unigene_424b3-071310.htm
Filed
pursuant to Rule 424(b)(3)
Registration
Statement No. 333-166850
Prospectus
UNIGENE
LABORATORIES, INC.
80,760,650
Shares of Common Stock
This
prospectus relates to the sale of up to 80,760,650 shares of Unigene
Laboratories, Inc. common stock, par value $.01 per share, by the selling
stockholder named in the “Selling Stockholder” section of this prospectus, of
which 72,114,836 shares will be issuable upon the conversion of senior secured
convertible notes held by the selling stockholder and the balance of which are
currently held of record by the selling stockholder. The prices at which the
selling stockholder may sell the shares will be determined by the prevailing
market price for the shares or in negotiated transactions. We will
not receive any proceeds from the sale of our shares by the selling
stockholder. All costs, expenses and fees in connection with the
registration of these shares will be borne by us.
Our
common stock is quoted in the OTC Bulletin Board under the symbol “UGNE.” On
July 1, 2010, the last reported closing price of our common stock was $0.74 per
share. These over-the-counter quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.
Pursuant
to an Amended and Restated Registration Rights Agreement, dated March 17, 2010
(the “Registration Rights Agreement”), between us and the selling
stockholder, we agreed to file the registration statement of which this
prospectus forms a part to cover the resale by the selling stockholder of the
shares of our common stock registered hereunder, including those shares issuable
from time to time upon the conversion of senior secured convertible notes
(pursuant to the terms and conditions set forth in such notes) issued by us to
the selling stockholder pursuant to an Amended and Restated Financing Agreement,
dated March 16, 2010 (the “Restated Financing Agreement”), by and among Unigene
and Victory Park Management, LLC, as administrative agent and collateral agent,
and the selling stockholder.
You
should read this prospectus carefully before you invest. Please refer to “Risk
Factors Related to our Business” on page 7 of this prospectus for a discussion
of the material risks involved in investing in the shares.
Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date
of this prospectus is July 14, 2010.
TABLE
OF CONTENTS
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ABOUT
THIS PROSPECTUS
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1
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PROSPECTUS
SUMMARY
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1
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RISK
FACTORS
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7
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FORWARD-LOOKING
STATEMENTS
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16
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USE
OF PROCEEDS
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17
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DESCRIPTION
OF SECURITIES TO BE REGISTERED
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18
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SELLING
STOCKHOLDER
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20
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PLAN
OF DISTRIBUTION
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27
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LEGAL
MATTERS
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29
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EXPERTS
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29
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WHERE
YOU CAN FIND MORE INFORMATION
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30
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MATERIAL
CHANGES
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31
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INDEMNIFICATION
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31
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the SEC. The
selling stockholder may sell up to 80,760,650 shares of common stock described
in this prospectus in one or more offerings. The exhibits to our
registration statement contain the full text of certain contracts and other
important documents we have summarized in this prospectus. Since these summaries
may not contain all the information that you may find important in deciding
whether to purchase the securities offered by the selling stockholder, you
should review the full text of these documents. The registration
statement and the exhibits can be obtained from the SEC as indicated under the
heading “Where You Can Find More Information.”
This
prospectus provides you with a general description of the offering of securities
by the selling stockholder. Each time the selling stockholder offers
to sell securities, we may provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read this prospectus, the applicable prospectus
supplement and the additional information described below under the heading
“Where You Can Find More Information.”
You
should rely only on the information contained or incorporated by reference in
this prospectus and in any 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. We are
not making offers to sell or solicitations to buy the securities in any
jurisdiction in which an offer or solicitation is not authorized or in which the
person making that offer or solicitation is not qualified to do so or to anyone
to whom it is unlawful to make an offer or solicitation. You should not assume
that the information in this prospectus or any prospectus supplement, as well as
the information we previously filed with the SEC that we incorporate by
reference in this prospectus or any prospectus supplement, is accurate as of any
date other than its respective date. Our business, financial condition, results
of operations and prospects may have changed since those dates.
In this
prospectus, “Unigene,” “we,” “our,” “ours,” and “us” refer to Unigene
Laboratories, Inc., which is a Delaware corporation headquartered in Boonton,
New Jersey. Unless otherwise stated, the dollar amounts contained in
this prospectus and any accompanying prospectus supplement are presented in U.S.
dollars.
PROSPECTUS
SUMMARY
The
following summary highlights information contained elsewhere in this prospectus.
It may not contain all of the information that is important to you. You should
read the entire prospectus carefully, especially the discussion regarding the
risks of investing in Unigene common stock under the heading “Risk Factors,”
before investing in Unigene common stock. “Unigene®,” “Forcaltonin®,” and
“Fortical®” are registered trademarks of Unigene Laboratories, Inc.
Business
We are a
biopharmaceutical company engaged in the research, production and delivery of
small proteins, referred to as peptides, for medical use. We have a patented
manufacturing technology for producing many peptides cost-effectively. We also
have patented oral and nasal delivery technologies that have been shown to
deliver medically useful amounts of various peptides into the bloodstream. We
have three operating locations: administrative and regulatory offices in
Boonton, New Jersey; a laboratory research facility in Fairfield, New Jersey;
and a pharmaceutical production facility in Boonton, New Jersey.
Our
primary focus has been on the development of calcitonin and other peptide
products for the treatment of osteoporosis and other indications. Among our
major accomplishments are:
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Development, Licensing and
Commercialization of a Nasal Calcitonin Product Using Our Proprietary
Technology. We have developed and patented a nasal
calcitonin product, which we have trademarked as Fortical®, that, in human
studies, demonstrated similar blood levels to a competitor’s existing
nasal calcitonin product and also demonstrated a comparable decrease in
bone loss as measured by several industry-accepted blood markers, and a
comparable increase in bone mineral density. During 2002, we licensed U.S.
rights to Fortical to Upsher-Smith Laboratories, Inc., or USL. Fortical
was approved by the Food and Drug Administration, or FDA, in 2005 for the
treatment of osteoporosis. This was our first product approval in the
United States. The launch of Fortical has resulted in sales to, and
royalty payments from, USL.
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Development and Licensing of a
Proprietary Peptide Production Process. One of our
principal scientific accomplishments is our success in developing a highly
efficient biotechnology-based peptide production process. Several patents
relating to this process have issued. We believe that this proprietary
process is a key step in the more efficient and economical commercial
production of medically-useful peptides. Many of these peptides cannot be
produced at a reasonable cost in sufficient quantities for human testing
or commercial use by other currently available production processes. We
have constructed and are operating a manufacturing facility employing this
process to produce oral parathyroid hormone, or PTH, and calcitonin, and
we have also produced laboratory-scale quantities of several other
peptides. In 2004, we licensed worldwide rights to our patented
manufacturing technology for the production of calcitonin to Novartis
Pharma AG, or Novartis, and we signed a supply agreement with Novartis in
2007 using this technology to manufacture peptide for a novel osteoporosis
treatment.
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·
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Development and Licensing of
Phase III Oral Calcitonin Program. We licensed our Phase
III oral calcitonin program in October 2009 to Tarsa Therapeutics, Inc.,
or Tarsa, a new company formed by a syndicate of three venture capital
funds specializing in the life sciences. Unigene owns approximately 26% of
Tarsa and will be eligible to receive milestone payments based on the
achievement of certain sales benchmarks, as well as royalties on product
sales. Going forward Tarsa will be solely responsible for the costs of the
global Phase III clinical program that was initiated in 2009 and Tarsa
paid us approximately $9,000,000 in October 2009 for certain of our Phase
III expenditures.
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Development and Licensing of
Proprietary Technology for Oral Delivery. We have
licensed worldwide rights to our manufacturing and delivery technologies
for PTH for the treatment of osteoporosis to GlaxoSmithKline, or GSK. We
have developed and patented an oral formulation that has successfully
delivered therapeutically important quantities of calcitonin and PTH into
the bloodstream of human subjects in studies performed by Unigene and our
collaborators. We believe that the components of our patented oral product
also can enable the delivery of other peptides, and we have initiated
studies to investigate this possibility internally and in collaboration
with others. During 2001, we reported successful oral delivery in animal
studies of various peptides including PTH for the treatment of
osteoporosis and insulin for the treatment of diabetes. During 2002, we
licensed rights to our manufacturing and delivery technologies for oral
PTH to GSK.
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Other Potential Technology and
Therapies. To expand our product pipeline we are
developing our site-directed bone growth technology, or SDBG, in
conjunction with Yale University, and we have in-licensed technology from
Queen Mary, University of London related to potential therapies for
inflammation and cardiovascular disease. We are also developing a novel
peptide treatment for obesity.
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·
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Chinese Joint
Venture. We have licensed to our Chinese joint venture
certain proprietary technologies and know-how to support the research,
development, and manufacturing of recombinant salmon calcitonin and
non-oral PTH, as well as other possible products, in the People’s Republic
of China.
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Additional Feasibility
Studies. In addition, we periodically perform
feasibility studies for third parties, which could lead to licensing or
other commercial opportunities for such
products.
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Our
business strategy is to develop proprietary products and processes with
applications in human health care to generate revenues from license fees,
royalties on third-party sales and direct sales of bulk or finished products.
Generally, we fund our internal research activities and, due to our limited
financial resources, we rely on licensees, which are likely to be established
pharmaceutical companies, to provide development funding. We also generally
expect to rely on these licensees to take responsibility for obtaining
appropriate regulatory approvals, human testing, and marketing of products
derived from our research activities. However, we may, in some cases, retain the
responsibility for human testing and for obtaining the required regulatory
approvals for a particular product.
Our
patented manufacturing and delivery technologies provide the technological
foundation for our business strategy. The potential pharmaceutical products that
we are developing use one or, in some cases, two of these technologies. Our oral
calcitonin and oral PTH products would utilize our peptide production process,
as well as our oral delivery system for peptides. These products are currently
in development and, if approved, they most likely would be introduced into the
market years from now.
Our
products, other than Fortical in the United States, will require clinical trials
and/or approvals from regulatory agencies and all of our products will require
acceptance in the marketplace. There are risks that these clinical trials will
not be successful and that we will not receive regulatory approval or
significant revenue for these products. We compete with specialized
biotechnology companies, major pharmaceutical and chemical companies and
universities and research institutions. Most of these competitors have
substantially greater resources than we do.
Corporate
Information
Unigene
is incorporated under the laws of the State of Delaware. Our executive offices
are located at 81 Fulton Street, Boonton, New Jersey 07005, and our telephone
number at this location is (973) 265-1100. The address of our website is
www.unigene.com. Information on our website is not part of this
prospectus.
Unigene
Common Stock
Unigene
common stock trades on the OTC Bulletin Board under the symbol
“UGNE.”
About
This Offering
On
September 30, 2008, we entered into a Financing Agreement (the “Original
Financing Agreement”) with Victory Park Management, LLC (“Victory Park”), as
agent, and Victory Park Special Situations Master Fund, Ltd. ( “Special
Situations Fund”) and the selling stockholder (together, the “Funds”), pursuant
to which the Funds purchased $20 million of three-year senior secured
non-convertible term notes (the “Original Notes”) from us and we issued
1,500,000 shares of common stock to the Funds at two closings (the
“Shares”).
On
October 19, 2009, in connection with the Omnibus Amendment Agreement that we
entered into with the Funds, we issued 300,000 shares of common stock (the
“Exchange Shares”) to Special Situations Fund in exchange for Special Situations
Fund’s surrender of a warrant to purchase 1,000,000 shares of common stock
pursuant to the terms of a Warrant Exchange Agreement. The Funds also
had collectively purchased an aggregate of 6,845,814 shares of our common stock
in open market transactions and privately negotiated transactions (the “Other
Shares”). In March 2010, Special Situations Fund sold and
assigned to the selling stockholder all of its rights, title and interest in and
to the Original Notes, the Shares, the Exchange Shares and the Other
Shares.
On March
16, 2010, we entered into the Restated Financing Agreement with Victory Park, as
administrative agent and collateral agent, and the selling stockholder, as
lender, and, under that agreement, we issued three-year senior secured
convertible notes in the aggregate principal amount of $33,000,000 due in March
2013 (the “Notes”), in exchange for the Original Notes in the outstanding
aggregate principal amount of approximately $19,360,000 and by way of cash
payment (before closing expenses) of approximately $13,640,000. Of
the 80,760,650 shares of common stock that we are registering on this
registration statement, 72,114,836 shares will be issuable, if at all, upon
conversion of the Notes.
The table
below more fully describes the net proceeds we received from the sale of the
Original Notes and the Notes:
Net
Proceeds From the Sale of the Original Notes
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Gross
Cash Proceeds
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Related
Disbursements and Value of Stock Issued in Connection with Sale of the
Original Notes
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Net
Proceeds
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Original
Notes issued September 30, 2008(1)
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$ |
15,000,000 |
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$ |
1,779,250 |
(2) |
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$ |
13,220,750 |
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Original
Notes issued May 22, 2009(1)
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$ |
5,000,000 |
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$ |
621,750 |
(3) |
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$ |
4,378,250 |
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Net
Proceeds From the Sale of the Notes
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Gross
Cash Proceeds
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Related
Disbursements and Value of Stock Issued in Connection with Sale of the
Notes
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Net
Proceeds
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Notes
issued March 17, 2010
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$ |
13,642,473 |
(1)(4) |
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$ |
2,007,534 |
(5) |
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$ |
11,634,939 |
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Total
Net Proceeds from Sale of Original Notes and Notes
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$ |
29,233,939 |
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(1)
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The
Original Notes were cancelled on March 17, 2010 pursuant to the terms of
the Restated Financing Agreement and in connection with the issuance of
the Notes.
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(2)
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Consisting
of a $450,000 closing fee; the issuance of 1,125,000 shares of common
stock (valued based on the $1.09 closing price per share on the issuance
date); and $103,000 in legal and due diligence fees. This does
not include $1,050,000 of interest prepaid on September 30,
2008.
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(3)
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Consisting
of a $150,000 closing fee; the issuance of 375,000 shares of common stock
(valued based on the $0.97 closing price per share on the issuance date);
and $108,000 in legal and due diligence fees. This does not
include $358,000 of interest prepaid on May 22,
2009.
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(4)
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The
aggregate principal amount of the Notes was $33,000,000, and was issued in
exchange for cancellation of the outstanding aggregate principal amount of
$19,357,527 on the Original Notes, and by way of cash payment (before
closing expenses) of $13,642,473.
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$714,274
in fees paid to RBC;
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$665,000
in fees paid to Victory Park Management,
LLC;
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$1,987
in fees paid to Land Services USA, Inc.;
and
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·
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$626,273
in various legal fees paid.
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In
addition, pursuant to the Restated Financing Agreement, we may request that the
selling stockholder purchase (which purchase shall be in its sole discretion) up
to an additional $3,000,000 aggregate principal amount of Notes at one
subsequent closing, which shall be no later than March 17, 2012. The
Notes will accrue interest at a rate per annum equal to the greater of (i) the
prime rate plus 5% and (ii) 15%, which, in the absence of an Event of Default
(as defined therein), shall be capitalized and added to the outstanding
principal balance of such Notes on each anniversary of the date of issuance
other than the maturity date.
The
Company intends to make all payments required to be made on the
Notes. In order to do so, however, the Company will need to generate
sufficient cash flow under its agreements with Upsher-Smith Laboratories, Inc.,
GlaxoSmithKline, Tarsa Therapeutics, Inc. or Novartis Pharma AG, or sign new
research, licensing or distribution agreements or locate other sources of cash
flow sufficient for that purpose. Alternatively, the Company would
have to enter into a refinancing transaction.
The Notes
will be convertible into shares of common stock (the “Conversion Shares”) at the
holder’s option upon the earliest of (i) March 17, 2011, (ii) the earliest date
on which we are required under the Notes to provide to the holder prior written
notice of our intention to consummate, or the occurrence of, a Fundamental
Transaction (as defined in the Notes), (c) our delivery of the redemption notice
(described below) and (d) the occurrence of an Event of Default under the
Restated Financing Agreement. The initial conversion rate, which is
subject to adjustment as set forth in the Notes, is calculated by dividing the
sum of the principal to be converted, plus all accrued and unpaid interest
thereon, by $0.70 per share. If we subsequently make certain
issuances of common stock or common stock equivalents at an effective purchase
price less than the then-applicable conversion price, the conversion price of
the Notes will be reduced to such lower price. After March 17, 2011, under
certain circumstances, and subject to specified conditions, we have the right,
at our option, by delivery of written notice, to redeem $13,642,472.50 of the
Notes at a price equal to 110% of the unpaid outstanding principal amount of the
Notes being redeemed plus accrued and unpaid interest with respect to such
principal amount; provided, that the holder of the Notes may elect to convert
all or any portion of such Notes that we are electing to redeem.
Assuming
$33,000,000 aggregate principal amount of Notes together with accrued interest
thereon is outstanding for the full three-year term of the Notes, and assuming a
conversion price of $0.70, the Notes will be convertible into 72,114,836
Conversion Shares. Under the Registration Rights Agreement, we are
required to file and maintain effective with the SEC a registration statement
covering the resale of all of the Shares, the Exchange Shares, the Other Shares
and the Conversion Shares. On the closing date of the Restated
Financing Agreement, the number of our authorized shares of common stock was
insufficient to cover all the Conversion Shares issuable if such Notes were
converted in full. Accordingly, we sought and received stockholder
approval at our 2010 Annual Meeting of Stockholders to increase the number of
authorized shares of common stock to a number that is sufficient to cover the
full number of Conversion Shares (plus a buffer equal to an additional 50% of
those shares), and have registered on the registration statement of which this
prospectus forms a part the full number of Conversion Shares.
As of
June 30, 2010, there were 92,233,551 shares of our common stock outstanding,
including the Shares, the Exchange Shares, and the Other Shares. The
number of shares outstanding does not include the additional 72,114,836 shares
of common stock being registered hereunder that the selling stockholder may
acquire upon conversion of the Notes. The 80,760,650 shares offered
by this prospectus represent approximately 49.1% of
the total common stock outstanding as of June 30, 2010, assuming the
issuance of 72,114,836 Conversion Shares.
The
shares offered by this prospectus may be sold by the selling stockholder from
time to time in the open market, through negotiated transactions or otherwise at
market prices prevailing at the time of sale or at negotiated
prices. We will receive none of the proceeds from the sale of the
shares by the selling stockholder. We will bear all expenses of
registration incurred in connection with this offering, but all selling and
other expenses incurred by the selling stockholder will be borne by
it.
RISK
FACTORS
Our
business is subject to the following risks:
We
may require additional cash to sustain our operations and our ability to secure
additional cash is uncertain.
We had a
cash flow deficit from operations of $2,675,000 for the three months ended March
31, 2010 and a cash flow deficit from operations of $11,291,000 for the year
ended December 31, 2009. Notwithstanding our receipt in March 2010 of
approximately $13,640,000 (before closing expenses) from the selling
stockholder, we may eventually need additional sources of cash in order to
maintain all of our future operations.
Our
future capital requirements will depend on many factors, including:
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the
level of Fortical sales, particularly in light of new and potential
competition;
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our
ability to successfully defend our Fortical patent against Apotex, Inc.
and Apotex Corporation’s abbreviated new drug application
(“ANDA”);
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the
generation of revenue from our Tarsa, Novartis and GSK
agreements;
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continued
scientific progress in our discovery and research
programs;
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progress
with preclinical studies and clinical
trials;
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the
magnitude and scope of our discovery, research and development
programs;
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our
ability to maintain existing, and establish additional, corporate
partnerships and licensing
arrangements;
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our
partners’ ability to sell and market our products or their products
utilizing our technologies;
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the
time and costs involved in obtaining regulatory
approvals;
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the
time and costs involved in maintaining our production
facility;
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the
costs involved in preparing, filing, prosecuting, maintaining, defending
and enforcing patent claims including our current litigation regarding
Apotex’s ANDA; and
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the
pharmaceutical industry’s need to acquire or license new technologies and
products.
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We may be
unable to raise on acceptable terms, if at all, the substantial capital
resources necessary to continue to conduct our operations. The
Restated Financing Agreement contains certain covenants that, among other
things, restrict our ability to: sell common stock, preferred stock or other
instruments or securities which are convertible into or exchangeable or
exercisable for shares of common stock without using a portion of the proceeds
therefrom toward mandatory repayment of the Notes; and, other than certain
permitted amounts, incur additional indebtedness or engage in any sale and
leaseback, synthetic lease or similar transaction and create
liens. These restrictions could limit our ability to obtain future
financing. In addition, until the maturity date of the Notes, it may
be difficult for us to raise funds through sales of our securities, to the
extent they are permitted under the Restated Financing Agreement, since the
ownership interests and proportionate voting power of existing and new
stockholders (other than Victory Park) will be significantly diluted upon
conversion of the Notes. If we are unable to raise the required
capital, we may be forced to limit some or all of our research and development
programs and related operations, curtail commercialization of our product
candidates and, ultimately, cease operations.
We
have payments due beginning in 2010 under the Levy loans.
As of
June 30, 2010, we owed Jean Levy and the Jaynjean Levy Family Limited
Partnership principal outstanding and interest accrued on certain notes in the
aggregate amount of $18,995,000. We made required repayments of
$1,000,000 on those notes on May 10, 2010, and, subject to certain conditions,
are required to repay an additional $500,000 on November 10, 2010 and $250,000
on May 10, 2011, with the balance of the outstanding principal and accrued
interest payable thereunder on June 18, 2013. We may not be able to generate
sufficient cash from operations or from other sources in order to make any or
all of these required payments.
There
are numerous default provisions under our Restated Financing Agreement with the
selling stockholder.
Under the
Restated Financing Agreement with Victory Park and the selling stockholder, so
long as our outstanding note balance is at least $5,000,000, we must maintain a
cash balance equal to at least $2,500,000 and our cash flow (as defined in the
agreement) must be at least $2,000,000 in any fiscal quarter or $7,000,000 in
any three consecutive quarters. The agreement specifies certain events of
default including, without limitation: failure to pay principal or interest;
filing for bankruptcy; breach of covenants, representations or warranties; the
occurrence of a material adverse effect (as defined in the Restated Financing
Agreement); a change in control (as defined in the Restated Financing
Agreement); any material decline or depreciation in the value or market price of
the collateral; the failure of any registration statement required to be filed
to be declared effective by the SEC, and maintained effective pursuant to the
terms of the Registration Rights Agreement; and a Conversion Failure (as defined
in the Restated Financing Agreement). Upon any default, among other
remedies, both principal and interest would be accelerated and additional
charges would apply. There is no assurance that we will be able to maintain a
minimum cash balance of $2,500,000, or maintain an adequate cash flow, in order
to avoid default. In addition, there is no assurance that the Notes
will be converted into common stock, in which case, we may not have sufficient
cash from operations or from new financings to repay the Victory Park debt when
it comes due in 2013, or that new financings will be available on favorable
terms, if at all.
Our
operations for future years are highly dependent on the successful marketing and
sales of Fortical and could be further impacted by generic or other
competition.
Fortical
is our only product approved by the FDA. Any factors that adversely impact the
marketing of Fortical including, but not limited to, competition, including
generic competition, acceptance in the marketplace, or delays related to
production and distribution or regulatory issues, will have a negative impact on
our cash flow and operating results. For the first quarter of 2010, compared to
the first quarter of 2009, Fortical sales to USL decreased 2% and Fortical
royalties decreased 41%. For 2009, compared to 2008, Fortical sales
to USL decreased 41% while Fortical royalties decreased 23%. In December 2008,
Apotex Inc. and Sandoz Pharmaceuticals launched nasal calcitonin products which
are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June
2009, Par Pharmaceutical Companies, Inc. also launched a product generic to
Novartis’ nasal calcitonin product. We do not yet know the long-term effect on
Fortical sales and royalties of the launch of these competing products. However,
certain providers have substituted these products for Fortical, causing Fortical
sales and royalties to decrease. Further decreases in Fortical sales or
royalties could have a material adverse effect on our business, financial
condition and results of operations. In addition, Apotex has a pending ANDA for
a nasal calcitonin product that we claim infringes our Fortical patent. We have
sued Apotex for infringement of our Fortical Patent and Apotex has been enjoined
from conducting any activities which would infringe the patent. Apotex has
appealed that decision and if we do not prevail in this litigation, then Apotex
could be in a position to market its nasal calcitonin product if and when its
pending ANDA receives FDA approval.
We
have significant historical losses and may continue to incur losses in the
future.
We have
incurred annual losses since our inception. As a result, at March 31, 2010, we
had an accumulated deficit of approximately $159,000,000. Our gross
revenues for the quarter ended March 31, 2010 and the years ended December 31,
2009 and 2008 were $2,533,000, $12,792,000 and $19,229,000, respectively. Our
revenues have not been sufficient to sustain our operations. Revenue for the
first quarter of 2010 and 2009 and 2008 consisted primarily of Fortical sales
and royalties. As of March 31, 2010, we had four material license agreements. We
believe that to achieve profitability we will require the successful
commercialization of at least one or more of our licensees’ oral or nasal
calcitonin products, our oral PTH product, our SDBG or obesity programs or
another peptide product in the U.S. and/or abroad.
For the
quarter ended March 31, 2010, we had an operating loss of
$2,801,000. For 2009 and 2008, we had losses from operations of
$12,380,000 and $4,950,000, respectively. Our net loss for the three months
ended March 31, 2010 was $15,947,000. Our net losses for the years
ended December 31, 2009 and 2008 were $13,380,000 and $6,078,000, respectively.
We might never be profitable.
We
believe that satisfying our long-term capital requirements will require the
successful commercialization of at least one or more of our peptide products.
However, our products may never become commercially successful.
Most
of our products are in early stages of development, and we and our licensees may
not be successful in efforts to develop a calcitonin, PTH or other peptide
product that will produce revenues sufficient to sustain our
operations.
Our
success depends on our and our licensees’ ability to commercialize a calcitonin,
PTH or other peptide product that will produce revenues sufficient to sustain
our operations. Except for Fortical, most of our products are in early stages of
development and we and our licensees may never develop a calcitonin, PTH or
other peptide product that makes us profitable. We have a joint venture in China
with SPG that may never generate profits. Our ability to achieve profitability
is dependent on a number of factors, including our and our licensees’ ability to
complete development efforts, obtain regulatory approval for additional product
candidates and successfully commercialize those product candidates or our
technologies. We believe that the development of more desirable formulations is
essential to expand consumer acceptance of peptide pharmaceutical products.
However, we may not be successful in our development efforts, or other companies
may develop such products, or superior products, before we do.
We
may not be successful in our efforts to gain regulatory approval for our
products other than Fortical and, if approved, the approval may not be on a
timely basis.
Even if
we or our licensees are successful in our development efforts, we may not be
able to obtain the necessary regulatory approval for our products other than
Fortical. The FDA must approve the commercial manufacture and sale of
pharmaceutical products in the United States. Similar regulatory approvals are
required for the sale of pharmaceutical products outside of the United States.
Our joint venture may not be able to obtain regulatory approval of our products
in China. None of our products other than Fortical has been approved for sale in
the United States, and our other products may never receive the approvals
necessary for commercialization. We must conduct further human testing on
certain of our products before they can be approved for commercial sale and such
testing requires the investment of significant resources. Any delay in
receiving, or failure to receive, these approvals would adversely affect our
ability to generate product revenues.
We
may not be successful in efficiently developing, manufacturing or
commercializing our products.
Because
of our limited clinical, manufacturing and regulatory experience and our lack of
a marketing organization, we are likely to rely on licensees or other parties to
perform one or more tasks for the commercialization of our pharmaceutical
products, such as USL to market and distribute Fortical in the U.S. If any of
our products are approved for commercial sale, the product will need to be
manufactured in commercial quantities at a reasonable cost in order for it to be
a successful product that can generate profits. We may incur additional costs
and delays while working with these parties, and these parties may ultimately be
unsuccessful in the commercialization of a product.
Our
success is dependent on our ability to establish and maintain commercial
partnerships and currently we have only four significant license
agreements.
We do not
currently have, nor do we expect to have in the near future, sufficient
financial resources and personnel to develop and market products on our own.
Accordingly, we expect to continue to depend on pharmaceutical companies for
revenues from sales of products, research sponsorship and distribution of our
products.
The
process of establishing partnerships is difficult and time-consuming. Our
discussions with potential partners may not lead to the establishment of new
partnerships on favorable terms, if at all. If we successfully establish new
partnerships, the partnerships may never result in the successful development of
our product candidates or the generation of significant revenue. Management of
our relationships with these partners would require:
·
|
significant
time and effort from our management
team;
|
·
|
coordination
of our research with the research priorities of our corporate
partners;
|
·
|
effective
allocation of our resources to multiple projects;
and
|
·
|
an
ability to attract and retain key management, scientific, production and
other personnel.
|
We may
not be able to manage these relationships successfully.
We
currently have significant license agreements with Novartis worldwide for the
production of calcitonin, with GSK worldwide for oral PTH, with USL in the
United States for nasal calcitonin and with Tarsa worldwide (except for China)
for oral calcitonin. We are pursuing additional opportunities to license or
enter into distribution arrangements for products that utilize our oral and
nasal delivery technologies and/or our manufacturing technology, as well as our
other technologies. However, we may not be successful in any of these
efforts.
In June
2000, we entered into a joint venture agreement with SPG for the manufacture and
distribution of injectable and nasal calcitonin products in China and possibly,
with our approval, other selected Asian markets, for the treatment of
osteoporosis. The joint venture began operations in 2002. This
joint venture may never generate revenue or profits.
We have
entered into a license agreement in Israel for nasal calcitonin. To date, we
have not received any revenue from this agreement and may never do
so.
Because
we are a biopharmaceutical company, our operations are subject to extensive
government regulation.
Our
laboratory research, development and production activities, as well as those of
our collaborators and licensees, are subject to significant regulation by
federal, state, local and foreign governmental authorities. In addition to
obtaining FDA approval and other regulatory approvals for our products, we must
maintain approvals for our manufacturing facility to produce calcitonin, PTH and
other peptides for human use. The regulatory approval process for a
pharmaceutical product requires substantial resources and may take many years.
Our inability to obtain approvals or delays in obtaining approvals would
adversely affect our ability to continue our development program, to manufacture
and sell our products, and to receive revenue from milestone payments, product
sales or royalties.
The FDA
and other regulatory agencies may audit our production facility at any time to
ensure compliance with cGMP guidelines. These guidelines require that we conduct
our production operation in strict compliance with our established rules for
manufacturing and quality controls. Any of these agencies can suspend production
operations and product sales if they find significant or repeated deviations
from these guidelines. A suspension would likely cause us to incur additional
costs or delays in product development.
In
addition, we are subject to the U.S. Foreign Corrupt Practices Act, which
prohibits corporations and individuals from engaging in certain activities to
obtain or retain business or to influence a person working in an official
capacity. Generally speaking, it is illegal to pay, offer to pay or
authorize the payment of anything of value to any foreign government official,
government staff member, political party or political candidate in an attempt to
obtain or retain business or to otherwise influence a person working in an
official capacity. Our present and future business is, and will continue to be,
subject to various other laws, rules and/or regulations applicable to us as a
result of our international business.
Fortical
currently faces competition from large pharmaceutical companies and, if our
other products receive regulatory approval, these other products would also face
competition from large pharmaceutical companies with superior
resources.
We are
engaged in developing pharmaceutical products, which is a rapidly changing and
highly competitive field. To date, we have concentrated our efforts primarily on
products to treat one indication — osteoporosis. Like the market for any
pharmaceutical product, the market for treating osteoporosis has the potential
for rapid, unpredictable and significant technological change. Competition is
intense from specialized biotechnology and biopharmaceutical companies, major
pharmaceutical and chemical companies and universities and research
institutions. In December 2008, Apotex and Sandoz launched nasal calcitonin
products that are generic to Novartis’ nasal calcitonin product, but not to
Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal
calcitonin product. We do not yet know the long-term effect on Fortical sales
and royalties of the launch of these competing products. However, certain
providers have substituted these products for Fortical, causing Fortical sales
and royalties to decrease. There could also be future competition from products
that are generic to Fortical, including Apotex’s product that is the subject of
our ANDA litigation. Fortical also faces competition from large pharmaceutical
companies that produce other osteoporosis products, and, if any of our other
products receive regulatory approval, these other products likely would also
face competition from large pharmaceutical companies with substantially greater
financial resources, research and development staffs and facilities, and
regulatory experience than we have. Major companies in the field of osteoporosis
treatment include Novartis, Merck, Eli Lilly and Sanofi-Aventis. One
of these potential competitors could, at any time, develop products or a
manufacturing process that could render our technology or products
noncompetitive or obsolete.
Our
success depends upon our ability to protect our intellectual property
rights.
We filed
applications for U.S. patents relating to proprietary peptide manufacturing
technology and oral and nasal formulations that we have invented in the course
of our research. Our most important U.S. manufacturing and delivery patents
expire from 2021 to 2025, and we have applications pending that could extend
that protection. To date, 13 U.S. patents have issued and other applications are
pending. We have also made patent application filings in selected foreign
countries, and 87 foreign patents have issued with other applications pending.
We face the risk that any of our pending applications will not be issued as
patents. In addition, our patents may be found to be invalid or unenforceable,
including in the pending ANDA litigation with Apotex. Our business also is
subject to the risk that our issued patents will not provide us with significant
competitive advantages if, for example, a competitor were to independently
develop or obtain similar or superior technologies. To the extent we are unable
to protect our patents and patent applications, our investment in those
technologies may not yield the benefits that we expect.
We also
rely on trade secrets to protect our inventions. Our policy is to include
confidentiality obligations in all research contracts, joint development
agreements and consulting relationships that provide access to our trade secrets
and other know-how. However, parties with confidentiality obligations could
breach their agreements causing us harm. If a secrecy obligation were to be
breached, we may not have the financial resources necessary for a legal
challenge. If licensees, consultants or other third parties use technological
information independently developed by them or by others in the development of
our products, disputes may arise from the use of this information and as to the
ownership rights to products developed using this information. These disputes
may not be resolved in our favor and could materially impact our
business.
Our
technology or products could give rise to product liability claims.
Our
business exposes us to the risk of product liability claims from human testing,
manufacturing and sale of pharmaceutical products. The administration of drugs
to humans, whether in clinical trials or commercially, can result in product
liability claims even if our products are not actually at fault for causing an
injury. Furthermore, our products may cause, or may appear to cause, adverse
side effects or potentially dangerous drug interactions that we may not learn
about or understand fully until the drug is actually manufactured and sold.
Product liability claims can be expensive to defend and may result in large
judgments against us. Even if a product liability claim is not successful, the
adverse publicity, time and expense involved in defending such a claim may
interfere with our business. We may not have sufficient resources to defend
against or satisfy these claims. We currently maintain $10,000,000 in product
liability insurance coverage. However, this amount may not be sufficient to
protect us against losses or may be unavailable in the future on acceptable
terms, if at all.
The
global financial crisis may adversely affect our business and financial
results.
The
global credit crisis that began in 2007 was further exacerbated by events
occurring in the financial markets in the fall of 2008 and continuing in 2009
and 2010. These events have negatively impacted the ability of corporations to
raise capital through equity financings or borrowings. Depending on
our future revenue, we believe our current cash should be sufficient to support
our operations for one to two years. When we need additional cash, we may not be
able to raise such capital on reasonable terms, if at all. If we are unable to
raise required capital when needed, we may be forced to limit some or all of our
research and development programs and related operations, curtail
commercialization of our product candidates and, ultimately, cease
operations. In addition, uncertainty about current and future global
economic conditions may impact our ability to license our products and
technologies to other companies and may cause consumers to defer purchases of
prescription medicines, such as Fortical, in response to tighter credit,
decreased cash availability and declining consumer confidence. Accordingly,
future demand for our product could differ from our current
expectations.
We
have a new Chief Executive Officer.
We
recently hired a new Chief Executive Officer. We cannot assure you
that our new Chief Executive Officer will be successfully integrated into our
management team and effectively implement our business strategy. If
the management team is unable to work together to successfully implement our
business strategy, it could have a material adverse effect on our financial
condition, results of operations and cash flow.
We
may be unable to retain key employees or recruit additional qualified
personnel.
Because
of the specialized scientific nature of our business, we are highly dependent
upon qualified scientific, technical, production and managerial personnel. There
is intense competition for qualified personnel in our business. Therefore, we
may not be able to attract and retain the qualified personnel necessary for the
development of our business. The loss of the services of existing personnel, as
well as the failure to recruit additional key scientific, technical, production
and managerial personnel in a timely manner, would harm our research and
development programs and our business.
The
market price of our common stock is volatile.
The
market price of our common stock has been, and we expect it to continue to be,
highly unstable. Factors, including our announcement of technological
improvements or announcements by other companies, regulatory matters, research
and development activities, new or existing products or procedures, signing or
termination of licensing agreements, concerns about competition, sales, our
financial condition, operating results, litigation, government regulation,
developments or disputes relating to agreements, patents or proprietary rights,
and public concern over the safety of activities or products have had a
significant impact on the market price of our stock. We expect such factors to
continue to impact our market price for the foreseeable future.
Our
common stock is classified as a “penny stock” under SEC rules, which may make it
more difficult for our stockholders to resell our common stock.
Our
common stock is traded on the OTC Bulletin Board. As a result, the holders of
our common stock may find it more difficult to obtain accurate quotations
concerning the market value of the stock. Stockholders also may experience
greater difficulties in attempting to sell the stock than if it was listed on a
stock exchange. Because Unigene common stock is not traded on a stock exchange
and the market price of the common stock is less than $5.00 per share, the
common stock is classified as a “penny stock.” Rule 15g-9 of the Exchange Act
imposes additional sales practice requirements on broker-dealers that recommend
the purchase or sale of penny stocks to persons other than those who qualify as
an “established customer” or an “accredited investor.” These include the
requirement that a broker-dealer must make a determination that investments in
penny stocks are suitable for the customer and must make special disclosures to
the customer concerning the risks of penny stocks. Application of the penny
stock rules to our common stock could adversely affect the market liquidity of
the shares, which in turn may affect the ability of holders of our common stock
to resell the stock.
The
exercise of warrants and options and the conversion of the Notes, as well as
other issuances of shares, will likely have a dilutive effect on our stock price
and could lead to a change in control.
As of
June 30, 2010, there were outstanding warrants to purchase 60,000 shares of our
common stock, all but 20,000 of which are currently exercisable, at an average
exercise price of $2.13 per share. There were also outstanding stock
options to purchase an aggregate of 7,829,215 shares of common stock, at an
average exercise price of $1.11, of which 3,560,464 are currently exercisable.
If our stock price should increase above the exercise price of these derivative
securities, then such exercise at prices below the market price of our common
stock followed by the sale of such shares could adversely affect the price of
our common stock.
In March
2010, we issued to Victory Park $33,000,000 of Notes, which come due in
2013. The Notes are convertible into shares of common stock at the
holder’s option upon the earliest of (a) March 17, 2011, (b) the earliest date
on which we are required under the Notes to provide to the holder prior written
notice of our intention to consummate, or the occurrence of, a fundamental
transaction (as defined in the notes), (c) our delivery of a redemption notice
and (d) the occurrence of an event of default under the Restated Financing
Agreement. In addition, pursuant to the Restated Financing Agreement,
we may request that Victory Park purchase (which purchase shall be in its sole
discretion) up to an additional $3,000,000 aggregate principal amount of Notes
at one subsequent closing, which shall be no later than March 17,
2012. The Notes are not currently convertible. The initial
conversion rate, which is subject to adjustment as set forth in the Notes, is
calculated by dividing the sum of the principal to be converted, plus all
accrued and unpaid interest thereon, by $0.70 per share. If we
subsequently make certain issuances of common stock or common stock equivalents
at an effective purchase price less than the then-applicable conversion price,
the conversion price of the Notes will be reduced to such lower price. Assuming
we do not redeem the Notes prior to their maturity date and $33,000,000
aggregate principal amount of Notes together with accrued interest thereon is
outstanding for the full three-year term of the Notes, and assuming a conversion
price of $0.70 and no additional issuances of common stock, then, together with
the shares and other securities owned by them, Victory Park and its affiliates
would beneficially own in the aggregate approximately 46.9% of our outstanding
common stock (as diluted by outstanding options and warrants) calculated as of
June 30, 2010.
Additional
dilution may result from the issuance of shares of our common stock in
connection with collaborations or licensing agreements or in connection with
other financing efforts. The issuance of additional shares, including
upon conversion of the Notes, could have a depressive effect on the market price
of our common stock by increasing the number of shares of common stock
outstanding. Such downward pressure could encourage short sales by certain
investors, which could place further downward pressure on the price of the
common stock.
If
provisions in our stockholder rights plan or Delaware law delay or prevent a
change in control of Unigene, we may be unable to consummate a transaction that
our stockholders consider favorable.
In
December 2002, we adopted a stockholder rights plan. This stockholder rights
plan increases the costs that would be incurred by an unwanted third party
acquirer if such party owns or announces its intent to commence a tender offer
for more than 15% of our outstanding common stock. The plan is designed to
assure our board of directors a full opportunity to review any proposal to
acquire us. However, the plan could prolong the take-over process and, arguably,
deter a potential bidder. These provisions apply even if the offer may be
considered beneficial by some stockholders, and a takeover bid otherwise favored
by a majority of our stockholders might be rejected by our board of directors.
In addition, specific sections of Delaware law may also discourage, delay or
prevent someone from acquiring or merging with us.
Accounting
for our revenues and costs involves significant estimates which, if actual
results differ from estimates, could have a material adverse effect on our
financial position and results of operations.
As
further described in “Summary of Critical Accounting Policies” under “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Annual Report on Form 10-K for the fiscal year ended December
31, 2009 filed on March 16, 2010, accounting for our contract related revenues
and costs as well as other cost items requires management to make a variety of
significant estimates and assumptions. Although we believe we have sufficient
experience and processes in place to enable us to formulate appropriate
assumptions and produce reliable estimates, these assumptions and estimates may
change significantly in the future and these changes could have a material
adverse effect on our financial position and the results of our
operations.
FORWARD-LOOKING
STATEMENTS
Various
statements that we make in this prospectus under the captions “Prospectus
Summary,” “Risk Factors” and elsewhere in this prospectus are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements involve known and unknown
risks, uncertainties and other factors, including those discussed in “Risk
Factors” above, that may cause the actual results, performance or activities of
our business, or industry results, to be materially different from any future
results, performance or activities expressed or implied by the forward-looking
statements. These factors include: general economic and business conditions, our
financial condition, the ability of our products to gain market acceptance and
increase market share, product sales and royalties, competition, our dependence
on other companies to commercialize, manufacture and sell products using our
technologies, the uncertainty of results of animal and human testing, the risk
of product liability and liability for human trials, our dependence on patents
and other proprietary rights and the risks associated with patent litigation,
dependence on key management officials, the availability and cost of capital,
the availability of qualified personnel, changes in, or the failure to comply
with, governmental regulations, the failure to obtain regulatory approvals for
our products, litigation and other factors discussed in this
prospectus.
USE
OF PROCEEDS
The
proceeds from the sale of the shares covered by this prospectus will be received
by the selling stockholder. We will not receive any of the proceeds
from the sales by the selling stockholder of the shares covered by this
prospectus. However, if the selling stockholder converts all or a
portion of the Notes, this conversion will reduce our senior indebtedness to the
selling stockholder and related payment obligations.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Capital
Stock
General
Our
authorized capital stock consists of 275,000,000 shares of common stock, par
value $0.01 per share. As of June 30, 2010 there were 92,233,551 shares of common stock
outstanding and held of record by approximately 608 stockholders.
Each
holder of common stock is entitled to one vote for each share held of record on
all matters submitted to a vote of the stockholders. There is no cumulative
voting for the election of directors and, as a consequence, minority
stockholders will not be able to elect directors on the basis of their votes
alone. Holders of common stock are entitled to receive ratably dividends as may
be declared by the board of directors out of funds legally available therefor.
We have never paid and we do not anticipate declaring or paying any cash
dividends on shares of our common stock in the foreseeable future. Upon our
liquidation, dissolution or winding up, the holders of common stock then
outstanding are entitled to share ratably in our assets remaining after the
payment of liabilities. All shares of common stock outstanding and to be
outstanding upon completion of this offering are and will be fully paid and
nonassessable.
On
December 30, 2002, pursuant to a rights agreement, we distributed common stock
purchase rights to stockholders of record as a dividend at the rate of one right
for each share of common stock. Each share of common stock that we have issued
since December 30, 2002 similarly has been accompanied by a common stock
purchase right. Each right entitles the holder to purchase from us
one ten-thousandth of a share of common stock at an exercise price of $4.00.
Initially the rights are attached to the common stock and are not
exercisable.
The
rights become exercisable and will separate from the common stock:
|
·
|
ten
calendar days after a person or group acquires beneficial ownership of
fifteen percent or more of our common stock,
or
|
|
·
|
ten
business days (or a later date following such announcement as determined
by our Board of Directors) after the announcement of a tender offer or an
exchange offer to acquire fifteen percent or more of our outstanding
common stock.
|
The
rights are redeemable for $.00001 per right at the option of the Board of
Directors at any time prior to the close of business on the tenth calendar day
after a person or group acquires beneficial ownership of fifteen percent or more
of our common stock. If not redeemed, the rights will expire on December 30,
2012. Prior to the date upon which the rights would become exercisable under the
rights agreement, our outstanding stock certificates will represent both the
shares of common stock and the rights, and the rights will trade only with the
shares of common stock.
Generally,
if the rights become exercisable, then each stockholder, other than the
stockholder whose acquisition has caused the rights to become exercisable, is
entitled to purchase, for the exercise price, that number of shares of common
stock that, at the time of the transaction, will have a market value of two
times the exercise price of the rights. In addition, if, after the rights become
exercisable, we are acquired in a merger or other business combination, or fifty
percent or more of our assets, cash flow or earning power are sold, each right
will entitle the holder to purchase, at the exercise price of the rights, that
number of shares of common stock of the acquiring company that, at the time of
the transaction, will have a market value of two times the exercise price of the
rights.
In
connection with the execution of the Restated Financing Agreement, the rights
agreement was amended to render the rights inapplicable to the restructuring
under the Restated Financing Agreement and the other transactions contemplated
by or occurring concurrently with such restructuring.
The
rights plan is intended to improve the ability of our Board of Directors to
protect the interests of Unigene and our stockholders in the event of an
unsolicited proposal to acquire a significant interest in Unigene.
Common
Stock Owned By the Selling Stockholder
On
September 30, 2008, we entered into the Financing Agreement with Victory Park
and the Funds, pursuant to which the Funds purchased $20 million of three-year
senior secured non-convertible term notes from us and we issued the Shares. On
October 19, 2009, in connection with the Omnibus Amendment Agreement that we
entered into with the Funds, we issued the Exchange Shares to Special Situations
Fund in exchange for Special Situations Fund’s surrender of a warrant to
purchase 1,000,000 shares of common stock pursuant to the terms of a Warrant
Exchange Agreement. The Funds also had collectively purchased an
aggregate of 6,845,814 Other Shares in open market transactions and privately
negotiated transactions. In March 2010, Special Situations Fund sold
and assigned to the selling stockholder all of its rights, title and interest in
and to the Original Notes, the Shares, the Exchange Shares and the Other
Shares.
Common
Stock to be Issued to the Selling Stockholder upon Conversion of the
Notes
On March
16, 2010, we entered into the Restated Financing Agreement with Victory Park, as
administrative agent and collateral agent, and the selling stockholder, as
lender, and, under that agreement, we issued three-year senior secured
convertible notes in the aggregate principal amount of $33,000,000 due in March
2013, in exchange for the Original Notes in the outstanding aggregate principal
amount of approximately $19,360,000 and by way of cash payment (before closing
expenses) of approximately $13,640,000. In addition, pursuant to the
Restated Financing Agreement, we may request that the selling stockholder
purchase (which purchase shall be in its sole discretion) up to an additional
$3,000,000 aggregate principal amount of Notes at one subsequent closing, which
shall be no later than March 17, 2012. The Notes will accrue interest
at a rate per annum equal to the greater of (i) the prime rate plus 5% and (ii)
15%, which, in the absence of an Event of Default (as defined therein), shall be
capitalized and added to the outstanding principal balance of such Notes on each
anniversary of the date of issuance other than the maturity date.
The Notes
will be convertible into the Conversion Shares at the holder’s option upon the
earliest of (i) March 17, 2011, (ii) the earliest date on which we are required
under the Notes to provide to the holder prior written notice of our intention
to consummate, or the occurrence of, a Fundamental Transaction (as defined in
the Notes), (c) our delivery of the redemption notice (described below) and (d)
the occurrence of an Event of Default under the Restated Financing
Agreement. The initial conversion rate, which is subject to
adjustment as set forth in the Notes, is calculated by dividing the sum of the
principal to be converted, plus all accrued and unpaid interest thereon, by
$0.70 per share. If we subsequently make certain issuances of common
stock or common stock equivalents at an effective purchase price less than the
then-applicable conversion price, the conversion price of the Notes will be
reduced to such lower price. After March 17, 2011, under certain
circumstances, and subject to specified conditions, we have the right, at our
option, by delivery of written notice, to redeem $13,642,472.50 of the Notes at
a price equal to 110% of the unpaid outstanding principal amount of the Notes
being redeemed plus accrued and unpaid interest with respect to such principal
amount; provided, that the holder of the Notes may elect to convert all or any
portion of such Notes that we are electing to redeem.
Assuming
$33,000,000 aggregate principal amount of Notes together with accrued interest
thereon is outstanding for the full three-year term of the Notes, and assuming a
conversion price of $0.70, the Notes will be convertible into 72,114,836
Conversion Shares. Under the Registration Rights Agreement, we are
required to file with the SEC a registration statement covering the resale of
all of the Shares, the Exchange Shares, the Other Shares and the Conversion
Shares.
SELLING
STOCKHOLDER
The
shares of common stock being offered by the selling stockholder are: (i) the
Shares issued by us pursuant to the Original Financing Agreement; (ii) the
Exchange Shares issued by us pursuant to the Warrant Exchange Agreement; (iii)
the Other Shares acquired by the selling stockholder in open market transactions
and privately negotiated transactions; and (iv) the Conversion Shares issuable
to the selling stockholder upon conversion of the Notes (without regard to any
limitations on conversion contained therein). We are registering the
shares of common stock in order to permit the selling stockholder to offer the
shares for resale from time to time. See the “Plan of Distribution”
section of this prospectus, which follows. Under the terms of the Registration
Rights Agreement, we have agreed to use our best efforts to maintain an
effective registration statement for the period beginning with the effectiveness
of the registration statement of which this prospectus forms a part and ending
with the earlier of (i) the date as of which the selling stockholder may sell
all of the Registrable Securities (as defined in the Registration Rights
Agreement) without restriction or condition pursuant to Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”) (or successor
thereto), or (ii) the date on which the selling stockholder or any transferees
to whom the selling stockholder has assigned its rights under, and in accordance
with the terms and conditions of, the Registration Rights Agreement, have sold
all of the Registrable Securities.
The table
below details issuances of common stock prior to the sale of the Notes to the
selling stockholder, its affiliates and any person with whom the selling
stockholder had a contractual relationship in connection with the
Notes:
Date
of Transaction
|
Shares
of Common Stock Outstanding Prior to Transaction
|
Shares
of Common Stock Outstanding Prior to Transaction Held by Persons Other
Than Selling Stockholder, Affiliates of Company and Affiliates of Selling
Stockholder
|
Shares
Issued to Selling Stockholder or Affiliates of Selling Stockholder in
Connection with the Transaction
|
Market
Price Per Share of Common Stock Prior to the Transaction
|
Current
Market Price Per Share of Common Stock
|
Shares
|
As
a Percentage of Shares of Common Stock Outstanding Prior to Transaction
Held by Persons Other Than Selling Stockholder, Affiliates of Company and
Affiliates of Selling Stockholder
|
September
30, 2008
|
89,025,520
|
78,971,843
|
1,125,000
|
1.42%
|
$0.78(1)
|
$0.74
|
May
22, 2009
|
90,322,763
|
77,606,843
|
375,000
|
0.48%
|
$0.99(2)
|
$0.74
|
October
19, 2009
|
91,029,656
|
78,108,093
|
300,000
|
0.38%
|
$1.94(3)
|
$0.74
|
(1)
|
Based
on the closing price of our common stock as quoted on the Over-the-Counter
Bulletin Board on September 29,
2008.
|
(2)
|
Based
on the closing price of our common stock as quoted on the Over-the-Counter
Bulletin Board on May 21, 2009.
|
(3)
|
Based
on the closing price of our common stock as quoted on the Over-the-Counter
Bulletin Board on October 16, 2009.
|
In
addition, the table below describes the value of payments made by us to the
selling stockholder and its affiliates and to others on behalf of the selling
stockholder in connection with the applicable transaction:
Payments
to the Selling Stockholder, its Affiliates and Others
|
|
Selling
Stockholder, its Affiliates and Others
|
|
Cash
Payments
|
|
|
Value
of Payments in Common Stock
|
|
|
Total
|
|
Victory
Park Management, LLC
|
|
$ |
2,950,038 |
(1) |
|
|
-- |
|
|
$ |
2,950,038 |
|
Victory
Park Special Situations Master Fund, Ltd.
|
|
$ |
1,895,293 |
(2) |
|
$ |
1,924,245 |
(3) |
|
$ |
3,819,538 |
|
Victory
Park Credit Opportunities Master Fund, Ltd.
|
|
$ |
1,152,392 |
(4) |
|
$ |
238,755 |
(5) |
|
$ |
1,391,147 |
|
Total
|
|
$ |
5,997,723 |
|
|
$ |
2,163,000 |
|
|
$ |
8,160,723 |
|
·
|
Interest
payments in 2009 under the Original Financing Agreement for an aggregate
of $1,391,703;
|
·
|
Legal
and due diligence fees in 2008 and 2009 for an aggregate of
$211,000;
|
·
|
Interest
payments in 2010 under the Original Financing Agreement (until the
execution of the Restated Financing Agreement) for an aggregate of
$682,335;
|
·
|
A
$660,000 closing fee paid on March 17, 2010 under the Restated Financing
Agreement; and
|
·
|
A
payment of $5,000 in connection with out-of-pocket fees and expenses on
March 17, 2010 under the Restated Financing
Agreement.
|
·
|
A
$450,000 closing fee paid on September 30, 2008 under the Original
Financing Agreement;
|
·
|
Prepayment
of $1,050,000 in interest on September 30, 2008 under the Original
Financing Agreement;
|
·
|
Interest
payments in 2009 under the Original Financing Agreement for an aggregate
of $122,943;
|
·
|
A
$51,545 closing fee paid on May 22, 2009 under the Original Financing
Agreement; and
|
·
|
Mandatory
prepayments under the Original Financing Agreement in 2009 and 2010 in
connection with proceeds received from the sale of certain New Jersey tax
benefits in the aggregate amounts of $159,062 and $61,743,
respectively.
|
·
|
1,125,000
shares of common stock issued on September 30, 2008 under the
Original Financing Agreement, valued based on the $1.09 closing price per
share of common stock on that date;
|
·
|
128,861
shares of common stock issued on May 22, 2009 under the Original
Financing Agreement, valued based on the $0.97 closing price per share of
common stock on that date; and
|
·
|
300,000
shares of common stock issued on October 19, 2009 in exchange for
surrender of a warrant to purchase 1,000,000 shares of common stock,
valued based on the $1.91 closing price per share of common stock on that
date.
|
·
|
Interest
payments in 2009 under the Original Financing Agreement for an aggregate
of $234,835;
|
·
|
A
$98,455 closing fee paid on May 22, 2009 under the Original Financing
Agreement;
|
·
|
Mandatory
prepayments under the Original Financing Agreement in 2009 and 2010 in
connection with proceeds received from the sale of certain New Jersey tax
benefits in the aggregate amounts of $303,732 and $117,936,
respectively;
|
·
|
Payment
on March 17, 2010 under the Restated Financing Agreement of $120,447 of
accrued and unpaid interest;
|
·
|
Payment
on March 17, 2010 of legal fees incurred by the selling stockholder in
connection with the Restated Financing Agreement;
and
|
·
|
Payment
on March 17, 2010 of fees to a title company in connection with the
Restated Financing Agreement.
|
(5)
|
Consisting
of 246,139 shares of common stock issued on May 22, 2009 under the
Original Financing Agreement, valued based on the $0.97 closing price per
share of common stock on that date.
|
Except
for (a) the transactions described in the Restated Financing Agreement and the
Registration Rights Agreement, including without limitation, the purchase of the
Original Notes and the Notes, (b) the transactions described in the tables
above, and under “About This Offering” and Victory Park’s resulting ownership of
the Shares, the Exchange Shares and the Other Shares, (c) the appointment of
Richard Levy, the managing principal and founder of Capital Advisors (defined
below), as a member of the Board, Chairman of the Board and a member of the
Company’s Nominating and Corporate Governance Committee in March 2010 and his
service in such roles since that date, and (d) Victory Park’s right, pursuant to
the Restated Financing Agreement, to designate, subject to certain conditions,
an individual to fill the vacant seat on our Board, the selling stockholder has
not had any material relationship with us within the past three
years.
We have
no payments scheduled to be made to the selling stockholder or its affiliates
through March 17, 2011, the first anniversary of the sale of the
Notes. Notwithstanding that, we may be required to make certain
payments to the selling stockholder and its affiliates in the first year
following the sale of the Notes if we are in default under the Restated
Financing Agreement and/or the Registration Rights Agreement and/or if we
receive certain extraordinary payments. The table below describes
these potential payments, although it is not possible to quantify such payments
at this time:
Possible
Payments to the Selling Stockholder
and
its Affiliates in the First Year
Following
Sale of the Notes
|
Payments
upon an Event of Default under the Restated Financing
Agreement
|
Upon
an event of default, we may be required to redeem all or a portion of the
Notes and in connection therewith, we will be required to pay the selling
stockholder (i) the outstanding principal amount of the Notes;
(ii) accrued and unpaid interest and late charges; and (iii) a
premium equal to the greater of (x) 1% of the Notes prior to
redemption and (y) the excess of the present value of all scheduled
future interest payments and scheduled redemptions until the scheduled
maturity date, discounted by a published annual interest rate for
comparable treasury instruments, over the principal of the Notes at the
time of redemption. In addition, upon the occurrence of certain
Events of Default, we will be required to redeem the Notes by paying an
amount equal to the greater of (x) 115% of the outstanding Notes
principal plus accrued and unpaid interest and late charges and
(y) the number of common shares into which the Notes are then
convertible, multiplied by the weighted average price of our common
stock.
|
Mandatory
prepayments under the Restated Financing Agreement upon the occurrence of
certain events
|
We
must prepay the Notes if we receive certain cash proceeds outside of the
ordinary course of our business, such as from asset sales, incurrence of
debt, milestone payments or extraordinary receipts (such as the sale of
certain New Jersey tax benefits), in an amount equal to 10%, 50% or 100%
of such proceeds depending on the nature of the
proceeds.
|
Payments
under the Registration Rights Agreement
|
With
the exception of certain permitted grace periods, if we do not keep the
registration statement of which this prospectus forms a part effective,
including due to our failure to disclose such information necessary to
allow sales to be made pursuant to such registration statement, a
suspension or delisting of our common stock from the OTC Bulletin Board
(or the national stock exchange on which such stock is then traded) or our
failure to register a sufficient number of shares of common stock for
resale by the selling stockholder, we will need to pay the selling
stockholder damages in an amount equal to 2% of the aggregate value of the
registrable securities on the initial date of such failure and on every
30th day thereafter (pro rated as appropriate) until the failure is
cured. The aggregate value will be determined by multiplying,
for certain days until the failure is cured, the number of registrable
securities by the greater of (x) the then-current market price of the
securities and (y) $0.70.
|
The
following table sets forth certain information known to us regarding the shares
of our common stock held and to be offered from time to time by the selling
stockholder as of June 30, 2010 and as adjusted to give effect to the sale of
certain shares offered hereby. The information regarding shares owned both
before and after the offering assumes that the full principal amount of the
Notes (i.e., $33,000,000) together with accrued interest thereon is outstanding
for their full three-year term and that the Notes are currently convertible into
shares of our common stock at a conversion price of $0.70 per
share. The information regarding shares owned after the offering
assumes the sale of all those shares offered by the selling shareholder and we
cannot assure you that the selling stockholder will sell any or all of those
shares. Accordingly, the information included on the following table
is provided subject to these assumptions. To the Company’s knowledge,
the selling stockholder does not have an existing short position in the
Company’s common stock.
|
|
Ownership
Before Offering
|
|
|
|
|
|
|
|
Name
of Selling Stockholder
|
|
|
|
|
Common
Shares that May Be Sold Pursuant to the Offering (2)
|
|
|
|
|
|
Percent
of Common Shares Held
|
|
Victory
Park Credit Opportunities Master Fund, Ltd. (1)
|
|
|
80,760,650 |
|
|
|
80,760,650 |
|
|
|
0 |
|
|
|
0 |
% |
(1) Victory
Park Capital Advisors, LLC (“Capital Advisors”) is the investment manager of the
selling stockholder and consequently may be deemed to have the shared power to
vote or direct the vote of (and the shared power to dispose or direct the
disposition of) the securities held by the selling stockholder. As the manager
of Capital Advisors, Jacob Capital, L.L.C. (“Jacob Capital”) may be deemed to
have the shared power to vote or direct the vote of (and the shared power to
dispose or direct the disposition of) the securities held by the selling
stockholder. By virtue of Richard Levy’s position as sole member of Jacob
Capital, Richard Levy may be deemed to have the shared power to vote or direct
the vote of (and the shared power to dispose or direct the disposition of) the
securities held by the selling stockholder. Therefore, each of Capital Advisors,
Jacob Capital and Richard Levy may be deemed to be the beneficial owner of the
securities held by the selling stockholder.
The
selling stockholder has advised us that (i) it is not a registered
broker-dealer, (ii) it does not control and is not controlled by a registered
broker-dealer, (iii) it is an affiliate of a registered broker-dealer due solely
to its being under common control with a registered broker-dealer, (iv) the
broker-dealer that is an affiliate of the selling stockholder was not involved
in the purchase, and will not be involved in the ultimate sale, of the shares,
(v) it acquired the shares in the ordinary course of business, and (vi) at the
time it acquired the shares, it was not a party to any agreement or other
understanding to distribute the shares, directly or indirectly.
(2) This
figure includes the Shares, the Exchange Shares, the Other Shares, and the
Conversion Shares.
As
reported in the Schedule 13D filed on March 17, 2010 by the selling stockholder
and certain of its affiliates, the 8,645,814 shares which the selling
stockholder beneficially owned as of such filing (and described herein as the
Shares, the Exchange Shares and the Other Shares) represented approximately 9.4%
of the common stock outstanding as of March 16, 2010. Neither the
selling stockholder nor any of its affiliates should be deemed to be the current
beneficial owner of any of the Conversion Shares because the Notes are not
currently convertible or convertible within 60 days. The Note will become
convertible at such times and under such circumstances described above in the
subsection entitled “Common Stock to be Issued to the Selling Stockholder upon
Conversion of the Notes”.
Of the
80,760,650 shares of common stock that we are registering on this registration
statement, 72,114,836 shares will be issuable upon conversion of the Notes
(assuming that the full principal amount of the Notes (i.e., $33,000,000)
together with accrued interest thereon is outstanding for their full three-year
term and that the Notes will be convertible into shares of our common stock at a
conversion price of $0.70 per share). The total dollar value of these
Conversion Shares is $45,432,347, based on the $0.63 closing price per share of
our common stock on March 16, 2010, when the terms of the Notes were finalized
upon execution of the Restated Financing Agreement.
None of
the Shares, Exchange Shares, Other Shares or Conversion Shares have been
previously registered for resale by the selling stockholder or its affiliates in
prior registration statements. When the Notes were issued on March
17, 2010, 78,690,540 shares of our common stock were held by persons other than
the selling stockholder, our affiliates and affiliates of the selling
stockholder.
PLAN
OF DISTRIBUTION
We are
registering the shares of common stock to permit the resale of these shares of
common stock by the selling stockholder from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
stockholder of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock.
The
selling stockholder may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholder will be responsible for underwriting discounts or commissions or
agent’s commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale or at negotiated prices.
These sales may be effected from time to time pursuant to one or more of the
following methods, which may involve crosses or block transactions:
·
|
on
any national securities exchange or U.S. inter-dealer quotation system of
a registered national securities association on which the securities may
be listed or quoted at the time of
sale;
|
·
|
in
the over-the-counter market;
|
·
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
·
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
public
or privately negotiated
transactions;
|
·
|
sales
pursuant to Rule 144;
|
·
|
broker-dealers
may agree with the selling stockholder to sell a specified number of such
shares at a stipulated price per
share;
|
·
|
a
combination of any such methods of sale;
or
|
·
|
any
other method permitted pursuant to applicable
law.
|
If the
selling stockholder effects such transactions by selling shares of common stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholder or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with
sales of the shares of common stock or otherwise, the selling stockholder may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the shares of common stock in the course of hedging in positions
they assume. The selling stockholder may also sell shares of common stock short
and deliver shares of common stock covered by this prospectus to close out short
positions, and to return borrowed shares in connection with such short sales,
provided that the short sales are made after the registration statement is
declared effective. The selling stockholder may also loan or pledge shares of
common stock to broker-dealers in connection with bona fide margin accounts
secured by the shares of common stock, which shares broker-dealers could in turn
sell if the selling stockholder defaults in the performance of its secured
obligations.
The
selling stockholder may pledge or grant a security interest in some or all of
the shares of common stock owned by it and, if it defaults in the performance of
its secured obligations, the pledgees or secured parties may offer and sell the
shares of common stock from time to time pursuant to this prospectus or any
amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act, amending, if necessary, the list of selling stockholders
to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholder also may transfer
and donate the shares of common stock in other circumstances in which case the
transferees, donees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
The
selling stockholder and any broker-dealer participating in the distribution of
the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of the
shares of common stock is made, a prospectus supplement, if required, will be
distributed that will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholder and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There can
be no assurance that the selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which this
prospectus forms a part.
The
selling stockholder and any other person participating in such distribution will
be subject to applicable provisions of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and the rules and regulations thereunder,
including, without limitation, Regulation M of the Exchange Act, which may limit
the timing of purchases and sales of any of the shares of common stock by the
selling stockholder and any other participating person. Regulation M may also
restrict the ability of any person engaged in the distribution of the shares of
common stock to engage in market-making activities with respect to the shares of
common stock. All of the foregoing may affect the marketability of the shares of
common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We will
pay all expenses of the registration of the shares of common stock pursuant to
the registration rights agreement, including, without limitation, SEC filing
fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, that the selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling
stockholder against liabilities, including liabilities under the Securities Act,
in accordance with the registration rights agreement, or the selling stockholder
will be entitled to contribution. We may be indemnified by the selling
stockholder against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to us by
the selling stockholder specifically for use in this prospectus, in accordance
with the related registration rights agreement, or we may be entitled to
contribution.
Once sold
under the registration statement of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
Any
shares covered by this prospectus that qualify for sale pursuant to Rule 144 of
the Securities Act may be sold under Rule 144, rather than pursuant to this
prospectus.
LEGAL
MATTERS
The
validity of the Unigene common stock offered by this prospectus will be passed
upon for Unigene by Dechert LLP, Princeton, New Jersey.
EXPERTS
The
financial statements and management’s assessment of the effectiveness of
internal control over financial reporting incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Grant Thornton LLP, independent registered public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
WHERE
YOU CAN FIND MORE INFORMATION
The SEC
allows us to “incorporate by reference” certain information we have filed with
them, which means that we can disclose important information to you by referring
you to documents we have filed with the SEC. The information incorporated by
reference is considered to be part of the registration statement. We incorporate
by reference the documents listed below:
·
|
Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2009
filed on March 16, 2010;
|
·
|
Our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010
filed on May 10, 2010;
|
·
|
Our
Definitive Proxy Statement on Schedule 14A and the Additional Definitive
Proxy Soliciting Materials filed on April 29,
2010;
|
·
|
Our
Current Reports on Form 8-K filed on March 17, 2010, June 9, 2010 and June
18, 2010; and
|
·
|
Our
Form 8-A/A filed on March 17, 2010.
|
We will
provide to each person, including any beneficial owner, to whom a prospectus is
delivered, a copy of any or all of the reports or documents that have been
incorporated by reference in this prospectus but not delivered with the
prospectus. We will provide these reports or documents upon written or oral
request, at no cost to the requester. Request for these reports or
documents may be made to William Steinhauer, Vice President of Finance, Unigene
Laboratories, Inc., 81 Fulton Street, Boonton, New Jersey 07005, (973) 265-1100,
wsteinhauer@unigene.com. These reports and documents also may be
accessed at our website: www.unigene.com.
Federal
securities law requires us to file information with the SEC concerning our
business and operations. We file annual, quarterly and current reports, proxy
statements and other information with the SEC. You can read and copy these
documents at the public reference room maintained by the SEC at 100 F Street,
NE, Room 1580, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room. Our SEC filings are also
available to the public on the SEC's web site at
http://www.sec.gov.
We have
filed with the SEC a registration statement on Form S-1 to register the stock to
be sold in connection with this prospectus. As permitted by the rules and
regulations of the SEC, this prospectus, which forms a part of the registration
statement, does not contain all of the information included in the registration
statement. For further information pertaining to us and the securities offered
under this prospectus, reference is made to the registration statement and the
attached exhibits and schedule. Although required material information has been
presented in this prospectus, statements contained in this prospectus as to the
contents or provisions of any contract or other document referred to in this
prospectus may be summary in nature and in each instance reference is made to
the copy of this contract or other document filed as an exhibit to the
registration statement and each statement is qualified in all respects by this
reference, including the exhibits and schedule filed therewith. You should rely
only on the information incorporated by reference or provided in this prospectus
or any supplement to this prospectus. We have not authorized anyone else to
provide you with different information. The selling stockholder should not make
an offer of these securities pursuant to this prospectus in any state where the
offer is not permitted.
You
should rely only on the information contained in this prospectus and those
documents incorporated by reference. We have not authorized anyone to provide
you with information that is different. This prospectus is not an offer to sell
nor is it seeking an offer to buy any securities in any state where the offer or
sale is not permitted.
MATERIAL
CHANGES
Since
December 31, 2009, there have been no material changes in our affairs which have
not been described in our Annual Report on Form 10-K, our Quarterly Report on
Form 10-Q filed on May 10, 2010, our Definitive Proxy Statement on Schedule 14A
and the Additional Definitive Proxy Soliciting Materials filed on April 29,
2010, our Current Reports on Form 8-K filed on March 17, 2010, June 9, 2010 and
June 18, 2010, our Form 8A/A filed on March 17, 2010 or this
prospectus.
INDEMNIFICATION
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling Unigene pursuant to the
foregoing provisions, Unigene has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
31