adjustment
to the exercise price of the June Warrants (and, in certain circumstances, the number of shares issuable upon exercise) upon certain
issuance by us of shares of our common stock or common stock equivalents at a price per share below $3.40, the current exercise
price of the June Warrants.
PRICE
RANGE OF COMMON STOCK
Our
common stock is traded on The NASDAQ Capital Market under the trading symbol “ADMP.” The following table sets forth
the range of high and low sales prices for the common stock as reported for the periods indicated below. Through December 12,
2013, our common stock was quoted on the OTCQB under the symbol “ADMP.” The following table shows the high and low
per share sale prices of our common stock for the periods indicated, and reflect the 1-for-17 reverse stock split of our common
stock that was effected in December 2013.
| |
High | |
Low |
Fiscal 2013 | |
| | | |
| | |
First Quarter (April 2012 - June 2012) | |
$ | 13.09 | | |
$ | 3.91 | |
Second Quarter (July 2012 - September 2012) | |
$ | 11.90 | | |
$ | 8.16 | |
Third Quarter (October 2012 - December 2012) | |
$ | 17.85 | | |
$ | 9.69 | |
Fourth Quarter (January 2013 - March 2013) | |
$ | 16.15 | | |
$ | 9.86 | |
Fiscal 2014 | |
| | | |
| | |
First Quarter (April 2013 - June 2013) | |
$ | 12.92 | | |
$ | 6.46 | |
Second Quarter (July 2013 - September 2013) | |
$ | 11.39 | | |
$ | 6.46 | |
Third Quarter (October 2013 - December 2013) | |
$ | 11.90 | | |
$ | 3.74 | |
Fourth Quarter (January 2014 - March 2014) | |
$ | 6.81 | | |
$ | 6.21 | |
First Quarter (April 2014 – June 2014) | |
$ | 7.02 | | |
$ | 4.78 | |
Second Quarter (July 2014 – September 2014) | |
$ | 5.07 | | |
$ | 2.82 | |
Third Quarter (October 2014 – December 2014) | |
$ | 6.17 | | |
$ | 3.85 | |
Fiscal 2015 | |
$ | | | |
$ | | |
First Quarter (January 1 – January 8, 2015) | |
$ | 6.99 | | |
$ | 6.14 | |
As
of January 7, 2015, there were approximately 109 holders of record common stock. The number of record holders was determined
from the records of our transfer agent and does not include beneficial owners of our common stock whose shares are held in
the names of various security brokers, dealers, and registered clearing agencies.
Dividend
Policy
We
have not previously declared or paid any dividends on our common stock. The payment of dividends on our common stock in the future
will depend on our profitability at the time, cash available for those dividends, and such other factors as our board of directors
may consider appropriate. We do not anticipate paying dividends on our common stock in the foreseeable future.
UNDERWRITING
We
entered into an underwriting agreement with the underwriters named below on January 9, 2015. Oppenheimer & Co. Inc.
is acting as the sole book-running manager and representative of the underwriters. The underwriting agreement provides for
the purchase of a specific number of shares of common stock by each of the underwriters. The underwriters’ obligations
are several, which means that each underwriter is required to purchase a specified number of shares, but is not responsible
for the commitment of any other underwriter to purchase shares. Subject to the terms and conditions of the underwriting
agreement, each underwriter has severally agreed to purchase the number of shares set forth opposite its name
below:
Underwriter | |
Number of Shares |
Oppenheimer & Co. Inc. | |
| 1,580,000 | |
CRT Capital Group LLC | |
| 140,000 | |
Maxim Group LLC
| |
| 140,000 | |
Mizuho Securities USA Inc. | |
| 140,000 | |
Total | |
| 2,000,000 | |
The
underwriters have agreed to purchase all of the shares offered by this prospectus (other than those covered by the over-allotment
option described below) if any are purchased.
The
shares of common stock offered hereby should be ready for delivery on or about January 14, 2015 against payment in immediately
available funds.
The
underwriters are offering the shares subject to various conditions and may reject all or part of any order. The representative
of the underwriters has advised us that the underwriters propose to offer the shares directly to the public at the public offering
price that appears on the cover page of this prospectus supplement. In addition, the representative may offer some of the shares
to other securities dealers at such price less a concession of $0.18 per share. After the shares are released for sale to the public,
the representative may change the offering price and other selling terms at various times.
We
have granted the underwriters an over-allotment option. This option, which is exercisable for up to 30 days after the date
of this prospectus supplement, permits the underwriters to purchase a maximum of 300,000 additional shares of common stock at a price of $5.00 per share from us to cover over-allotments, if any. If the
underwriters exercise all or part of this option, they will purchase shares covered by the option at the public offering
price that appears on the cover page of this prospectus supplement, less the underwriting discounts and commissions. If this
option is exercised in full, the total price to public will be $11,500,000, and the total proceeds to us will be $10,810,000. The
underwriters have severally agreed that, to the extent the over-allotment option is exercised, they will each purchase a
number of additional shares proportionate to the underwriter’s initial amount reflected in the foregoing
table.
The
following table provides information regarding the amount of the discounts and commissions to be paid to the underwriters by us,
before expenses:
| |
Per Share | |
Total Without Exercise of Over-Allotment Option | |
Total With Full Exercise of Over-Allotment Option |
Public offering price | |
$ | 5.00 | | |
$ | 10,000,000 | | |
$ | 11,500,000 | |
Underwriting discounts and commissions | |
| 0.30 | | |
| 600,000 | | |
| 690,000 | |
Proceeds, before expenses, to us | |
$ | 4.70 | | |
$ | 9,400,000 | | |
$ | 10,810,000 | |
We
estimate that our total expenses of the offering, excluding the estimated underwriting discounts and commissions, will be approximately
$200,000, which includes up to $115,000 that we have agreed to reimburse the underwriters for the fees and expenses incurred by them
in connection with the offering.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
We,
our officers and directors and an affiliated stockholder, have agreed to a 90-day “lock-up” with respect to shares
of our common stock and other of our securities that they beneficially own, including securities that are convertible into shares
of common stock and securities that are exchangeable or exercisable for shares of common stock. This means that, subject to certain
exceptions, for a period of 90 days following the date of this prospectus supplement, we and such persons may not offer, sell,
pledge or otherwise dispose of these securities without the prior written consent of Oppenheimer & Co. Inc.
Rules
of the Securities and Exchange Commission may limit the ability of the underwriters to bid for or purchase shares before the distribution
of the shares is completed. However, the underwriters may engage in the following activities in accordance with the rules:
| • | Stabilizing transactions
— The representative may make bids or purchases for the purpose of pegging, fixing or maintaining the price of the shares,
so long as stabilizing bids do not exceed a specified maximum. |
| • | Over-allotments and syndicate covering
transactions — The underwriters may sell more shares of our common stock in connection with this offering than the number
of shares than they have committed to purchase. This over-allotment creates a short position for the underwriters. This
short sales position may involve either “covered” short sales or “naked” short sales. Covered
short sales are short sales made in an amount not greater than the underwriters' over-allotment option to purchase additional
shares in this offering described above. The underwriters may close out any covered short position either by exercising
its over-allotment option or by purchasing shares in the open market. To determine how they will close the covered
short position, the underwriters will consider, among other things, the price of shares available for purchase in the open
market, as compared to the price at which they may purchase shares through the over-allotment option. Naked short sales
are short sales in excess of the over-allotment option. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are
concerned that, in the open market after pricing, there may be downward pressure on the price of the shares that could adversely
affect investors who purchase shares in this offering. |
| • | Penalty bids — If the representative
purchases shares in the open market in a stabilizing transaction or syndicate covering transaction, it may reclaim a selling
concession from the underwriters and selling group members who sold those shares as part of this offering. |
| • | Passive market making — Market
makers in the shares who are underwriters or prospective underwriters may make bids for or purchases of shares, subject to
limitations, until the time, if ever, at which a stabilizing bid is made. |
Similar
to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales or to stabilize the market
price of our common stock may have the effect of raising or maintaining the market price of our common stock or preventing or
mitigating a decline in the market price of our common stock. As a result, the price of the shares of our common stock may be
higher than the price that might otherwise exist in the open market. The imposition of a penalty bid might also have an effect
on the price of the shares if it discourages resales of the shares.
Neither
we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have
on the price of the shares. These transactions may occur on The NASDAQ Capital Market or otherwise. If such transactions are commenced,
they may be discontinued without notice at any time.
Electronic
Delivery of Prospectus Supplement : A prospectus supplement in electronic format may be delivered to potential
investors by one or more of the underwriters participating in this offering. The prospectus supplement in electronic format
will be identical to the paper version of such prospectus supplement. Other than the prospectus supplement in
electronic format, the information on any underwriter's website and any information contained in any other website
maintained by an underwriter is not part of this prospectus supplement, the accompanying prospectus or the registration
statement of which this prospectus supplement and the accompanying prospectus form a part.
Other Activities and
Relationships: The underwriters and certain of their affiliates are full service financial institutions engaged in various activities,
which may include securities trading, commercial and investment banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates
have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory
services for us, for which they received or will receive customary fees and expenses.
Notice
to Non-U.S. Investors
Belgium
The
offering is exclusively conducted under applicable private placement exemptions and therefore it has not been and will not
be notified to, and this document or any other offering material relating to the shares has not been and will not be approved
by, the Belgian Banking, Finance and Insurance Commission (“Commission bancaire, financière et des
assurances/Commissie voor het Bank, Financie en Assurantiewezen”). Any representation to the contrary is
unlawful.
Each
underwriter has undertaken not to offer sell, resell, transfer or deliver directly or indirectly, any units, or to take any steps
relating/ancillary thereto, and not to distribute or publish this document or any other material relating to the units or to the
offering in a manner which would be construed as: (a) a public offering under the Belgian Royal Decree of 7 July 1999 on the public
character of financial transactions; or (b) an offering of securities to the public under Directive 2003/71/EC which triggers
an obligation to publish a prospectus in Belgium. Any action contrary to these restrictions will cause the recipient and the Company
to be in violation of the Belgian securities laws.
France
Neither
this prospectus supplement nor any other offering material relating to the shares has been submitted to the
clearance procedures of the Autorité des marchés financiers in France. The shares have not been offered or sold
and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus supplement nor any
other offering material relating to the shares has been or will be: (a) released, issued, distributed or caused to be
released, issued or distributed to the public in France; or (b) used in connection with any offer for subscription or sale of
the shares to the public in France. Such offers, sales and distributions will be made in France only: (i) to qualified
investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint
d’investisseurs), in each case investing for their own account, all as defined in and in accordance with Articles
L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;
(ii) to investment services providers authorised to engage in portfolio management on behalf of third parties; or
(iii) in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code
monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the
Autorité des marchés financiers, does not constitute a public offer (appel public à
l’épargne). Such shares may be resold only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8
through L.621-8-3 of the French Code monétaire et financier.
United
Kingdom/Germany/Norway/The Netherlands
In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a
“Relevant Member State”) an offer to the public of any shares which are the subject of the offering contemplated
by this prospectus supplement may not be made in that Relevant Member State other than the offers contemplated in this
prospectus supplement in name(s) of Member State(s) where prospectus will be approved or passported for the purposes of a
non-exempt offer once this prospectus supplement has been approved by the competent authority in such Member State and
published and passported in accordance with the Prospectus Directive as implemented in name(s) of relevant Member State(s)
except that an offer to the public in that Relevant Member State of any shares may be made at any time under the following
exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
| (a) | to
legal entities which are authorised or regulated to operate in the financial markets
or, if not so authorised or regulated, whose corporate purpose is solely to invest in
securities; |
| (b) | to
any legal entity which has two or more of (1) an average of at least 250 employees during
the last financial year; (2) a total balance sheet of more than €43,000,000 and
(3) an annual net turnover of more than €50,000,000, as shown in its last annual
or consolidated accounts; |
| (c) | by
the representative to fewer than 100 natural or legal persons (other than qualified investors
as defined in the Prospectus Directive); or |
| (d) | in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided
that no such offer of shares shall result in a requirement for the publication by the
Company or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. |
For
the purposes of this provision, the expression an “offer to the public” in relation to any shares in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the
offer and any shares to be offered so as to enable an investor to decide to purchase any shares, as the same may be varied in
that Member State by any measure implementing the Prospectus Directive in that Member State and the expression
“Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant
Member State.
Each
underwriter has represented, warranted and agreed that:
| (a) | it
has only communicated or caused to be communicated and will only communicate or cause
to be communicated any invitation or inducement to engage in investment activity (within
the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA))
received by it in connection with the issue or sale of any shares in circumstances in
which section 21(1) of the FSMA does not apply to the Company; and |
| (b) | it
has complied with and will comply with all applicable provisions of the FSMA with respect
to anything done by it in relation to the shares in, from or otherwise involving the United
Kingdom. |
Israel
In
the State of Israel, the shares offered hereby may not be offered to any person or entity other than the
following:
| (a) | a
fund for joint investments in trust (i.e., mutual fund), as such term is defined in the
Law for Joint Investments in Trust, 5754-1994, or a management company of such a fund; |
| (b) | a
provident fund as defined in Section 47(a)(2) of the Income Tax Ordinance of the State
of Israel, or a management company of such a fund; |
| (c) | an
insurer, as defined in the Law for Oversight of Insurance Transactions, 5741-1981, (d)
a banking entity or satellite entity, as such terms are defined in the Banking Law (Licensing),
5741-1981, other than a joint services company, acting for their own account or for the
account of investors of the type listed in Section 15A(b) of the Securities Law 1968; |
| (d) | a
company that is licensed as a portfolio manager, as such term is defined in Section 8(b)
of the Law for the Regulation of Investment Advisors and Portfolio Managers, 5755-1995,
acting on its own account or for the account of investors of the type listed in Section
15A(b) of the Securities Law 1968; |
| (e) | a
company that is licensed as an investment advisor, as such term is defined in Section
7(c) of the Law for the Regulation of Investment Advisors and Portfolio Managers, 5755-1995,
acting on its own account; |
| (f) | a
company that is a member of the Tel Aviv Stock Exchange, acting on its own account or
for the account of investors of the type listed in Section 15A(b) of the Securities Law
1968; |
| (g) | an
underwriter fulfilling the conditions of Section 56(c) of the Securities Law, 5728-1968; |
| (h) | a
venture capital fund (defined as an entity primarily involved in investments in companies
which, at the time of investment, (i) are primarily engaged in research and development
or manufacture of new technological products or processes and (ii) involve above-average
risk); |
| (i) | an
entity primarily engaged in capital markets activities in which all of the equity owners
meet one or more of the above criteria; and |
| (j) | an
entity, other than an entity formed for the purpose of purchasing shares in this offering,
in which the shareholders equity (including pursuant to foreign accounting rules, international
accounting regulations and U.S. generally accepted accounting rules, as defined in the
Securities Law Regulations (Preparation of Annual Financial Statements), 1993) is in
excess of NIS 50 million. |
Any
offeree of the shares offered hereby in the State of Israel shall be required to submit written confirmation that it falls
within the scope of one of the above criteria. This prospectus supplement will not be distributed or directed to investors in
the State of Israel who do not fall within one of the above criteria.
Italy
The
offering of the shares offered hereby in Italy has not been registered with the Commissione Nazionale per la Società
e la Borsa (“CONSOB”) pursuant to Italian securities legislation and, accordingly, the shares offered hereby
cannot be offered, sold or delivered in the Republic of Italy (“Italy”) nor may any copy of this prospectus
supplement or any other document relating to the shares offered hereby be distributed in Italy other than to professional
investors (operatori qualificati) as defined in Article 31, second paragraph, of CONSOB Regulation No. 11522 of 1 July, 1998
as subsequently amended. Any offer, sale or delivery of the shares offered hereby or distribution of copies of this
prospectus supplement or any other document relating to the shares offered hereby in Italy must be made:
| (a) | by
an investment firm, bank or intermediary permitted to conduct such activities in Italy
in accordance with Legislative Decree No. 58 of 24 February 1998 and Legislative Decree
No. 385 of 1 September 1993 (the “Banking Act”); |
| (b) | in
compliance with Article 129 of the Banking Act and the implementing guidelines of the
Bank of Italy; and |
| (c) | in
compliance with any other applicable laws and regulations and other possible requirements
or limitations which may be imposed by Italian authorities. |
Sweden
This
prospectus supplement has not been nor will it be registered with or approved by Finansinspektionen (the Swedish Financial
Supervisory Authority). Accordingly, this prospectus supplement may not be made available, nor may the shares offered
hereunder be marketed and offered for sale in Sweden, other than under circumstances which are deemed not to require a
prospectus under the Financial Instruments Trading Act (1991: 980).
Switzerland
The
shares offered pursuant to this prospectus supplement will not be offered, directly or indirectly, to the public in
Switzerland and this prospectus supplement does not constitute a public offering prospectus as that term is understood
pursuant to art. 652a or art. 1156 of the Swiss Federal Code of Obligations. The company has not applied for a listing of the
shares being offered pursuant to this prospectus supplement on the SWX Swiss Exchange or on any other regulated securities
market, and consequently, the information presented in this prospectus supplement does not necessarily comply with the
information standards set out in the relevant listing rules. The shares being offered pursuant to this prospectus supplement
have not been registered with the Swiss Federal Banking Commission as foreign investment funds, and the investor protection
afforded to acquirers of investment fund certificates does not extend to acquirers of shares.
Investors
are advised to contact their legal, financial or tax advisers to obtain an independent assessment of the financial and tax consequences
of an investment in shares.
LEGAL
MATTERS
The
validity of the securities being offered under this prospectus by us will be passed upon for us by Weintraub Tobin Chediak Coleman
Grodin Law Corporation, Sacramento, California. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, New York, is acting
as counsel for the underwriters in connection with this offering.
EXPERTS
The
financial statements as of March 31, 2014 and 2013 and for the two years in the period ended March 31, 2014,
incorporated in this prospectus supplement by reference to our Annual Report on Form 10-K for the year ended March 31, 2014,
have been so incorporated in reliance on the report of Mayer Hoffman McCann P.C., an independent registered public accounting
firm, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available
to the public over the Internet at the SEC’s website at www.sec.gov. Copies of certain information filed by us with
the SEC are also available on our website at www.adamispharmaceuticals.com. Our website is not a part of this prospectus
and is not incorporated by reference in this prospectus. You may also read and copy any document we file at the SEC’s Public
Reference Room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the Public Reference Room.
This
prospectus is part of a registration statement we filed with the SEC. This prospectus supplement and the accompany prospectus
omit some information contained in the registration statement in accordance with SEC rules and regulations. You should review
the information and exhibits in the registration statement for further information on us and our consolidated subsidiaries and
the securities we are offering. Statements in this prospectus supplement and the accompany prospectus concerning any document
we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive
and are qualified by reference to these filings. You should review the complete document to evaluate these statements. You can
obtain a copy of the registration statement from the SEC at the address listed above or from the SEC’s Internet site.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
SEC allows us to incorporate by reference in this prospectus supplement and the accompanying prospectus much of the information
we file with the SEC, which means that we can disclose important information to you by referring you to those publicly available
documents. The information that we incorporate by reference in this prospectus is considered to be part of this prospectus. Because
we are incorporating by reference future filings with the SEC, this prospectus is continually updated and those future filings
may modify or supersede some of the information included or incorporated in this prospectus. This means that you must look at
all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus or in any document
previously incorporated by reference have been modified or superseded. This prospectus incorporates by reference the documents
listed below (File No. 001-36242) and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act (in each case, other than those documents or the portions of
those documents not deemed to be filed) until the offering of the securities under the registration statement is terminated or
completed:
| • | Annual
Report on Form 10-K for the year ended March 31, 2014, filed on June 23, 2014; |
| • | Quarterly
Report on Form 10-Q for the quarter ended June 30, 2014, filed on August 13, 2014; |
| • | Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014, filed on November 14, 2014; |
| • | Current
Reports on Form 8-K filed on April 1, 2014, August 20, August 26, 2014, November 12,
2014 and January 9, 2015; |
| • | Definitive
Proxy Statement, as amended, in connection with our annual meeting of stockholders filed
October 9 and October 14, 2014; and |
| • | The
description of our common stock contained in our Form 8-A filed on December 11, 2013. |
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (858) 997-2400 or by writing
to us at the following address:
Adamis
Pharmaceuticals Corporation
11682
El Camino Real, Suite 300
San
Diego, CA 92130
Attention:
Corporate Secretary
PROSPECTUS
ADAMIS PHARMACEUTICALS CORPORATION
$50,000,000.00
Common Stock
Preferred Stock
Warrants
Units
We may offer and sell, from time to time
in one or more offerings, any combination of common stock, preferred stock, warrants, or units having an aggregate initial offering
price not exceeding $50,000,000. The preferred stock, warrants, and units may be convertible into or exercisable or exchangeable
for common stock, preferred stock or other securities of ours.
Each time we sell a particular class or
series of securities, we will provide specific terms of the securities offered in a supplement to this prospectus. We may also
authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement
may also add, update or change information in this prospectus. You should read this prospectus and any prospectus supplement, as
well as the documents incorporated by reference or deemed to be incorporated by reference into this prospectus, carefully before
you invest in any securities.
This prospectus may not be used to offer
or sell our securities unless accompanied by a prospectus supplement relating to the offered securities.
Our common stock is presently listed
on The NASDAQ Capital Market under the symbol “ADMP.” On July 1, 2014, the last reported sale price of our common
stock was $4.75. The applicable prospectus supplement will contain information, where applicable, as to any other listing, if
any, of the securities covered by the applicable prospectus supplement.
These securities may be sold directly by
us, through dealers or agents designated from time to time, to or through underwriters or dealers or through a combination of these
methods on a continuous or delayed basis. See “Plan of Distribution” in this prospectus. We may also describe the plan
of distribution for any particular offering of our securities in a prospectus supplement. If any underwriters or agents are involved
in the sale of any securities in respect of which this prospectus is being delivered, we will disclose their names and the nature
of our arrangements with them in a prospectus supplement. The net proceeds we expect to receive from any such sale will also be
included in a prospectus supplement.
Investing in our securities involves
various risks. See “Risk Factors” contained herein for more information on these risks. Additional risks will be described
in the related prospectus supplements under the heading “Risk Factors.” You should review that section of the related
prospectus supplements for a discussion of matters that investors in our securities should consider.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy of
this prospectus or any accompanying prospectus supplement. Any representation to the contrary is a criminal offense.
The date of this prospectus is July 2,
2014.
TABLE OF CONTENTS
|
Page |
ABOUT THIS PROSPECTUS |
1 |
ABOUT THE COMPANY |
1 |
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS |
4 |
RISK FACTORS |
5 |
USE OF PROCEEDS |
22 |
THE SECURITIES WE MAY OFFER |
22 |
DESCRIPTION OF CAPITAL STOCK |
23 |
DESCRIPTION OF WARRANTS |
27 |
DESCRIPTION OF UNITS |
30 |
PLAN OF DISTRIBUTION |
30 |
LEGAL MATTERS |
32 |
EXPERTS |
32 |
WHERE YOU CAN FIND MORE INFORMATION |
33 |
INCORPORATION OF DOCUMENTS BY REFERENCE |
34 |
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration
statement that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration
process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one
or more offerings from time to time having an aggregate initial offering price of $50,000,000. This prospectus provides you with
a general description of the securities we may offer. Each time we offer securities, we will provide you with a prospectus supplement
that describes the specific amounts, prices and terms of the securities we offer. We may also authorize one or more free writing
prospectuses to be provided to you that may contain material information relating to these offerings and securities. We may also
add, update or change in the prospectus supplement any of the information contained in this prospectus or in the documents that
we have incorporated by reference into this prospectus, including without limitation, a discussion of any risk factors or other
special considerations that apply to these offerings or securities or the specific plan of distribution. If there is any inconsistency
between the information in this prospectus and a prospectus supplement or information incorporated by reference having a later
date, you should rely on the information in that prospectus supplement or incorporated information having a later date. You should
read carefully both this prospectus and any prospectus supplement together with additional information described below under the
caption “Where You Can Find More Information.”
This prospectus does not contain all the
information provided in the registration statement we filed with the SEC. You should read both this prospectus, including the section
titled “Risk Factors,” and the accompanying prospectus supplement, together with the additional information described
under the heading “Where You Can Find More Information.”
You should rely only on the information
contained or incorporated by reference in this prospectus or a prospectus supplement. We have not authorized any other person to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this
prospectus, any applicable prospectus supplement or any related free writing prospectus. This prospectus is not an offer to sell
securities, and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus, any prospectus supplement or any related free writing prospectus,
as well as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date on the front
of those documents only, regardless of the time of delivery of this prospectus, any applicable prospectus supplement or any related
free writing prospectus, or any sale of a security. Our business, financial condition, results of operations and prospects may
have changed since those dates.
Unless otherwise indicated, information
in this prospectus reflects a 1-for-17 reverse split of our outstanding common stock, effective at the close of business on December
12, 2013.
This prospectus contains summaries of certain
provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information.
All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to
herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this
prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES, UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Unless otherwise stated or the context requires
otherwise, references in this prospectus to “Adamis,” the “company,” or the “Company,” “we,”
“us,” or “our” refer to Adamis Pharmaceuticals Corporation and our subsidiaries, taken together.
ABOUT THE COMPANY
Company Overview
We are an emerging pharmaceutical
company focused on combining specialty pharmaceuticals and biotechnology to provide innovative medicines for patients and
physicians. We are currently primarily focused on our specialty pharmaceutical products. We are currently
developing four products in the allergy and respiratory markets, including a dry powder inhaler technology that we recently
acquired from 3M Company. Our goal is to create low cost therapeutic alternatives to existing treatments. Consistent across
all specialty pharmaceuticals product lines, we intend to pursue Section 505(b)(2) New Drug Application,
or NDA, regulatory approval filings with the U.S. Food and Drug Administration, or FDA, whenever applicable in order to
reduce the time needed to get to market and to save on costs, compared to Section 505(b)(1) NDA filings for new drug
products. We also have a number of biotechnology product candidates and technologies, including therapeutic vaccine and cancer
product candidates and technologies for patients with unmet medical needs in the global cancer market. To achieve our goals
and support our overall strategy, we will need to raise a substantial amount of funding and make substantial investments in
equipment, new product development and working capital.
The current status of our development programs
is as follows:
Product Portfolio
Specialty Pharmaceutical Products |
|
Target Indication |
|
Development Status |
Epinephrine PFS |
|
Anaphylaxis |
|
Submitted NDA |
APC-5000 DPI |
|
Asthma/COPD |
|
Phase 3 trial (1)(2) |
APC-1000 |
|
Asthma/COPD |
|
Phase 3 trial (1)(2) |
APC-3000 |
|
Allergic Rhinitis |
|
Phase 3 trial (1)(2) |
|
|
|
|
|
Biotechnology Products |
|
Target Indication |
|
Development Status |
TeloB-VAX (vaccine) |
|
Prostate Cancer |
|
Phase 2 trial(1) |
APC-100 |
|
Prostate Cancer |
|
Phase 1 trial(3) |
APC-200 |
|
Prostate Cancer |
|
Preclinical |
APC-300 |
|
Prostate Cancer |
|
Preclinical |
(1) |
Represents the next development or regulatory
stage that we intend to pursue, assuming that we have the financial resources to pursue any of these
opportunities. Even assuming the successful completion of one or more offerings pursuant to the registration statement of
which this prospectus is a part, we may not have the financial resources to pursue these opportunities. |
(2) |
A single Phase 3 trial, without previous Phase 1 or Phase 2 trials, is anticipated. |
(3) |
Phase 1/2a clinical trial has commenced. |
We have not received regulatory approval for any drugs or products.
Since our fiscal 2010 year, we have not generated commercial revenues from marketing or selling any drugs or other products.
Anaphylaxis; Epinephrine Pre-Filled Syringe
Our most advanced product
candidate, the Epinephrine Injection USP 1:1000 0.3mg Pre-filled Single Dose Syringe, or the Epinephrine PFS, is a simple
syringe designed to deliver a premeasured 0.3 mg dose of epinephrine for the treatment of anaphylaxis. The American Academy
of Allergy Asthma and Immunology, or AAAAI, defines anaphylaxis as a serious life-threatening allergic reaction. The most
common anaphylactic reactions are to foods, insect stings, medications and latex. According to
information published by AAAAI, up to 8% of U.S. children under the age of 18 have a food allergy, and approximately 38% of
those with a food allergy have a history of severe reactions. Anaphylaxis requires immediate medical treatment, including an
injection of epinephrine. We estimate that sales of prescription epinephrine products in 2013 were at least $900 million,
based on industry data. We cannot provide any assurances concerning any possible future rates of annual growth or whether
annual prescriptions will decline or grow. We believe that there is an opportunity for a simple, low-cost, intuitive
pre-filled syringe to compete in this market. With the help of our contract manufacturer, on May 28, 2014, we submitted
an NDA to the FDA pursuant to Section 505(b)(2) of the Food, Drug & Cosmetic Act, as amended, or FDCA, for approval
for sale of our Epinephrine PFS product. Assuming no unexpected regulatory delays, we hope to receive an approval by the end
of the first calendar quarter of 2015. Under goals established in connection with the Prescription Drug User Fee Act, or
PDUFA, the FDA’s guidance for the review and acting on standard NDA submissions that do not relate to new molecular
entities, which we believe will be the case with our Epinephrine PFS product, is ten months from the date of receipt of the
submission. However, the FDA’s review processes can extend beyond, and in some cases significantly beyond, anticipated
completion dates due to FDA requests for additional information or clarification, difficulties scheduling an advisory
committee meeting, FDA workload issues or other reasons. As a result, the dates of regulatory approval, if obtained, and
commercial introduction of our product could be delayed beyond our expectations.
Asthma and COPD
According to the
National Institute of Health, or NIH, asthma is a chronic lung disease that inflames and narrows the airways. Asthma causes recurring
periods of wheezing, chest tightness, shortness of breath, and coughing. Asthma affects people of all ages, but it most often
starts during childhood. According to information published by AAAAI, the number of
people in the U.S. with asthma is
approximately 25 million and growing. COPD, or chronic obstructive pulmonary disease, is a progressive disease
that makes it difficult to breathe. COPD can cause coughing that produces large amounts of mucus, wheezing, shortness of breath,
chest tightness, and other symptoms. According to the NIH, cigarette smoking is the leading cause of COPD. However, long-term exposure
to other lung irritants such as air pollution, chemical fumes, or dust may also contribute to COPD.
APC-5000 DPI. On December
27, 2013, we acquired assets relating to 3M’s patented Taper dry powder inhaler, or DPI, technology under development
by 3M for the treatment of asthma and COPD. The Taper DPI technology was under development by 3M as a device designed to
efficiently deliver dry powder by utilizing a 3M proprietary microstructured carrier tape. We intend to utilize the Taper DPI
assets initially to develop a pre-metered inhaler device, referred to as APC-5000 DPI, for the treatment of asthma and
COPD to deliver the same active ingredients as GlaxoSmithKline’s Advair Diskus®. The Advair Diskus® is a
dry powder inhaler, or DPI, product that combines fluticasone propionate, or fluticasone and salmeterol xinafoate,
or salmeterol. Fluticasone belongs to the family of medicines known as corticosteroids or steroids. We believe that,
once developed, the device can be utilized to deliver a variety of different drug compounds.
Upon completion of product development
and clinical trials and if required regulatory approvals are obtained, we intend to commercially market the APC-5000 product
to compete for a share of the Advair Diskus market with a branded generic version utilizing the acquired technology. Pursuant
to our agreement with 3M, the microstructured carrier tape will be supplied by 3M under a separate supply agreement to be
negotiated with 3M. We are currently preparing an investigational new drug application, or IND, to be submitted to the FDA
for approval to begin human testing of APC-5000 DPI. Assuming receipt of sufficient funding and if clinical trials are
initiated and successfully completed, we intend to pursue an NDA under Section 505(b)(2) of the FDCA to seek approval for
sale in the U.S. market. We also intend to seek to identify opportunities to market APC-5000 DPI based products outside of
the U.S. Pursuant to our August 1, 2013, agreement with 3M, we made an initial payment of $3.0 million to 3M and acquired an
exclusive license to the assets, and on December 27, 2013, we made a final payment to 3M of $7.0 million and the Taper
DPI assets were transferred to us.
Additional Allergy Products;
APC-1000 and APC-3000. Additional product candidates in our allergy and respiratory product pipeline include a steroid
hydrofluoroalkane, or HFA, metered dose inhaler product, referred to as APC-1000, for asthma and COPD and an HFA pressurized
metered dose nasal steroid for the treatment of seasonal and perennial allergic rhinitis, referred to as APC-3000. Inhaled
nasal steroid, or INS, products are sold under prescription for seasonal allergic rhinitis. Our product candidates, if
developed and approved for marketing, will target a small niche within the larger market for INS products.
Cancer
We believe that there is a significant need
for new products and therapies for the treatment of prostate cancer and other forms of cancer.
TeloB-VAX. In April 2011, we acquired
exclusive rights to patented telomerase-based cancer vaccine technology from the Regents of the University of California and the
Dana-Farber/Harvard Cancer Center. We intend to pursue development of the technology initially for what we believe may be a novel
cell-based vaccine product candidate for cancer, tentatively named TeloB-VAX. The technology is intended to activate the body’s
natural defense machinery to stimulate an immune response against one of nature’s most common tumor markers, telomerase reverse
transcriptase, or telomerase. We believe that a vaccine product, if developed, will utilize the patient’s own B cells as
antigen producing and antigen presenting cells. In a Phase 1 study completed at UCSD in castrate resistant prostate cancer patients,
the vaccine product candidate was shown to be safe and well tolerated. The vaccine was found to be immunogenic, and was shown to
induce a specific CD8 T cell response. More important, the T cells induced post-vaccination were shown to specifically kill prostate
cancer cells. This vaccine product candidate is covered by what we believe is a unique patented platform
technology using a cancer antigen marker, telomerase, that is increased in approximately 85%
of all tumors. We believe that this technology may represent an opportunity to program the immune system to mobilize killer lymphocytes
to combat cancer cells, including progenitor cancer stem cells that were shown to also express telomerase.
Prostate Cancer. According to the American Cancer Society,
or ACS, and the National Cancer Institute, or NCI, prostate cancer is the second-most common cancer in American men and the second
leading cause of cancer death in American men. The ACS estimated that for 2013 in the United States, approximately 238,000 new
cases of prostate cancer will be diagnosed and about 29,700 men will die of prostate cancer in 2013. In 2010, we licensed patents
and related intellectual property relating to three cancer drug candidates developed at the University of Wisconsin. We believe
these drug candidates, named APC-100, -200 and -300, may offer new treatment opportunities for prostate cancer.
APC-100 is the most advanced of the three
drug candidates. In animal studies conducted to date, APC-100 demonstrated anti-androgenic and anti-inflammatory activities against
prostate tumors growing in animal models and showed a strong safety profile in preclinical safety studies. In 2006, APC-100 was
awarded the NCI Rapid Award. The award is given for promising new drugs for the treatment of cancer and resulted in significant
funding for research and development of APC-100. APC-100 has demonstrated desirable pharmacological characteristics as an oral
or injectable anti-inflammatory and anti-androgenic drug candidate with multiple mechanisms of action. In studies conducted to
date, APC-100 decreased secretion of human PSA by human prostate cancer cells growing in mice and also
increased the time-to-tumor progression and survival of mice with prostate sensitive and castrate resistant tumors. In August 2011,
we announced the enrollment of the first patient in a Phase 1/2a prostate cancer clinical study relating to the use of the APC-100
product to treat men with castrate-resistant prostate cancer. The study began at the University of Wisconsin Carbone Cancer Center
and was extended to the Wayne State University Karmanos Cancer Institute. In the trial, each patient will be assessed for toxicity,
biochemical responses (PSA), radiographic and clinical responses.
APC-200 is a drug candidate for both
castrate-sensitive and castrate resistant prostate cancer. In 2007, APC-200 was awarded the NCI Rapid Award. APC-200 blocks
androgen-induced hydrogen peroxide production and inflammation and inhibits mouse prostate cancer. In animal studies
conducted to date, APC-200 was an excellent inhibitor of chronic inflammation, also completely inhibiting oxidase mediated
high rates of hydrogen peroxide production in vivo and delaying prostate cancer progression and death in the standard
mouse prostate cancer model. If we conclude pre-clinical development activities, such as GMP manufacturing of drug substance
and drug product, and pre-clinical safety, pharmacology and toxicology studies, we anticipate that
we would file and open an Adamis-sponsored IND relating to the clinical investigation of oral APC-200 in PCa patients with
castrate resistant prostate cancer, assuming adequate funding and no unexpected delays, although there are no assurances that we will file or
open such an IND.
APC-300 is a multi-targeted small
molecule therapeutic drug that we believe has the potential to demonstrate anti-inflammatory, pro-apoptotic anti-cancer
activities for prostate cancer patients, including men with advanced metastatic castrate resistance prostate cancer. In
pre-clinical in vitro studies conducted to date, APC-300 repeadedly demonstrated inhibition of human tumor cell growth
and killed both castrate-sensitive and castrate-resistant human prostate cancer tumors. It also materially decreased tumor
volumes and suppressed local metastasis in human to mouse xenograft models, where malignant human prostate, pancreas, or
melanoma tumor tissue was grafted onto athymic immunosuppressed experimental mice. For several reasons, including funding
limitations, we have not yet developed a clinical protocol and other materials for submission of an IND.
Corporate Background
Our principal executive offices are located
at 11682 El Camino Real, Suite 300, San Diego, CA 92130, and our telephone number is (858) 997-2400. Our website address is: www.adamispharmaceuticals.com.
We have included our website address as a factual reference and do not intend it to be an active link to our website. The information
that can be accessed through our website is not part of this prospectus, and investors should not rely on any such information
in deciding whether to purchase our common stock.
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking
statements. Such statements may include, without limitation, statements relating to: our expectations for growth; estimates of
future revenue; our sources and uses of cash; our liquidity needs; our ability to obtain sufficient funding to support our planned
activities; our current or planned clinical trials or research and development activities; product development timelines; our future
products; regulatory matters; anticipated dates for commencement of clinical trials;
anticipated completion dates of clinical trials; anticipated dates for meetings with regulatory authorities and submissions to
obtain required regulatory marketing approvals’ anticipated dates for commercial introduction of products; expense, profits,
cash flow balance sheet; guidance on future periods; and other statements concerning our future operations and activities. Such
forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development
and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations
and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual
results and developments to differ materially from those expressed or implied in such statements.
In some cases, you can identify forward-looking
statements by terminology, such as “expects,” “anticipates,” “intends,” “estimates,”
“plans,” “believes,” “seeks,” “may,” “should”, “could”
or the negative of such terms or other similar expressions. 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 throughout this prospectus.
You should read this prospectus and any
accompanying prospectus supplement and the documents that we reference herein and therein and have filed as exhibits to the registration
statement of which this prospectus is part, completely and with the understanding that our actual future results may be materially
different from what we expect. You should assume that the information appearing in this prospectus and any accompanying prospectus
supplement is accurate as of the date on the front cover of this prospectus or such prospectus supplement only. Because the risk
factors referred to elsewhere in the prospectus 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 forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made, and except as may be required by applicable
law, 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. 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. We qualify all of the information presented in this prospectus and any accompanying prospectus
supplement, and particularly our forward-looking statements, by these cautionary statements.
RISK FACTORS
Any investment in our common stock or
other securities involves a high degree of risk. Investors should carefully consider the risks described below and all of the information
contained in this prospectus before deciding whether to purchase the securities offered hereby. Our business, financial condition,
results of operations and prospects could be materially and adversely affected by these risks if any of them actually occur. The
risks and uncertainties described below are not the only ones we face. Additional risks not currently known to us or other factors
not perceived by us to present significant risks to our business at this time also could adversely affect our business, operating
results and financial conditions, as well as adversely affect the value of an investment in our securities. This prospectus also
contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below
and elsewhere in this prospectus.
Risks Related to Our Business, Industry and Financial Condition
We may never commercialize any of our products or earn
a profit.
We have not received regulatory approval
for any drugs or products. Since our fiscal 2010 year, we have not generated commercial revenues from marketing or selling, any
drugs or other products. We currently have no revenues from product sales, have not generated any revenue from operations for the
last four fiscal years, and expect to incur substantial net losses for the foreseeable future to further develop and commercialize
our product candidates and technologies. We may never be able to commercialize any of our product candidates or be able to generate
revenues from products sales. Because of the risks and uncertainties associated with developing and commercializing our specialty
pharmaceuticals, cancer and other product candidates, we are unable to predict when we may commercially introduce products, the extent of any future
losses or when we will become profitable, if ever. We may never successfully commercialize our product candidates, and our business
may fail.
Our auditors have expressed substantial doubt about our
ability to continue as a going concern, which may hinder our ability to obtain further financing.
Our audited financial statements for the
year ended March 31, 2014, were prepared under the assumption that we would continue our operations as a going concern. Our
independent registered public accounting firm has included a “going concern” explanatory paragraph in its report on
our financial statements for the years ended March 31, 2014 and 2013, indicating that we have sustained substantial losses
from continuing operations and have used, rather than provided, cash in our continuing operations, and that these factors raise
substantial doubt about our ability to continue as a going concern. Uncertainty concerning our ability to continue as a going concern
may hinder our ability to obtain future financing. Continued operations and our ability to continue as a going concern are dependent
on our ability to obtain additional funding in the near future and thereafter, and there are no assurances that such funding will
be available at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include
any adjustments that may result from the outcome of this uncertainty. Without additional funds from debt or equity financings,
sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions, we will exhaust our resources
and will be unable to continue operations. If we cannot continue as a viable entity, our stockholders would likely lose most or
all of their investment in us.
Our ability to raise capital is limited by applicable
laws and regulations.
This registration statement is a
“shelf” registration on Form S-3, which typically enables an issuer to raise additional capital on a more timely
and cost effective basis than through other means, such as registration of a securities offering under a Form S-1
registration statement. Our ability to raise additional capital through the sale and issuance of our equity securities is
limited by, among other things, Securities and Exchange Commission rules and regulations. Under current Securities and
Exchange Commission rules and regulations, to be eligible to use a Form S-3 registration statement for primary offerings
without restriction as to the amount of securities to be sold and issued, the aggregate market value of our common equity
held by non-affiliates (i.e., our “public float”) must be at least $75 million at the time we file the Form S-3
(calculated pursuant to the General Instructions to Form S-3). Furthermore, the Securities and Exchange Commission’s
rules and regulations require that we periodically re-evaluate the value of our public float (typically when we file our
Annual Report on Form 10-K) to determine whether we continue to satisfy the foregoing public float requirement. At the time
that we filed the registration statement on Form S-3 of which this prospectus is a part, we did not meet the $75 million
public float requirement. If we do not meet the $75 million public float requirement at the time that we file our next Annual
Report on Form 10-K for the year ended March 31, 2015, or at another applicable re-evaluation date, the amount we could raise
through primary offerings of our securities in any 12-month period using a Form S-3 registration statement would be limited
to an aggregate of one-third of our public float. Moreover, the market value of all securities sold by us under our Form S-3
registration statements during the 12-month period prior to any intended sale will be subtracted from that amount to
determine the amount we can then raise under our Form S-3 registration statements. If after we are or become subject to the
foregoing one-third limitation our public float increases to $75 million or more, such limitation would cease to apply until
we conduct our next re-evaluation.
We will require additional financing to continue as a
going concern.
We incurred a net loss of approximately
$8.2 million for the year ended March 31, 2014, and a net loss of approximately $7.2 million for the year ended March 31,
2013. At March 31, 2014, we had cash and cash equivalents of approximately $5.4 million, no accounts receivable and liabilities
of approximately $2.9 million. Absent additional funding, we believe that our cash and cash equivalents will be sufficient to fund
our operations only for a relatively short period of time. The development of our business will require substantial additional
capital in the future to commercialize our Epinephrine PFS product, proceed with development of the APC-5000 DPI product, and conduct
research and develop our cancer and vaccine technologies and other product candidates, as well as to fund our ongoing operations
and satisfy our obligations and liabilities. We have historically relied upon private sales of our equity or debt securities to
fund our operations. We currently have no credit facility or committed sources of capital. Delays in obtaining funding could adversely
affect our ability to develop and commercially introduce products and cause us to be unable to comply with our obligations under
outstanding instruments.
Our ability to obtain additional financing
will be subject to a number of factors, including market conditions, our operating performance and investor sentiment. If we are
unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue
the development or commercialization of one or more of our product candidates, restrict our operations or obtain funds by entering
into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price and our relationships
with third parties with whom we have business relationships, at least until additional funding is obtained. If we do not have sufficient
funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result
in our stockholders losing some or all of their investment in us.
Statements in this prospectus concerning our future plans
and operations are dependent on our ability to secure adequate funding and the absence of unexpected delays or adverse developments.
We may not be able to secure required funding.
The statements contained in this prospectus
concerning future events or developments or our future activities, such as concerning current or planned clinical trials, anticipated
research and development activities, anticipated dates for commencement of clinical trials, anticipated completion dates of clinical
trials, anticipated meetings with the FDA or other regulatory authorities concerning our product candidates, anticipated dates
for submissions to obtain required regulatory marketing approvals, anticipated dates for commercial introduction of products, and
other statements concerning our future operations and activities, are forward-looking statements that in each instance assume that
we are able to obtain sufficient funding in the near term and thereafter to support such activities and continue our operations
and planned activities in a timely manner. There can be no assurance that this will be the case. Also, such statements assume that
there are no significant unexpected developments or events that delay or prevent such activities from occurring. Failure to timely
obtain sufficient funding, or unexpected developments or events, could delay the occurrence of such events or prevent the events
described in any such statements from occurring which could adversely affect our business, financial condition and results of operations.
We have incurred losses since our inception, and we anticipate
that we will continue to incur losses. We may never achieve or sustain profitability.
We incurred net losses of approximately
$8.2 million for the fiscal year ended March 31, 2014, and a net loss of approximately $7.2 million for the year ended March
31, 2013. From inception through March 31, 2014, we have an accumulated deficit of approximately $46.1 million. These losses will
increase as we continue our research and development activities, seek regulatory approvals for our product candidates and commercialize
any approved products. These losses will cause, among other things, our stockholders’ equity and working capital to decrease.
Any future earnings and cash flow from operations of our business are dependent on our ability to further develop our products
and on revenues and profitability from sales of products.
There can be no assurance that we will be
able to generate sufficient product revenue to become profitable at all or on a sustained basis. Even if we generate revenues,
we expect to have quarter-to-quarter fluctuations in revenues and expenses, some of which could be significant, due to research,
development, clinical trial, marketing and manufacturing expenses and activities. If our product candidates fail in clinical trials
or do not gain regulatory approval, or if our products do not achieve market acceptance, we may never become profitable. As we
commercialize and market products, we will need to incur expenses for product marketing and brand awareness and conduct significant
research, development, testing and regulatory compliance activities that, together with general and administrative expenses, could
result in substantial operating losses for the foreseeable future. Even if we do achieve profitability, we may not be able to sustain
or increase profitability on a quarterly or annual basis.
Our limited operating history may make it difficult to
evaluate our business and our future viability.
We are in the relatively early stage of
operations and development of our current products and product candidates and have only a limited operating history on which to
base an evaluation of our business and prospects. Even if we successfully obtain additional funding, we are subject to the risks
associated with early stage companies with a limited operating history, including: the need for additional financings; the uncertainty
of research and development efforts resulting in successful commercial products, as well as the marketing and customer acceptance
of such products; unexpected issues with the FDA or other federal or state regulatory authorities; regulatory setbacks and delays;
competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; fluctuations in
expenses; and dependence on corporate partners and collaborators. Any failure to successfully address these risks and uncertainties
could seriously harm our business and prospects. We may not succeed given the technological, marketing, strategic and competitive
challenges we will face. The likelihood of our success must be considered in light of the expenses, difficulties, complications,
problems and delays frequently encountered in connection with the growth of a new business, the continuing development of new drug
technology, and the competitive and regulatory environment in which we operate or may choose to operate in the future.
Many of our potential products and technologies are in
early stages of development.
The development of new pharmaceutical products
is a highly risky undertaking, and there can be no assurance that any future research and development efforts we might undertake
will be successful. Our potential products in the cancer and viral fields will require extensive additional research and development
before any commercial introduction, as will research and development work on our allergy and respiratory products. There can be
no assurance that any future research, development or clinical trial efforts will result in viable products or meet efficacy standards.
Future clinical or preclinical results may be negative or insufficient to allow us to successfully market our product candidates.
Obtaining needed data and results may take longer than planned or may not be obtained at all. Any such delays or setbacks could
have a material adverse effect on our ability to achieve our financial goals.
We rely on third parties to conduct our clinical trials.
If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain,
or may experience delays in obtaining, regulatory approval, or may not be successful in commercializing our planned and future
products.
Like many companies our size, we do not
have the ability to conduct preclinical or clinical studies for our product candidates without the assistance of third parties
who conduct the studies on our behalf. These third parties are usually toxicology facilities and clinical research organizations,
or CROs, that have significant resources and experience in the conduct of pre-clinical and clinical studies. The toxicology facilities
conduct the pre-clinical safety studies as well as associated tasks connected with these studies. The CROs typically perform patient
recruitment, project management, data management, statistical analysis, and other reporting functions. We intend to rely on third
parties to conduct clinical trials of our product candidates and to use third party toxicology facilities and CROs for our pre-clinical
and clinical studies. We may also rely on academic institutions or clinical research organizations to conduct, supervise or monitor
some or all aspects of clinical trials involving our products.
Our reliance on these third parties for
development activities will reduce our control over these activities. If these third parties do not successfully carry out their
contractual duties or obligations or meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is
compromised due to the failure to adhere to our clinical protocols or for other reasons, we may be required to replace them, and
our clinical trials may be extended, delayed or terminated. Although we believe there are a number of third-party contractors that
we could engage to continue these activities, replacing a third-party contractor may result in a delay of the affected trial.
Delays in the commencement or completion of clinical testing
of our product candidates could result in increased costs and delay our ability to generate significant revenues.
The actual timing of commencement and completion
of clinical trials can vary dramatically from our anticipated timing due to factors such as funding limitations, scheduling conflicts
with participating clinicians and clinical institutions, and the rate of patient enrollment. Clinical trials involving our product
candidates may not commence or be completed as forecast. Delays in the commencement or completion of clinical testing could significantly
impact our product development costs. We do not know whether current or planned clinical trials will begin on time or be completed
on schedule, if at all. The commencement of clinical trials can be delayed for a variety of reasons, including delays in:
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obtaining required funding; |
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obtaining regulatory approval to commence a clinical trial; |
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reaching agreement on acceptable terms with prospective contract research organizations and clinical trial sites; |
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obtaining sufficient quantities of clinical trial materials for product candidates; |
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obtaining institutional review board approval to conduct a clinical trial at a prospective site; and |
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recruiting participants for a clinical trial. |
In addition, once a clinical trial has begun,
it may be suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors, including:
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failure to conduct the clinical trial in accordance with regulatory requirements; |
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inspection of the clinical trial operations or clinical trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold; |
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failure to achieve certain efficacy and/or safety standards; or |
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lack of adequate funding to continue the clinical trial. |
Clinical trials require sufficient participant
enrollment, which is a function of many factors, including the size of the target patient population, the nature of the trial protocol,
the proximity of participants to clinical trial sites, the availability of effective treatments for the relevant disease, the eligibility
criteria for our clinical trials and competing trials. Delays in enrollment can result in increased costs and longer development
times. Our failure to enroll participants in our clinical trials could delay the completion of the clinical trials beyond current
expectations. In addition, the FDA could require us to conduct clinical trials with a larger number of participants than we may
project for any of our product candidates. As a result of these factors, we may not be able to enroll a sufficient number of participants
in a timely or cost-effective manner.
Furthermore, enrolled participants may drop
out of clinical trials, which could impair the validity or statistical significance of the clinical trials. A number of factors
can influence the discontinuation rate, including, but not limited to: the inclusion of a placebo in a trial; possible lack of
effect of the product candidate being tested at one or more of the dose levels being tested; adverse side effects experienced,
whether or not related to the product candidate; and the availability of numerous alternative treatment options that may induce
participants to withdraw from the trial.
We may be required to suspend, repeat or terminate our
clinical trials if the trials are not well designed, do not meet regulatory requirements or the results are negative or inconclusive,
which may result in significant negative repercussions on business and financial condition.
Before regulatory approval for a potential
product can be obtained, we must undertake clinical testing on humans to demonstrate the tolerability and efficacy of the product.
We cannot assure you that we will obtain authorization to permit product candidates that are in the preclinical development phase
to enter the human clinical testing phase. In addition, we cannot assure you that any authorized preclinical or clinical testing
will be completed successfully within any specified time period by us, or without significant additional resources or expertise
to those originally expected to be necessary. We cannot assure you that such testing will show potential products to be safe and
efficacious or that any such product will be approved for a specific indication. Further, the results from preclinical studies
and early clinical trials may not be indicative of the results that will be obtained in later-stage clinical trials. In addition,
we or regulatory authorities may suspend clinical trials at any time on the basis that the participants are being exposed to unacceptable
health risks.
We are
subject to the risk of clinical trial and product liability lawsuits.
The testing of human health care product
candidates entails an inherent risk of allegations of clinical trial liability, while the marketing and sale of approved products
entails an inherent risk of allegations of product liability and associated adverse publicity. We currently maintain liability
insurance coverage of $1,000,000. Such insurance is expensive, difficult to obtain and may not be available in the future on acceptable
terms, or at all. As we conduct additional clinical trials and introduce products into the United States market, the risk of adverse
events increases and our requirements for liability insurance coverage are likely to increase. We are subject to the risk that
substantial liability claims from the testing or marketing of pharmaceutical products could be asserted against us in the future.
There can be no assurance that we will be able to obtain or maintain insurance on acceptable terms, particularly in overseas locations,
for clinical and commercial activities or that any insurance obtained will provide adequate protection against potential liabilities.
An inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability
claims could inhibit our business.
Moreover, our current and future coverages
may not be adequate to protect us from all of the liabilities that we may incur. If losses from liability claims exceed our insurance
coverage, we may incur substantial liabilities that exceed our financial resources. In addition, a product or clinical trial liability
action against us would be expensive and time-consuming to defend, even if we ultimately prevailed. If we are required to pay a
claim, we may not have sufficient financial resources and our business and results of operations may be harmed. A product liability
claim brought against us in excess of our insurance coverage, if any, could have a material adverse effect upon our business, financial
condition and results of operations.
We do not have commercial-scale manufacturing capability,
and we lack commercial manufacturing experience. We will likely rely on third parties to manufacture and supply our product candidates.
We do not own or operate manufacturing facilities
for clinical or commercial production of product candidates. We do not have any experience in drug formulation or manufacturing,
and we lack the resources and the capability to manufacture any of our product candidates on a clinical or commercial scale. Accordingly,
we expect to depend on third-party contract manufacturers for the foreseeable future. Any performance failure on the part of our
contract manufacturers could delay clinical development, regulatory approval or commercialization of our current or future product
candidates, depriving us of potential product revenue and resulting in additional losses.
The manufacture of pharmaceutical products
requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process
controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up initial
production.
These problems can include difficulties
with production costs and yields, quality control (including stability of the product candidate and quality assurance testing),
shortages of qualified personnel, and compliance with strictly enforced federal, state and foreign regulations. If our third-party
contract manufacturers were to encounter any of these difficulties or otherwise fail to comply with their obligations or under
applicable regulations, our ability to provide product candidates to patients in our clinical trials or commercially would be jeopardized.
If we file an application for marketing approval of the product and the FDA grants marketing approval, any delay or interruption
in the supply of product could delay the commercial launch of the product or impair our ability to meet demand for the product.
Difficulties in supplying products for clinical trials could increase the costs associated with our clinical trial programs and,
depending upon the period of delay, require us to commence new trials or qualify new manufacturers at significant additional expense,
possibly causing commercial delays or termination of the trials.
Our products can only be manufactured in
a facility that has undergone a satisfactory inspection by the FDA and other relevant regulatory authorities. For these reasons,
we may not be able to replace manufacturing capacity for our products quickly if we or our contract manufacturer(s) were unable
to use manufacturing facilities as a result of a fire, natural disaster (including an earthquake), equipment failure, or other
difficulty, or if such facilities were deemed not in compliance with the regulatory requirements and such non-compliance could
not be rapidly rectified. An inability or reduced capacity to manufacture our products would have a material adverse effect on
our business, financial condition, and results of operations.
We are subject to substantial government regulation, which
could materially adversely affect our business. If we do not receive regulatory approvals, we may not be able to develop and commercialize
our technologies.
We need FDA approval to market our proposed
Epinephrine PFS product and other products in the United States, and similar approvals from foreign regulatory authorities to market
products outside the United States. The production and marketing of our products and potential products and our ongoing research
and development, pre-clinical testing and clinical trial activities are subject to extensive regulation and review by numerous
governmental authorities in the United States and will face similar regulation and review for overseas approval and sales from
governmental authorities outside of the United States. The regulatory review and approval process, which may include evaluation
of preclinical studies and clinical trials of our products, as well as the evaluation of manufacturing processes and contract manufacturers’
facilities, is lengthy, expensive and uncertain. We have limited experience in filing and pursuing applications necessary to gain
regulatory approvals. Many of the product candidates that we are currently developing must undergo rigorous pre-clinical and clinical
testing and an extensive regulatory approval process before they can be marketed. This process makes it longer, more difficult
and more costly to bring our potential products to market, and we cannot guarantee that any of our potential products will be approved.
Many products for which FDA approval has been sought by other companies have never been approved for marketing. In addition to
testing and approval procedures, extensive regulations also govern marketing, manufacturing, distribution, labeling, and record-keeping
procedures. If we or our collaboration partners do not comply with applicable regulatory requirements, such violations could result
in non-approval, suspensions of regulatory approvals, civil penalties and criminal fines, product seizures and recalls, operating
restrictions, injunctions, and criminal prosecution.
Regulatory authorities generally have substantial
discretion in the approval process and may either refuse to accept an application, or may decide after review of an application
that the data submitted is insufficient to allow approval of the proposed product. If regulatory authorities do not accept or approve
our applications, they may require that we conduct additional clinical, preclinical or manufacturing studies and submit that data
before regulatory authorities will reconsider such application. We may need to expend substantial resources to conduct further
studies to obtain data that regulatory authorities believe is sufficient. Depending on the extent of these studies, approval of
applications may be delayed by several years, or may require us to expend more resources than we may have available. It is also
possible that additional studies may not suffice to make applications approvable. If any of these outcomes occur, we may be forced
to abandon our applications for approval.
Failure to obtain FDA or other required
regulatory approvals, or withdrawal of previous approvals, would adversely affect our business. Even if regulatory approval of
a product is granted, this approval may entail limitations on uses for which the product may be labeled and promoted, or may prevent
us from broadening the uses of products for different applications.
Following regulatory approval of any of our drug candidates,
we will be subject to ongoing regulatory obligations and restrictions, which may result in significant expense and limit our ability
to commercialize our potential products.
With regard to our drug candidates, if any,
approved by the FDA or by another regulatory authority, we are held to extensive regulatory requirements over product manufacturing,
labeling, packaging, adverse event reporting, storage, advertising, promotion and record keeping. Regulatory approvals may also
be subject to significant limitations on the indicated uses or marketing of the drug candidates. Potentially costly follow-up or
post-marketing clinical studies may be required as a condition of approval to further substantiate safety or efficacy, or to investigate
specific issues of interest to the regulatory authority. Previously unknown problems with the drug candidate, including adverse
events of unanticipated severity or frequency, may result in restrictions on the marketing of the drug, and could include withdrawal
of the drug from the market. In addition, the law or regulatory policies governing pharmaceuticals may change. New statutory requirements
may be enacted or additional regulations may be enacted that could prevent or delay regulatory approval of our drug candidates.
We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative
action, either in the United States or elsewhere. If we are not able to maintain regulatory compliance, we might not be permitted
to market our drugs and our business could suffer.
We intend to pursue Section 505(b)(2) regulatory approval
filings with the FDA for our products where applicable. Such filings involve significant costs, and we may also encounter difficulties
or delays in obtaining regulatory approval for our products.
We intend to pursue a Section 505(b)(2)
regulatory filing with the FDA in connection with our Epinephrine PFS, APC-1000, APC-3000 and APC-5000 DPI products and product
candidates. A Section 505(b)(2) NDA is a special type of NDA that enables the applicant to rely, in part, on the FDA’s findings
of safety and efficacy of an existing previously approved product, or published literature, in support of its application. Section
505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved
products. Such filings involve significant filing costs, including filing fees.
To the extent that a Section 505(b)(2)
NDA relies on clinical trials conducted for a previously approved drug product or the FDA’s prior findings of safety and
effectiveness for a previously approved drug product, the Section 505(b)(2) applicant must submit patent certifications in
its Section 505(b)(2) application with respect to any patents for the previously approved product on which the applicant’s
application relies and that are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly
known as the Orange Book. Specifically, the applicant must certify for each listed patent that, in relevant part, (1) the
required patent information has not been filed; (2) the listed patent has expired; (3) the listed patent has not expired,
but will expire on a particular date and approval is not sought until after patent expiration; or (4) the listed patent is
invalid, unenforceable or will not be infringed by the proposed new product. A certification that the new product will not infringe
the previously approved product’s listed patent or that such patent is invalid or unenforceable is known as a Paragraph IV
certification. If the applicant does not challenge one or more listed patents through a Paragraph IV certification, the FDA will
not approve the Section 505(b)(2) NDA application until all the listed patents claiming the referenced product have expired.
If the Section 505(b)(2) NDA applicant
has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to
the owner of the referenced NDA for the previously approved product and relevant patent holders within 20 days after the Section 505(b)(2)
NDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement suit against the
Section 505(b)(2) applicant. Under the FDCA, the filing of a patent infringement lawsuit within 45 days of receipt of the
notification regarding a Paragraph IV certification automatically prevents the FDA from approving the Section 505(b)(2) NDA
until the earliest to occur of 30 months beginning on the date the patent holder receives notice, expiration of the patent, settlement
of the lawsuit, or until a court deems the patent unenforceable, invalid or not infringed.
If we rely in our Section 505(b)(2) regulatory
filings on clinical trials conducted, or the FDA’s prior findings of safety and effectiveness, for a previously approved
drug product that involves patents referenced in the Orange Book, then we will need to make the patent certifications or the Paragraph
IV certification described above. If we make a Paragraph IV certification and the holder of the previously approved product that
we referenced in our application initiates patent litigation within the time periods described above, then any FDA approval of
our 505(b)(2) application would be delayed until the earlier of 30 months, resolution of the lawsuit, or the other events described
above. Accordingly, our anticipated dates of commercial introduction of our Epinephrine PFS product and or other products would
be delayed. In addition, we would incur the expenses, which could be material, involved with any such patent litigation. As a result,
we may invest a significant amount of time and expense in the development of our product only to be subject to significant delay
and patent litigation before our product may be commercialized, if at all.
In addition, even if we submit a Section
505(b)(2) application, such as we have submitted for the Epinephrine PFS product, and as we may submit for other future products,
that relies on clinical trials conducted for a previously approved product where there are no patents referenced in the Orange
Book for such other product with respect to which we have to provide certifications, we are subject to the risk that the FDA could
disagree with our reliance on the particular previously approved product that we chose to rely on, conclude that such previously
approved product is not an acceptable reference product, and require us instead to rely as a reference product on another previously
approved product that involves patents referenced in the Orange Book, requiring us to make the certifications described above and
subjecting us to additional delay, expense and the other risks described above.
If we fail to obtain acceptable prices or appropriate
reimbursement for our products, our ability to successfully commercialize our products will be impaired.
Government and insurance reimbursements
for healthcare expenditures play an important role for all healthcare providers, including physicians and pharmaceutical companies
such as Adamis, that plan to offer various products in the United States and other countries in the future. Physicians and patients
may decide not to order our products unless third-party payors, such as managed care organizations as well as government payors
such as Medicare and Medicaid, pay a substantial portion of the price of the products. Market acceptance and sales of our products
and potential products will depend in part on the extent to which reimbursement for the costs of such products will be available
from government health administration authorities, private health coverage insurers, managed care organizations, and other organizations.
In the United States, our ability to have our products eligible for Medicare, Medicaid or private insurance reimbursement will
be an important factor in determining the ultimate success of our products. If, for any reason, Medicare, Medicaid or the insurance
companies decline to provide reimbursement for our products, our ability to commercialize our products would be adversely affected.
Third-party payors may challenge the price
of medical and pharmaceutical products. Reimbursement by a third-party payor may depend on a number of factors, including a payor’s
determination that our product candidates are:
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not experimental or investigational; |
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effective; |
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medically necessary; |
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appropriate for the specific patient; |
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cost-effective; |
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supported by peer-reviewed publications; and |
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included in clinical practice guidelines. |
If purchasers or users of our products and
related treatments are not able to obtain appropriate reimbursement for the cost of using such products, they may forego or reduce
such use. Significant uncertainty exists as to the reimbursement status of newly approved pharmaceutical products, and there can
be no assurance that adequate third-party coverage will be available for any of our products. Even if our products are approved
for reimbursement by Medicare, Medicaid and private insurers, of which there can be no assurance, the amount of reimbursement may
be reduced at times or even eliminated. This would have a material adverse effect on our business, financial condition and results
of operations.
Legislative or regulatory reform of the healthcare system
may affect our ability to sell our products profitably.
In both the United States and certain foreign
jurisdictions, there have been and are expected to be a number of legislative and regulatory changes to the healthcare system in
ways that could impact our ability to sell our products profitably, including the Patient Protection and Affordable Care Act signed
into law in the United States in March 2010. Given the enactment of these laws and other federal and state legislation and regulations
relating to the healthcare system, it is still too early to determine their impact on the biotechnology and pharmaceutical industries
and our business. The U.S. Congress continues to consider issues relating to the healthcare system, and future legislation or regulations
may affect our ability to market and sell products on favorable terms, which would affect our results of operations, as well as
our ability to raise capital, obtain additional collaborators or profitably market our products. Such legislation or regulation
may reduce our revenues, increase our expenses or limit the markets for our products. In particular, we expect to experience pricing
pressures in connection with the sale of our products due to the influence of health maintenance and managed health care organizations
and additional legislative proposals.
We have limited sales, marketing and distribution experience.
We have limited experience in the sales,
marketing, and distribution of pharmaceutical products. There can be no assurance that we will be able to establish sales, marketing,
and distribution capabilities or make arrangements with our current collaborators or others to perform such activities or that
such efforts will be successful. If we decide to market any products directly, we must either acquire or internally develop a marketing
and sales force with technical expertise and with supporting distribution capabilities. The acquisition or development of a sales,
marketing and distribution infrastructure would require substantial resources, which may not be available to us or, even if available, could divert the attention of our management
and key personnel and have a negative impact on further product development efforts.
We may seek to enter into arrangements to develop and
commercialize our products. These collaborations, if secured, may not be successful.
We have entered into arrangements with third
parties regarding development and commercialization of some of our products and may in the future seek to enter into collaborative
arrangements to develop and commercialize some of our potential products both in North America and international markets. There
can be no assurance that we will be able to negotiate collaborative arrangements on favorable terms or at all or that our current
or future collaborative arrangements will be successful. The amount and timing of resources such third parties will devote to these
activities may not be within our control. There can be no assurance that such parties will perform their obligations as expected.
There can be no assurance that our collaborators will devote adequate resources to our products.
If our potential products are unable to compete effectively
with current and future products targeting similar markets as our potential products, our commercial opportunities will be reduced
or eliminated.
The markets for epinephrine products,
our proposed APC-5000 DPI inhaler product and other allergy and respiratory products, and cancer and vaccine products, are
intensely competitive and characterized by rapid technological progress. We face competition from numerous sources, including
major biotechnology and pharmaceutical companies worldwide. Many of our competitors have substantially greater financial and
technical resources, and development, production and marketing capabilities, than we do. Certain companies have established
technologies that may be competitive with our product candidates and any future products that we may develop or acquire. Some
of these products may use different approaches or means to obtain results, which could be more effective or less expensive
than our products for similar indications. In addition, many of these companies have more experience than we do in
pre-clinical testing, clinical trials and manufacturing of compounds, obtaining FDA and foreign regulatory approvals, and
brand name exposure and expertise in sales and marketing. We also compete with academic institutions, governmental agencies
and private organizations that are conducting research in the same fields.
Competition among these entities to recruit
and retain highly qualified scientific, technical and professional personnel and consultants is also intense. As a result, there
is a risk that one or more of our competitors will develop a more effective product for the same indications for which we are developing
a product or, alternatively, bring a similar product to market before we can do so. Failure to successfully compete will adversely
impact the ability to raise additional capital and ultimately achieve profitable operations.
Our product candidates may not gain acceptance among physicians,
patients, or the medical community, thereby limiting our potential to generate revenues, which will undermine our future growth
prospects.
Even if our product candidates are approved
for commercial sale by the FDA or other regulatory authorities, the degree of market acceptance of any approved product candidate
by physicians, health care professionals and third-party payors, and our profitability and growth will depend on a number of factors,
including:
• the ability to provide acceptable evidence of
safety and efficacy;
• pricing and cost effectiveness, which may be
subject to regulatory control;
• our ability to obtain sufficient third-party
insurance coverage or reimbursement;
• effectiveness of our or our collaborators’
sales and marketing strategy;
• relative convenience and ease of administration;
• the prevalence and severity of any adverse side
effects; and
• availability of alternative treatments.
If any product candidate that we develop
does not provide a treatment regimen that is at least as beneficial as the current standard of care or otherwise does not provide
some additional patient benefit over the current standard of care, that product will not achieve market acceptance and we will
not generate sufficient revenues to achieve profitability.
If we suffer negative publicity concerning the safety
of our products in development, our sales may be harmed and we may be forced to withdraw such products.
If concerns should arise about the safety
of any of our products that are marketed, regardless of whether or not such concerns have a basis in generally accepted science
or peer-reviewed scientific research, such concerns could adversely affect the market for these products. Similarly, negative publicity
could result in an increased number of product liability claims, whether or not these claims are supported by applicable law.
Our failure to adequately protect or to enforce our intellectual
property rights or secure rights to third party patents could materially harm our proprietary position in the marketplace or prevent
the commercialization of our products.
Our success depends in part on our ability
to obtain and maintain protection in the United States and other countries for the intellectual property covering or incorporated
into our technologies and products. The patents and patent applications in our existing patent portfolio are either owned by us
or licensed to us. Our ability to protect our product candidates from unauthorized use or infringement by third parties depends
substantially on our ability to obtain and maintain, or license, valid and enforceable patents. Due to evolving legal standards
relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims
made under these patents, our ability to obtain and enforce patents is uncertain and involves complex legal and factual questions
for which important legal principles are unresolved.
There is a substantial backlog of patent
applications at the United States Patent and Trademark Office, or USPTO. There can be no assurance that any patent applications
relating to our products or methods will be issued as patents, or, if issued, that the patents will not be challenged, invalidated
or circumvented or that the rights granted thereunder will provide a competitive advantage. We may not be able to obtain patent
rights on products, treatment methods or manufacturing processes that we may develop or to which we may obtain license or other
rights. Even if we do obtain patents, rights under any issued patents may not provide us with sufficient protection for our product
candidates or provide sufficient protection to afford us a commercial advantage against our competitors or their competitive products
or processes. It is possible that no patents will be issued from any pending or future patent applications owned by us or licensed
to us. Others may challenge, seek to invalidate, infringe or circumvent any patents we own or license. Alternatively, we may in
the future be required to initiate litigation against third parties to enforce our intellectual property rights. The defense and
prosecution of patent and intellectual property claims are both costly and time consuming, even if the outcome is favorable to
us. Any adverse outcome could subject us to significant liabilities, require us to license disputed rights from others, or require
us to cease selling our future products.
In addition, many other organizations are
engaged in research and product development efforts that may overlap with our products. Such organizations may currently have,
or may obtain in the future, legally blocking proprietary rights, including patent rights, in one or more products or methods under
development or consideration by us. These rights may prevent us from commercializing technology, or may require us to obtain a
license from the organizations to use the technology. We may not be able to obtain any such licenses that may be required on reasonable
financial terms, if at all, and we cannot be sure that the patents underlying any such licenses will be valid or enforceable. As
with other companies in the pharmaceutical industry, we are subject to the risk that persons located in other countries will engage
in development, marketing or sales activities of products that would infringe our patent rights if such activities were conducted
in the United States.
Our patents also may not afford protection
against competitors with similar technology. We may not have identified all patents, published applications or published literature
that affect our business either by blocking our ability to commercialize our product candidates, by preventing the patentability
of our products or by covering the same or similar technologies that may affect our ability to market or license our product candidates.
Many companies have encountered difficulties in protecting and defending their intellectual property rights in foreign jurisdictions.
If we encounter such difficulties or are otherwise precluded from effectively protecting our intellectual property rights in either
the United States or foreign jurisdictions, our business prospects could be substantially harmed. In addition, because of funding
limitations and our limited cash resources, we may not be able to devote the resources that we might otherwise desire to prepare
or pursue patent applications, either at all or in all jurisdictions in which we might desire to obtain patents, or to maintain
already-issued patents.
We may become involved in patent litigations or other
intellectual property proceedings relating to our future product approvals, which could result in liability for damages or delay
or stop our development and commercialization efforts.
The pharmaceutical industry has been characterized
by significant litigation and other proceedings regarding patents, patent applications, and other intellectual property rights.
The situations in which we may become parties to such litigation or proceedings may include any third parties initiating litigation
claiming that our products infringe their patent or other intellectual property rights; in such case, we will need to defend against
such proceedings. For example, the field of generic pharmaceuticals is characterized by frequent litigation that occurs in connection
with the regulatory filings under Section 505(b)(2) of the FDCA and attempts to invalidate the patent of the reference drug.
The costs of resolving any patent litigation
or other intellectual property proceeding, even if resolved in our favor, could be substantial. Many of our potential competitors
will be able to sustain the cost of such litigation and proceedings more effectively than we can because of their substantially
greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property
proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other intellectual
property proceedings may also consume significant management time.
In the event that a competitor infringes
upon our patent or other intellectual property rights, enforcing those rights may be costly, difficult, and time-consuming. Even
if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive
and time-consuming and could divert our management’s attention. We may not have sufficient resources to enforce our intellectual
property rights or to defend our patent or other intellectual property rights against a challenge. If we are unsuccessful in enforcing
and protecting our intellectual property rights and protecting our products, it could materially harm our business.
We depend on our officers. If we are unable to retain
our key employees or to attract additional qualified personnel, our product operations and development efforts may be seriously
jeopardized.
Our success will be dependent upon the efforts
of a small management team and staff, including Dennis J. Carlo, Ph.D., our chief executive officer. The employment of Dr.
Carlo may be terminated at any time by either us or Dr. Carlo. We currently do not have key man life insurance policies covering
any of our executive officers or key employees. If key individuals leave us, we could be adversely affected if suitable replacement
personnel are not quickly recruited. There is competition for qualified personnel in all functional areas, which makes it difficult
to attract and retain the qualified personnel necessary for the operation of our business. Our success also depends in part on
our ability to attract and retain highly qualified scientific, commercial and administrative personnel. If we are unable to attract
new employees and retain existing key employees, the development and commercialization of our product candidates could be delayed
or negatively impacted.
We may experience difficulties in managing growth.
We are a small company. Future growth will
impose significant added responsibilities on members of management, including the need to identify, attract, retain, motivate and
integrate highly skilled personnel. We may increase the number of employees in the future depending on the progress of our development
of our products and technologies. Our future financial performance and our ability to compete effectively will depend, in part,
on our ability to manage any future growth effectively. To that end, we must be able to:
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manage our clinical studies effectively; |
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integrate additional management, administrative,
manufacturing and regulatory personnel; |
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maintain sufficient
administrative, accounting and management information systems and controls; and |
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hire and train additional qualified personnel. |
We may not be able to accomplish these tasks,
and our failure to accomplish any of them could harm our financial results.
There are significant limitations
on our ability in the future to utilize any net operating loss carry forwards for federal and state income tax purposes.
At March 31, 2014,
we had net operating loss carry forwards of approximately $129 million and $58 million for federal and state purposes, respectively.
The net operating loss carry forwards expire through the year 2031. At March 31, 2014, we also had research and development
credit carry forwards of approximately $2.8 million and $200,000 for federal and state purposes, respectively. The federal credits
expire through the year 2027 and the state credits expire through the year 2019. The Tax Reform Act of 1986, as amended, or the
TRA, provides for a limitation on the annual use of net operating loss and research and development tax credit carry forwards following
certain ownership changes that could limit our ability to utilize these carry forwards. We most likely have experienced various
ownership changes, as defined by the TRA, as a result of past financings and merger transactions. Accordingly, our ability to utilize
some of all of these carry forwards is likely limited. Additionally, U.S. tax laws limit the time during which these carry forwards
may be applied against future taxes, and as a result we may not be able to take full advantage of these carry forwards for federal
income tax purposes.
Risks Related to Our Common Stock
Provisions of our charter documents could discourage an
acquisition of our company that would benefit our stockholders and may have the effect of entrenching, and making it difficult
to remove, management.
Provisions of our restated certificate of
incorporation and bylaws may make it more difficult for a third party to acquire control of us, even if a change of control would
benefit our stockholders. For example, shares of our preferred stock may be issued in the future without further stockholder approval,
and upon such terms and conditions, and having such rights, privileges and preferences, as our board of directors may determine,
including, for example, rights to convert into our common stock. The rights of the holders of our common stock will be subject
to, and may be adversely affected by, the rights of the holders of any of our preferred stock that may be issued in the future.
The issuance of our preferred stock could have the effect of making it more difficult for a third party to acquire control of us.
This could limit the price that certain investors might be willing to pay in the future for shares of our common stock and discourage
those investors from acquiring a majority of our common stock. Similarly, our bylaws require that any stockholder proposals or
nominations for election to our board of directors must meet specific advance notice requirements and procedures, which make it
more difficult for our stockholders to make proposals or director nominations. The existence of these charter provisions could
have the effect of entrenching management and making it more difficult to change our management. Furthermore, because we are incorporated
in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law. These provisions may
prohibit or restrict large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or
combining with us, unless one or more exemptions from such provisions apply. These provisions under Delaware law could discourage
potential takeover attempts and could reduce the price that investors might be willing to pay for shares of our common stock in
the future.
The price of our common stock may be volatile.
The market price of our common stock may
fluctuate substantially. For example, from April 2012 to June 17, 2014, the market price of our common stock, adjusted retroactively
to give effect to our 1-for-17 reverse split of the common stock in December 2013, has fluctuated between $3.74 to $17.85. The
price of our common stock that will prevail in the market after any offering made pursuant to this prospectus may be higher or
lower than the price that investors purchasing our securities in such an offering have paid, depending on many factors, some of
which are beyond our control and may not be related to our operating performance. Market prices for securities of early-stage pharmaceutical,
biotechnology and other life sciences companies have historically been particularly volatile. Some of the factors that may cause
the market price of our common stock to fluctuate include:
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relatively low trading volume, which can result in significant volatility in the market price of our common stock based on a relatively smaller number of trades and dollar amount of transactions; |
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the timing and results of our current and any future preclinical or clinical trials of our product candidates; |
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the entry into or termination of key agreements, including, among others, key collaboration and license agreements; |
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the results and timing of regulatory reviews relating to the approval of our product candidates; |
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the initiation of, material developments in, or conclusion of, litigation to enforce or defend any of our intellectual property rights; |
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failure of any of our product candidates, if approved, to achieve commercial success; |
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general and industry-specific economic conditions that may affect our research and development expenditures; |
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the results of clinical trials conducted by others on products that would compete with our product candidates; |
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issues in manufacturing our product candidates or any approved products; |
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the loss of key employees; |
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the introduction of technological innovations or new commercial products by our competitors; |
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changes in estimates or recommendations by securities analysts, if any, who cover our common stock; |
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future sales of our common stock; |
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period-to-period fluctuations in our financial results; |
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publicity or announcements regarding regulatory developments relating to our products; |
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period-to-period fluctuations in our financial results, including our cash and cash equivalents balance, operating expenses, cash burn rate or revenue levels; |
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common stock sales in the public market by one or more of our larger stockholders, officers or directors; |
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our filing for protection under federal bankruptcy laws; |
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a negative outcome in any litigation or potential legal proceeding; or |
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other potentially negative financial announcements, such as a review of any of our filings by the SEC, changes in accounting treatment or restatement of previously reported financial results or delays in our filings with the SEC. |
The stock markets in general have experienced
substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations
may also adversely affect the trading price of our common stock. In the past, following periods of volatility in the market price
of a company’s securities, stockholders have often instituted class action securities litigation against those companies.
Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could
significantly harm our profitability and reputation.
Trading of our common stock is limited.
Trading of our common stock is limited,
and trading restrictions imposed on us by applicable regulations may further reduce our trading, making it difficult for our stockholders
to sell their shares.
Prior to the listing of our common stock
on the NASDAQ Capital Market, trading of our common stock was conducted on the OTCQB. The liquidity of our common stock is limited,
not only in terms of the number of shares that can be bought and sold at a given price, but also as it may be adversely affected
by delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us, if at all.
The foregoing factors may result in lower
prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked
prices for our common stock. In addition, without a large public float, our common stock is less liquid than the stock of companies
with broader public ownership, and as a result, the trading price of our common stock may be more volatile. In the absence of an
active public trading market, an investor may be unable to liquidate his or her investment
in our common stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price of
our stock than would be the case if our public float were larger. We cannot predict the price at which our common stock will trade
at any given time.
Our common stock may become subject to additional trading
restrictions as a “penny stock,” which could adversely affect the liquidity and price of such stock. If our common
stock becomes subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions
and trading activity in our securities may be adversely affected.
Prior to the listing of our common stock
on the NASDAQ Capital Market, our common stock was traded on the OTCQB. The OTCQB, the OTC Bulletin Board and Pink Sheets are viewed
by most investors as a less desirable, and less liquid, marketplace. As a result, an investor may find it more difficult to purchase,
dispose of or obtain accurate quotations as to the value of our common stock.
Unless our common stock is listed on a national
securities exchange, such as the NASDAQ Capital Market, our common stock may also be subject to the regulations regarding trading
in “penny stocks,” which are those securities trading for less than $5.00 per share, and that are not otherwise exempted
from the definition of a penny stock under other exemptions provided for in the applicable regulations. The following is a list
of the general restrictions on the sale of penny stocks:
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Before the sale of penny stock by a broker-dealer to a new purchaser, the broker-dealer must determine whether the purchaser is suitable to invest in penny stocks. To make that determination, a broker-dealer must obtain, from a prospective investor, information regarding the purchaser’s financial condition and investment experience and objectives. Subsequently, the broker-dealer must deliver to the purchaser a written statement setting forth the basis of the suitability finding and obtain the purchaser’s signature on such statement. |
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A broker-dealer must obtain from the purchaser an agreement to purchase the securities. This agreement must be obtained for every purchase until the purchaser becomes an “established customer.” |
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The Securities Exchange Act of 1934, or the Exchange Act, requires that before effecting any transaction in any penny stock, a broker-dealer must provide the purchaser with a “risk disclosure document” that contains, among other things, a description of the penny stock market and how it functions and the risks associated with such investment. These disclosure rules are applicable to both purchases and sales by investors. |
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A dealer that sells penny stock must send to the purchaser, within 10 days after the end of each calendar month, a written account statement including prescribed information relating to the security. |
These requirements can severely limit the
liquidity of securities in the secondary market because fewer brokers or dealers are likely to be willing to undertake these compliance
activities. If our common stock is not listed on a national securities exchange, the rules and restrictions regarding penny stock
transactions may limit an investor’s ability to sell to a third party and our ability to raise additional capital. We make
no guarantee that market-makers will make a market in our common stock, or that any market for our common stock will continue.
Our principal stockholders have significant influence
over us, they may have significant influence over actions requiring stockholder approval, and your interests as a stockholder may
conflict with the interests of those persons.
Based on the number of outstanding shares
of our common stock held by our stockholders as of March 31, 2014, our directors, executive officers and their respective affiliates
owned approximately 23% of our outstanding shares of common stock and our largest stockholder owned approximately 16% of the outstanding
shares of our common stock. As a result, those stockholders have the ability to exert a significant degree of influence with respect
to the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of
our assets. The interests of these persons may not always coincide with our interests or the interests of our other stockholders.
This concentration of ownership could harm the market price of our common stock by (i) delaying, deferring or preventing a change
in corporate control, (ii) impeding a merger, consolidation, takeover or other business combination involving us, or (iii) discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. The significant concentration
of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts
of interest may exist or arise.
In preparing our consolidated financial
statements, our management determined that our disclosure controls and procedures, and that our internal controls over financial
reporting, were ineffective as of March 31, 2014, which could result in material misstatements in our financial statements.
If we continue to fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures,
or, if we discover additional material weaknesses and other deficiencies in our internal controls over financial reporting, our
stock price could decline and raising capital could be more difficult.
Our management is responsible
for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under
the Exchange Act. As of March 31, 2014, our management determined that our disclosure controls and procedures were ineffective,
and that there was a material weakness in our internal controls over financial reporting, due to insufficient segregation of duties
in our finance and accounting function because of limited personnel, based on the absence of finance and accounting personnel other
than the Chief Financial Officer. This resulted in not ensuring appropriate segregation of duties between incompatible functions,
and made it more difficult to ensure review of financial reporting issues sufficiently in advance of the dates on which filings
are required to be made with the SEC and to ensure that financial information is adequately analyzed and reviewed on a timely basis
to detect misstatements. These above deficiencies represent a material weakness in our internal control over financial reporting
given that they result in a reasonable possibility that a material misstatement to the annual or interim financial statements would
not have been prevented or detected. In addition, management determined that our disclosure controls and procedures, and that our
internal controls over financial reporting, had several significant deficiencies which did not rise to the level of material weaknesses.
Because the material weaknesses and significant deficiencies identified by our management will require significant financial resources
to address, we expect to continue to experience these material weaknesses and significant deficiencies for the foreseeable future.
We intend to address
the weaknesses identified above by increasing the oversight and review procedures of the board of directors with regard to financial
reporting, financial processes and procedures and internal control procedures; where possible preparing and reviewing SEC filings
farther in advance of required filing dates; and when funding is available, hiring additional finance and accounting personnel.
Nevertheless, there can be no assurances that we will have enough financial resources to remedy our current material weaknesses
and significant deficiencies.
If remedial measures
that we intend to take are insufficient to address the ineffectiveness of our disclosure controls and procedures and our internal
controls over financial reporting, or if other material weaknesses or significant deficiencies in our internal controls are discovered
or occur in the future and the ineffectiveness of our disclosure controls and procedures continues, we may fail to meet our future
reporting obligations on a timely basis, our consolidated financial statements may contain material misstatements, we could be
required to restate our prior period financial results, our operating results may be harmed, and we could become subject to class
action litigation. Internal control deficiencies and ineffective disclosure controls and procedures could also cause investors
to lose confidence in our reported financial information. We can give no assurance that the measures we plan to take in the future
will remediate the ineffectiveness of our disclosure controls and procedures or that any material weaknesses or restatements of
financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial
reporting or adequate disclosure controls and procedures or circumvention of these controls. In addition, even if we are successful
in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify
irregularities or errors or to facilitate the fair presentation of our consolidated financial statements. If we cannot provide
reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence
in our reported financial information, and the trading price of our common stock could decline.
Our stockholders may experience significant dilution as
a result of the sale of securities offered by this prospectus, or as a result of any additional financing using our securities,
as the result of the exercise or conversion of our outstanding securities.
To the extent that we raise additional funds
through the sale of securities offered by this prospectus, our stockholders may experience significant dilution. If additional
funds are raised through the issuance of preferred stock, holders of preferred stock would likely have rights that are senior to
the rights of holders of our common stock, and the agreements relating to any such issuance could contain covenants that would
restrict our operations.
We will need to raise significant additional
capital in order to maintain and continue our operations. To the extent that we raise additional funds by issuing equity securities
or securities convertible into or exercisable for equity securities, our stockholders may experience significant dilution. In addition,
conversion or exercise of other outstanding options, warrants or convertible securities could result in there being a significant
number of additional shares outstanding and dilution to our stockholders. Certain of our outstanding securities include anti-dilution
provision providing that, with certain exceptions, if we issue shares of common stock or options, warrants, convertible securities
or other common stock equivalents, at an effective price per share less than the conversion or exercise price of such securities,
the conversion or exercise price of such securities (and, in certain circumstances, the number of shares issuable upon exercise
or conversion of such securities) will be adjusted downward to equal the per share price of the securities issued in such transaction,
entitling the holders to pay a lower per share exercise price and/or to acquire a larger number of shares upon exercise or conversion
of such securities, which could result in dilution to our stockholders. As a result, sale of additional equity or convertible securities
at prices below certain levels could trigger anti-dilution provisions with respect to certain securities we have previously sold.
We have not paid cash dividends on our common stock in
the past and do not expect to pay cash dividends on our common stock for the foreseeable future. Any return on investment may be
limited to the value of our common stock.
No cash dividends have been paid on our
common stock, and we do not expect to pay cash dividends on our common stock in the foreseeable future. Payment of dividends would
depend upon our profitability at the time, cash available for those dividends, and other factors as our board of directors may
consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on a stockholder’s
investment will only occur if our stock price appreciates.
A sale of a substantial number of shares of our common
stock may cause the price of our common stock to decline and may impair our ability to raise capital in the future.
There have been and may continue to be periods
when our common stock could be considered “thinly-traded,” meaning that the number of persons interested in purchasing
our common stock at or near bid prices at any given time may be relatively small or non-existent. Finance transactions resulting
in a large amount of newly issued shares that become readily tradable, conversion of outstanding convertible notes or exercise
of outstanding warrants and sale of the shares issuable upon conversion of such notes or exercise of such warrants, or other events
that cause stockholders to sell shares, could place downward pressure on the trading price of our stock. In addition, the lack
of a robust resale market may require a stockholder who desires to sell a large number of shares of common stock to sell the shares
in increments over time to mitigate any adverse impact of the sales on the market price of our stock. If our stockholders sell,
or the market perceives that our stockholders intend to sell for various reasons, substantial amounts of our common stock in the
public market, the market price of our common stock could decline. Sales of a substantial number of shares of our common stock
may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable
or appropriate.
Sales of additional equity securities may adversely affect
the market price of our common stock.
We expect to incur research, development
and selling, general and administrative costs, and to satisfy our funding requirements we will need to sell additional equity securities,
which may be subject to registration rights, and warrants with anti-dilutive protective provisions. The sale or the proposed sale
of substantial amounts of our common stock or other equity securities in the public markets may adversely affect the market price
of our common stock, and our stock price may decline substantially. Our stockholders may experience substantial dilution and a
reduction in the price that they are able to obtain upon the sale of their shares. Also, new equity securities issued may have
greater rights, preferences or privileges than our existing common stock.
Because we expect to have broad discretion and flexibility
in how the net proceeds from any offering made by this prospectus are used, we may use the net proceeds in ways in which you disagree.
Except as otherwise provided in any applicable
prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this prospectus for general
corporate purposes, which may include working capital, capital expenditures, research and development expenditures, regulatory
affairs expenditures, clinical trial expenditures, acquisitions of new companies, products or technologies, and the repayment,
refinancing, redemption or repurchase of future indebtedness or capital stock. As a result, our management will have significant
discretion and flexibility in applying the net proceeds of this offering. You will be relying on the judgment of our management
with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess
whether the net proceeds are being used appropriately. It is possible that the net proceeds will be invested or used in a way that
does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could have a material
adverse effect on our business, financial condition, operating results and cash flow.
If securities or industry analysts do not publish research
or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading
volume could decline.
The trading market for our common stock
will be influenced by the research and reports that industry or securities analysts publish about us or our business. We may never
obtain substantial research coverage by industry or financial analysts. If no or few analysts commence or continue coverage of
us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts
who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our
company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause
our stock price or trading volume to decline.
The rights of the holders of common stock may be impaired
by the potential issuance of preferred stock.
Our restated certificate of incorporation
gives our board of directors the right to create new series of preferred stock. As a result, the board of directors may, without
stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights which could adversely
affect the voting power and equity interest of the holders of common stock. Preferred stock, which could be issued with the right
to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a change of control. The
possible impact on takeover attempts could adversely affect the price of our common stock.
USE OF PROCEEDS
Except as otherwise provided in the
applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this
prospectus for general corporate purposes, which may include without limitation working capital, capital expenditures,
research and development expenditures, regulatory affairs expenditures, clinical trial expenditures, acquisitions of new
companies, technologies or products, and the repayment, refinancing, redemption or repurchase of future
indebtedness or capital stock.
The intended application of proceeds from
the sale of any particular offering of securities using this prospectus will be described in the accompanying prospectus supplement
relating to such offering. The precise amount and timing of the application of these proceeds will depend on our funding requirements
and the availability and costs of other funds. We may temporarily invest the net proceeds in investment-grade, interest-bearing
securities until they are used for their stated purpose. We have not determined the amount of net proceeds to be used specifically
for such purposes. As a result, management will retain broad discretion over the allocation of net proceeds.
THE SECURITIES WE MAY OFFER
The descriptions of the securities contained
in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the
various types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement,
the terms of the securities may differ from the terms we have summarized below. We will also include in the prospectus supplement
information, where applicable, about material United States federal income tax considerations relating to the securities, and the
securities exchange, if any, on which the securities will be listed.
We may sell from time to time, in one
or more offerings:
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shares of our common
stock; |
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shares of our preferred
stock; |
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warrants to purchase
any of the securities listed above; and/or |
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units consisting
of any of the securities listed above. |
The terms of any securities we offer will
be determined at the time of sale. We may issue securities that are exchangeable for or convertible into common stock or any of
the other securities that may be sold under this prospectus. When particular securities are offered, a supplement to this prospectus
will be filed with the SEC, which will describe the terms of the offering and sale of the offered securities, including the specific
amounts, prices and other important terms of the securities including, to the extent applicable:
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Designation or classification |
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Aggregate principal amount or aggregate offering price; |
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Rates and times of payment of interest or dividends, if any; |
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Redemption, conversion or sinking fund terms, if any; |
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Voting or other rights, if any; |
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Conversion prices, if any; and |
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Important federal income tax considerations. |
The prospectus supplement and any related
free writing prospectus also may supplement or, as applicable, add, update or change information contained in this prospectus or
in documents as we have incorporated by reference. However, no prospectus supplement or free writing prospectus will offer a security
that is not registered and described in this prospectus at the time of the effectiveness of the registration statement of which
this prospectus is a part.
The terms of any particular offering, the
initial offering price and the net proceeds to us will be contained in the prospectus supplement, information incorporated by reference
or free writing prospectus relating to such offering.
We may issue securities in book-entry form
through one or more depositaries, such as The Depository Trust Company, named in the applicable prospectus supplement. If any securities
are to be listed or quoted on a securities exchange or quotation system, the applicable prospectus supplement will say so.
DESCRIPTION OF CAPITAL STOCK
General
The following description of
common stock and preferred stock, together with the additional information we include in any applicable prospectus
supplements or related free writing prospectuses, summarizes the material terms and provisions of the common stock and
preferred stock that we may offer under this prospectus but is not complete. For the complete terms of our common stock and
preferred stock, please refer to our restated certificate of incorporation, as the same may be amended from time to time, any
certificates of designation for our preferred stock, and our amended and restated bylaws, as amended from time to time. The
Delaware General Corporation Law, or DGCL, may also affect the terms of these securities. While the terms we
have summarized below will apply generally to any future common stock or preferred stock that we may offer, we will describe
the particular terms of any series of these securities in more detail in the applicable prospectus supplement. If we so
indicate in a prospectus supplement, the terms of any common stock or preferred stock we offer under that prospectus
supplement may differ from the terms we describe below.
As of the date of this prospectus,
our authorized capital stock consisted of 100,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares
of preferred stock, $0.0001 par value per share. Our board of directors may establish the rights and preferences of the preferred
stock from time to time. As of June 16, 2014, there were approximately 10,501,519 shares of our common stock outstanding and no
shares of preferred stock outstanding.
Common Stock
Holders of our common stock are
entitled to one vote per share. Our restated certificate of incorporation does not provide for cumulative voting. Subject to
preferences that may be applicable to any outstanding preferred stock, the holders of our common stock are entitled to receive ratably
such dividends, if any, as may be declared by our board of directors, or the Board, out of legally available funds. However, the
current policy of our board of directors is to retain earnings, if any, for the operation and expansion of the company. Upon liquidation,
dissolution or winding-up, the holders of our common stock are entitled to share ratably in all of our assets which are legally
available for distribution, after payment of or provision for all liabilities and the liquidation preference of any outstanding
preferred stock. The holders of our common stock have no preemptive, subscription, redemption or conversion rights.
Preferred Stock
Our restated certificate of incorporation
provides that the Board is authorized to provide for the issuance of shares of preferred stock in one or more series and, by filing
a certificate of designation pursuant to the applicable law of the State of Delaware, to establish from time to time for each such
series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the
shares of each such series, and the qualifications, limitations and restrictions thereof, which may include, among others, dividend
rights, voting rights, liquidation preferences, conversion rights and preemptive rights. The authority of the Board with respect
to each series of preferred stock includes, but is not limited to, determination of the following:
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the designation of the series, which may be by distinguishing number, letter or title; |
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the number of shares of the series, which number the Board may thereafter (except where otherwise provided in the certificate of designation) increase or decrease (but not below the number of shares thereof then outstanding); |
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whether dividends, if any, shall be paid, and, if paid, the date or dates upon which, or other times at which, such dividends shall be payable, whether such dividends shall be cumulative or noncumulative, the rate of such dividends (which may be variable) and the relative preference in payment of dividends of such series; |
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the redemption provisions and price or prices, if any, for shares of the series; |
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the terms and amounts of any sinking fund or similar fund provided for the purchase or redemption of shares of the series; |
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the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of our corporation; |
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whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of our corporation or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion price or prices, or rate or rates, any adjustments thereto, the date or dates on which such shares shall be convertible and all other terms and conditions upon which such conversion may be made; |
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restrictions on the issuance of shares of the same series or of any other class or series; and |
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the voting rights, if any, of the holders of shares of the series. |
Preferred stock may be issued in the future
in connection with acquisitions, financings, or other matters as the Board deems appropriate. In the event that any shares of preferred
stock are to be issued, a certificate of designation containing the rights, privileges and limitations of such series of preferred
stock may be filed with the Secretary of State of Delaware. The effect of such preferred stock is that, subject to federal securities
laws and Delaware law, the Board alone may be able to authorize the issuance of preferred stock, which could have the effect of
delaying, deferring or preventing a change in control of us without further action by the stockholders, and may adversely affect
the other rights of the holders of our common stock. The issuance of preferred stock with voting and conversion rights may also
adversely affect the voting power of holders of our common stock, including the loss of voting control to others.
Each series of preferred stock, if issued, will be more fully
described in the particular prospectus supplement that will accompany this prospectus, including redemption provisions, rights
in the event of our liquidation, dissolution or winding up, voting rights and rights to convert into common stock or other securities.
We do not have any shares of our preferred stock presently outstanding.
The purpose of authorizing
the board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with
a shareholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, a majority of our outstanding voting stock. The effects of issuing preferred
stock could include one or more of the following:
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decreasing the amount of earnings and assets available for distribution to holders of common stock; |
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diluting the voting power of the common stock; |
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impairing the liquidation rights of the common stock; or |
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delaying, deferring or preventing changes in our control or management. |
Anti-Takeover
Effects of Certain Provisions of our Certificate of Incorporation, Bylaws and the DGCL
Delaware Law
We are subject to Section 203 of the
DGCL. This provision generally prohibits a Delaware corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:
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prior to such date, the board of directors approved either the business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; |
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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes
of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee
stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or |
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on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual meeting
or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting
stock that is not owned by the interested stockholder. |
Section 203 defines a business combination to include:
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any merger or consolidation involving the corporation and the interested stockholder; |
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder; |
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any transaction involving the corporation that has the effect of increasing the proportionate
share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or |
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation. |
In general, Section 203 defines an
“interested stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of
a corporation, or an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock
of a corporation at any time within three years prior to the time of determination of interested stockholder status; and
any entity or person affiliated with or controlling or controlled by such entity or person.
These statutory provisions could delay or
frustrate the removal of incumbent directors or a change in control of our company. They could also discourage, impede, or prevent
a merger, tender offer, or proxy contest, even if such event would be favorable to the interests of stockholders.
Restated Certificate of Incorporation and Bylaw Provisions
Our restated certificate of incorporation
and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer
or delaying or preventing a change in control, including changes a stockholder might consider favorable. In particular, the certificate
of incorporation and bylaws, as applicable, among other things:
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permit the Board to issue up to 10,000,000 shares of preferred stock, without further action by the stockholders, with any rights, preferences and privileges as they may designate; |
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provide that all vacancies on the Board, including newly created directorships, may, except as otherwise required by law, or as determined otherwise by resolution of the Board, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; |
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do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); |
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set forth an advance notice procedure with regard to the nomination, other than by or at the direction of the Board, of candidates for election as directors and with regard to business to be brought before a meeting of stockholders; and |
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provide the Board with the ability to alter its bylaws without stockholder approval. |
Such provisions may have the effect of discouraging a
third-party from acquiring us, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance
the likelihood of continuity and stability in the composition of the Board and in the policies formulated by them, and to discourage
some types of transactions that may involve an actual or threatened change in control of our company. These provisions are designed
to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights.
We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly
or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such proposals because,
among other things, negotiation of such proposals could result in an improvement of their terms.
However, these provisions could have the
effect of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts.
These provisions also may have the effect of preventing changes in our management.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our
common stock is First American Stock Transfer, Inc.
Indemnification of Directors and Officers
Section 145 of the DGCL provides, in general,
that a corporation incorporated under the laws of the State of Delaware, as we are, may 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 (other than a derivative
action by or in the right of the corporation) by reason of the fact that such person 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
enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person 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 such person’s conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify
any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect
of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such
person is fairly and reasonably entitled to indemnity for such expenses.
Our bylaws provide that we will indemnify
our directors and officers, to the maximum extent permitted by the DGCL, or any other applicable law, except that we are not required
to indemnify any director or officer in connection with any proceeding initiated by such person unless (i) such indemnification
is expressly required to be made by law or the bylaws, (ii) the proceeding was authorized by the Board, or (iii) such indemnification
is provided by us pursuant to the powers vested in the company under the DGCL or any other applicable law. In addition, our bylaws
provide that we may indemnify our employees and other agents as set forth in the DGCL or any other applicable law. Our bylaws also
provide for the advancement of expenses incurred by a person who was or is a party or is threatened to be made a party to any threatened,
pending or completed proceeding by reason of the fact that the person is or was a director or officer of the company, or is or
was serving at the request of the company as a director or officer of another corporation, partnership, joint venture, trust or
other enterprise, prior to the final disposition of the proceeding, provided, however, that if the DGCL requires, an advancement
of expenses incurred by a director or officer in his or her capacity as a director or officer shall be made only upon delivery
to the company of an undertaking by or on behalf of the indemnitee to repay all amounts so advanced if it shall ultimately be determined
by final judicial decision from which there is no further right to appeal the indemnitee is not entitled to be indemnified for
such expenses under the bylaws. In addition, our restated certificate of incorporation provides that the liability of any of our
directors for monetary damages shall be eliminated to the fullest extent under applicable law. We carry officer and director liability
insurance with respect to certain matters, including matters arising under the Securities Act.
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
Insofar as indemnification for liabilities
arising under the Securities Act, may be permitted to our directors, officers and persons controlling us, we have been advised
that it is the Securities and Exchange Commission’s opinion that such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
DESCRIPTION OF WARRANTS
The following description, together with
the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the
terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus supplement, information incorporated by reference or a free writing prospectus.
If we so indicate in the prospectus supplement, information incorporated by reference or free writing prospectus, the terms of
any warrants offered under that prospectus supplement, information incorporated by reference and free writing prospectus may differ
from the terms described below. If there are differences between that prospectus supplement, information incorporated by reference
or free writing prospectus and this prospectus, such prospectus supplement, information incorporated by reference or free writing
prospectus will control. Thus, the statements we make in this section may not apply to a particular series of warrants. Specific
warrant agreements will contain additional important terms and provisions and will be incorporated by reference as an exhibit to
the registration statement which includes this prospectus.
We may issue warrants for the purchase of
common stock and/or preferred stock, or units, in one or more series. We may issue warrants independently or together with common
stock, preferred stock and/or units, and the warrants may be attached to or separate from these securities.
We will evidence each series of warrants
by warrant certificates that we may issue under a separate agreement. We may enter into the warrant agreement with a warrant agent
which may be a bank or other institution that we select. We may also choose to act as our own warrant agent. We will indicate the
name and address of any such warrant agent in the applicable prospectus supplement relating to a particular series of warrants.
We will describe in the applicable prospectus
supplement, information incorporated by reference or free writing prospectus the terms of the series of warrants, including:
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the offering price and aggregate number of warrants offered; |
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the currency for which the warrants may be purchased; |
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if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued
with each such security or each principal amount of such security; |
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if applicable, the date on and after which the warrants and the related securities will be separately transferable; |
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in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as
the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise; |
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the warrant agreement under which the warrants will be issued; |
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the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants; |
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anti-dilution provisions of the warrants, if any; |
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the terms of any rights to redeem or call the warrants; |
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any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants; |
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the dates on which the right to exercise the warrants will commence and expire or, if the warrants are not continuously exercisable
during that period, the specific date or dates on which the warrants will be exercisable; |
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the manner in which the warrant agreement and warrants may be modified; |
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the identities of the warrant agent and any calculation or other agent for the warrants; |
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federal income tax consequences of holding or exercising the warrants; |
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the terms of the securities issuable upon exercise of the warrants; |
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information with respect to book-entry procedures, if any; |
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any securities exchange or quotation system on which the warrants or any securities deliverable upon exercise of the warrants may
be listed; and |
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any other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
Unless otherwise described in an
applicable prospectus supplement, information incorporated by reference or free writing prospectus, before exercising their warrants,
holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including in
the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or, payments upon our
liquidation, dissolution or winding up or to exercise voting rights, if any.
Exercise of Warrants
Each warrant will entitle the holder to
purchase the securities that we specify in the applicable prospectus supplement, information incorporated by reference or free
writing prospectus, at the exercise price that we describe therein. Unless we otherwise specify in the applicable prospectus supplement,
information incorporated by reference or free writing prospectus, holders of the warrants
may exercise the warrants at any time up to 5:00 p.m. Eastern Time on the expiration date that we set forth in the applicable
prospectus supplement, information incorporated by reference or free writing prospectus. After the close of business on the expiration
date, unexercised warrants will become void.
A warrant will entitle the holder to
purchase for cash an amount of securities at an exercise price that will be stated in, or that will be determinable as described
in, the applicable prospectus supplement, information incorporated by reference or free writing prospectus. Warrants may
be exercised, redeemed, as set forth in the applicable offering material.
Until the warrant is properly
exercised, no holder of any warrant will be entitled to any rights of a holder of the securities purchasable upon exercise of
the warrant and will not be entitled to dividend payments, if any, or voting rights of the common stock or preferred stock purchasable upon such exercise.
Upon receipt of the required payment
and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other
office indicated in the applicable prospectus supplement, information incorporated by reference or free writing prospectus, we
will issue and deliver the securities purchasable upon such exercise. If fewer than all of the warrants represented by the warrant
certificate are exercised, then we will issue a new warrant certificate for the remaining amount of warrants. If we so indicate
in the applicable prospectus supplement, information incorporated by reference or free writing prospectus, holders of the warrants
may surrender securities as all or part of the exercise price for warrants.
Warrant Agreement
We may issue
the warrants in one or more series under one or more warrant agreements, each to be entered into between us and a warrant
agent, which may include a bank, trust company or other financial institution as warrant agent. We may add, replace or
terminate warrant agents from time to time. We may also choose to act as our own warrant agent or may choose one of
our subsidiaries to do so.
The warrant agent under
a warrant agreement will act solely as our agent in connection with the warrants issued under that agreement. Any holder
of warrants may, without the consent of any other person, enforce by appropriate legal action, on its own behalf, its right to
exercise those warrants in accordance with their terms.
Form, Exchange and Transfer
We may issue the warrants
in registered form or bearer form. Warrants issued in registered form, i.e., book-entry form, will be represented by a global
security registered in the name of a depository, which will be the holder of all the warrants represented by the global security.
Those investors who own beneficial interests in a global warrant will do so through participants in the depository’s system,
and the rights of these indirect owners will be governed solely by the applicable procedures of the depository and its participants.
In addition, we may issue warrants in non-global form, i.e., bearer form. If any warrants are issued in non-global form,
warrant certificates may be exchanged for new warrant certificates of different denominations, and holders may exchange, transfer
or exercise their warrants at the warrant agent’s office or any other office indicated in the applicable prospectus supplement,
information incorporated by reference or free writing prospectus.
No warrant agreement will be qualified as
an indenture, and no warrant agent will be required to qualify as a trustee, under the Trust Indenture Act. Therefore, holders
of warrants issued under a warrant agreement will not have the protection of the Trust Indenture Act with respect to their warrants.
DESCRIPTION OF UNITS
We may issue units comprised of one
or more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of
the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations
of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included
in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The following
description is a summary of selected provisions relating to units that we may offer. The summary is not complete.
When units are offered in the future, a prospectus supplement, information incorporated by reference or a free writing prospectus,
as applicable, will explain the particular terms of those securities and the extent to which these general provisions may apply.
The specific terms of the units as described in a prospectus supplement, information incorporated by reference, or free writing
prospectus will supplement and, if applicable, may modify or replace the general terms described in this section.
This summary
and any description of units in the applicable prospectus supplement, information incorporated by reference or free writing prospectus
is subject to and is qualified in its entirety by reference to the unit agreement, collateral arrangements and depositary arrangements,
if applicable. We will file each of these documents, as applicable, with the SEC and incorporate them by reference as an
exhibit to the registration statement of which this prospectus is a part on or before the time we issue a series of units.
See “Where You Can Find More Information” and “Incorporation of Documents by Reference” above for information
on how to obtain a copy of a document when it is filed.
The applicable prospectus supplement, information
incorporated by reference or free writing prospectus will describe:
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the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately; |
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any unit agreement under which the units will be issued; |
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any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units;
and |
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whether the units will be issued in fully registered or global form. |
The applicable provisions described
in this section, as well as those described under “Description of Capital Stock” and “Description of Warrants”
above, will apply to each unit and to each security included in each unit, respectively.
PLAN OF DISTRIBUTION
We may sell the securities being
offered pursuant to this prospectus to or through underwriters or dealers, through agents, or directly to one or
more purchasers (including our affiliates and shareholders), through a specific bidding or auction process, a rights offering
or otherwise, through a combination of these methods or through any other methods described in a prospectus supplement. The
applicable prospectus supplement will describe the terms of the offering of the securities, including:
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the name or names of any underwriters, if any, and if required, any dealers or agents; |
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the purchase price of the securities and the proceeds we will receive from the sale; |
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any underwriting discounts and other items constituting underwriters’ compensation; |
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any discounts or concessions allowed or reallowed or paid to dealers; and |
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any securities exchange or market on which the securities may be listed. |
The distribution
of securities may be effected, from time to time, in one or more transactions, including:
| · | block transactions (which may involve
crosses) and transactions on the Nasdaq Capital Market or any other organized market where the securities may be traded; |
| · | purchases by a broker-dealer as principal
and resale by the broker-dealer for its own account pursuant to a prospectus supplement; |
| · | ordinary brokerage transactions and transactions
in which a broker-dealer solicits purchasers; |
| · | sales “at the market” to or
through a market maker or into an existing trading market, on an exchange or otherwise; and |
| · | sales in other ways not involving market
makers or established trading markets, including direct sales to purchasers. |
The securities
may be sold at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating
to the prevailing market prices or at negotiated prices. The consideration may be cash or another form negotiated by the
parties.
We may also make direct sales through
subscription rights distributed to our existing shareholders on a pro rata basis, which may or may not be transferable.
In any distribution of subscription rights to our shareholders, if all of the underlying securities are not subscribed for, we
may then sell the unsubscribed securities directly to third parties or may engage the services of one or more underwriters, dealers
or agents, including standby underwriters, to sell the unsubscribed securities to third parties.
Some or all of the securities that
we offer through this prospectus may be new issues of securities with no established trading market. Any underwriters to
whom we sell our securities for public offering and sale may make a market in those securities, but they will not be obligated
to do so and they may discontinue any market making at any time without notice. Accordingly, we cannot assure you of the
liquidity of, or continued trading markets for, any securities that we offer.
Only underwriters named in the prospectus
supplement are underwriters of the securities offered by the prospectus supplement.
If underwriters are used in an
offering, we will execute an underwriting agreement with such underwriters and will specify the name of each underwriter and
the terms of the transaction (including any underwriting discounts and other terms constituting compensation of the
underwriters and any dealers) in a prospectus supplement. The securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by one or more investment banking firms or others,
as designated. If an underwriting syndicate is used, the managing underwriter(s) will be specified on the
cover of the prospectus supplement. If underwriters are used in the sale, the offered securities will be acquired by the
underwriters for their own accounts and may be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under delayed delivery contracts
or other contractual commitments. Any public offering
price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Unless
otherwise set forth in the prospectus supplement, the obligations of the underwriters to purchase the offered securities will
be subject to conditions precedent and the underwriters will be obligated to purchase all of the offered securities if any
are purchased.
We may grant to the underwriters options
to purchase additional securities to cover over-allotments, if any, at the public offering price, with additional underwriting
commissions or discounts, as may be set forth in a related prospectus supplement. The terms of any over-allotment option will be
set forth in the prospectus supplement for those securities.
If we use a dealer in the sale of
the securities being offered pursuant to this prospectus or any prospectus supplement, we or an underwriter will sell the
securities to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be
determined by the dealer at the time of resale. To the extent required, we will
set forth in the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, the name
of the dealer and the terms of the transactions.
We may directly
solicit offers to purchase the securities and may make sales of securities directly to institutional investors or others.
These persons may be deemed to be underwriters with respect to any resale of the securities. To the extent required, the
prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe the terms of
any such sales, including the terms of any bidding or auction process, if used.
We may sell the securities directly or through
agents we designate from time to time. We will name any agent involved in the offering and sale of securities and we will describe
any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, any agent
will act on a best-efforts basis for the period of its appointment.
We may authorize agents or underwriters
to solicit offers by institutional investors to purchase securities from us at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. We will
describe the conditions to these contracts and the commissions we must pay for solicitation of these contracts in the prospectus
supplement.
In connection with the sale of the securities,
underwriters, dealers or agents may receive compensation from us or from purchasers of the securities for whom they act as agents
in the form of discounts, concessions, commissions or other payments. Underwriters may sell the securities to or through dealers,
and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions
from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of the
securities, and any institutional investors or others that purchase securities directly and then resell the securities, may be
deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of the securities
by them may be deemed to be underwriting discounts and commissions under the Securities Act. If such persons were deemed to be
underwriters, they may be subject to statutory liabilities under the Securities Act.
Any person participating
in the distribution of common stock registered under the registration statement that includes this prospectus will be subject to
applicable provisions of the Exchange Act, and the applicable SEC rules and regulations, including, among others, Regulation M,
which may limit the timing of purchases and sales of any of our common stock by any such person. Furthermore, Regulation
M may restrict the ability of any person engaged in the distribution of our common stock to engage in market-making activities
with respect to our common stock. These restrictions may affect the marketability of our common stock and the ability of
any person or entity to engage in market-making activities with respect to our common stock.
We may provide agents and underwriters with
indemnification against particular civil liabilities, including liabilities under the Securities Act, or contribution with respect
to payments that the agents or underwriters may make with respect to such liabilities. Agents and underwriters may engage in transactions
with, or perform services for, us in the ordinary course of business.
In addition, we may enter into derivative
transactions with third parties (including the writing of options), or sell securities not covered by this prospectus to third
parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with such a transaction,
the third parties may, pursuant to this prospectus and the applicable prospectus supplement, sell securities covered by this prospectus
and the applicable prospectus supplement. If so, the third party may use securities borrowed from us or others to settle such sales
and may use securities received from us to close out any related short positions. We may also loan or pledge securities covered
by this prospectus and the applicable prospectus supplement to third parties, who may sell the loaned securities or, in an event
of default in the case of a pledge, sell the pledged securities pursuant to this prospectus and the applicable prospectus supplement.
The third party in such sale transactions will be an underwriter and will be identified in the applicable prospectus supplement
or in a post-effective amendment.
To facilitate an offering of a series of
securities, persons participating in the offering may engage in transactions that stabilize, maintain, or otherwise affect the
market price of the securities. This may include over-allotments or short sales of the securities, which involves the sale by
persons participating in the offering of more securities than have been sold to them by us. In those circumstances, such persons
would cover such over-allotments or short positions by purchasing in the open market or by exercising the over-allotment option
granted to those persons. In addition, those persons may stabilize or maintain the price of the securities by bidding for or purchasing
securities in the open market or by imposing penalty bids, whereby selling concessions allowed to underwriters or dealers participating
in any such offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions.
The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which
might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. We make no representation
or prediction as to the direction or magnitude of any effect that the transactions described above, if implemented, may have on
the price of our securities.
Any common stock sold pursuant to a prospectus
supplement will be eligible for quotation and trading on The NASDAQ Capital Market. Any underwriters to whom securities are sold
by us for public offering and sale may make a market in the securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice.
In order to comply with the securities laws
of some states, if applicable, the securities offered pursuant to this prospectus will be sold in those states only through registered
or licensed brokers or dealers. In addition, in some states securities may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or qualification requirement is available and complied with.
In compliance with
the guidelines of the Financial Industry Regulatory Authority (“FINRA”), the aggregate maximum discount, commission
or agency fees or other items constituting underwriting compensation to be received by any FINRA member or independent broker-dealer
will not exceed 8% of any offering pursuant to this prospectus and any applicable prospectus supplement, as the case may be.
If more than 10% of
the net proceeds of any offering of securities made under this prospectus will be received by FINRA members participating in the
offering or affiliates or associated persons of such FINRA members, the offering will be conducted in accordance with FINRA Conduct
Rule 5110(h).
So long as the aggregate
market value of our voting and non-voting common equity held by non-affiliates is less than $75,000,000.00 and so long as required
by the rules of the SEC, the amount of securities we may offer hereunder will be limited such that the aggregate market value of
securities sold by us during a period of 12 calendar months cannot exceed one-third of the aggregate market value of the voting
and non-voting common equity held by non-affiliates.
To the extent required,
this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution.
LEGAL MATTERS
The validity of the issuance of the securities
offered hereby will be passed upon for us by Weintraub Tobin Chediak Coleman Grodin, Law Corporation.
EXPERTS
The financial statements as of March 31,
2014 and 2013 and for the two years in the period ended March 31, 2014, included in this prospectus have been so included
in reliance on the report of Mayer Hoffman McCann P.C., an independent registered public accounting firm, appearing elsewhere herein,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration
statement on Form S-3 under the Securities Act of 1933, as amended (“Securities Act”), with respect to the securities
covered by this prospectus. This prospectus and any prospectus supplement which form a part of the registration statement,
do not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith.
For further information with respect to us and the securities covered by this prospectus, please see the registration statement
and the exhibits filed with the registration statement. Any statements made in this prospectus or any prospectus supplement
concerning legal documents are not necessarily complete and you should read the documents that are filed as exhibits to the registration
statement or otherwise filed with the SEC for a more complete understanding of the document or matter. A copy of the registration
statement and the exhibits filed with the registration statement may be inspected without charge at the Public Reference Room
maintained by the SEC, located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for more information about the operation of the Public Reference Room. The SEC also maintains an Internet website that contains
reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.
The address of the website is http://www.sec.gov.
We file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read, without charge, and copy the documents we file at
the SEC’s public reference rooms in Washington, D.C. at 100 F Street, NE, Room 1580, Washington, DC 20549. 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 further information on the public reference rooms. Our SEC filings are also available to the public at no cost from the SEC’s
website at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
We have filed a registration statement on
Form S-3 with the Securities and Exchange Commission under the Securities Act. This prospectus is part of the registration
statement but the registration statement includes and incorporates by reference additional information and exhibits. The Securities
and Exchange Commission permits us to “incorporate by reference” the information contained in documents we file with
the Securities and Exchange Commission, which means that we can disclose important information to you by referring you to those
documents rather than by including them in this prospectus. Information that is incorporated by reference is considered to be part
of this prospectus and you should read it with the same care that you read this prospectus. Information that we file later with
the Securities and Exchange Commission will automatically update and supersede the information that is either contained, or incorporated
by reference, in this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed.
We have filed with the Securities and Exchange Commission, and incorporate by reference in this prospectus:
|
☐ |
Annual Report on Form 10-K for the year ended March 31, 2014, filed on June 23, 2014; and |
|
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The description of our common stock contained in our Form 8-A filed on December 11, 2013. |
We also incorporate by reference all additional
documents that we file with the Securities and Exchange Commission under the terms of Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act that are made after the initial filing date of the registration statement of which this prospectus is a part until
the offering of the particular securities covered by a prospectus supplement or term sheet has been completed. We are not, however,
incorporating, in each case, any documents or information that we are deemed to furnish and not file in accordance with Securities
and Exchange Commission rules.
You may request, and we will provide you
with, a copy of these filings, at no cost, by calling us at (858) 997-2400 or by writing to us at the following address:
Adamis Pharmaceuticals Corporation
11682 El Camino Real, Suite 300
San Diego, CA 92130
Attn: Corporate Secretary
2,000,000
Shares of Common Stock
PROSPECTUS
SUPPLEMENT
Sole
Book-Running Manager
Oppenheimer
& Co.
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Co-Managers |
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CRT Capital |
Maxim Group LLC |
Mizuho Securities |
January
9, 2015
Adamis Pharmaceuticals (NASDAQ:ADMP)
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