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PROSPECTUS
SUPPLEMENT
To
Prospectus dated November 27, 2007
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Filed
pursuant to Rule 424(b)(5)
Registration
File No. 333-146392
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PALATIN
TECHNOLOGIES, INC.
9,629,629
Shares of Common Stock
Warrants
to Purchase 6,355,554 Shares of Common Stock
Pursuant to this prospectus
supplement and the accompanying prospectus, we are offering up to 9,629,629
shares of our common stock and warrants to purchase up to 6,355,554 shares of
our common stock. Of the 15,985,183 shares of our common stock,
9,629,629 shares are to be issued directly to the purchasers at the closing of
the offering and the remaining 6,355,554 are issuable upon exercise of the
warrants. The common stock and warrants will be sold in units, with each unit
consisting of one share of common stock, a Series A warrant exercisable for 0.33
shares of our common stock and a Series B warrant exercisable for 0.33 shares of
our common stock. Each unit will be sold at a negotiated price of
$0.27 per unit. Units will not be issued or certificated. The shares
of common stock and warrants are immediately separable and will be issued
separately. The Series A warrant is exercisable one hundred eighty
one days from the date of issuance and expires three years thereafter, and the
Series B warrant is exercisable immediately upon issuance and expires one
hundred eighty days from the date of issuance. For a more detailed description
of our common stock and warrants, see the section entitled “Description of the
Securities We are Offering” beginning on page S-22 of this prospectus
supplement.
Our common stock is quoted on the
NYSE Amex under the symbol PTN. On February 23, 2010, the closing price of the
common stock was $0.29. As of December 31, 2009, the aggregate market value of
our outstanding common stock held by non-affiliates was $35,557,981, based on
96,102,653 shares of outstanding common stock held by non-affiliates, and a per
share price of $0.37 based on the closing sale price of our common stock on that
date. We have offered securities with an aggregate market value of $4,358,288,
consisting of the offer and sale of 9,484,848 shares of our common stock and
warrants exercisable for 3,319,697 shares of our common stock that we issued in
our offering that closed on August 17, 2009, during the period of 12 calendar
months immediately prior to the date of this prospectus supplement, pursuant to
General Instruction I.B.6. of Form S-3.
Rodman & Renshaw, LLC is acting
as the exclusive placement agent for the sale of the units. The
placement agent is not required to arrange for the sale of any specific number
of units or dollar amount but will use its reasonable best efforts to arrange
for the sale of all of the units. We have agreed to pay the placement
agent the placement agent fees set forth in the table below, which assumes that
we sell all of the units we are offering.
Investing
in our securities involves a high degree of risk. You should purchase these
units only if you can afford a complete loss of your investment. See “Risk
Factors” beginning on page S-8 of this prospectus supplement.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
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Per Unit(1)
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Maximum Offering
Amount
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Public
offering price
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$
0.27
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$2,600,000
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Placement
agent fees
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$
0.016
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$156,000
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Proceeds
to us, before expenses
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$
0.254
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$2,444,000
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(1)
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We
have also agreed to issue the placement agent warrants to purchase common
stock and to reimburse the placement agent for certain of its expenses as
described under “Plan of Distribution” in this prospectus
supplement.
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We
estimate the total expenses of this offering, excluding the placement agent
fees, will be approximately $110,000. Because there is no minimum offering
amount required as a condition to closing in this offering, the actual offering
amount, the placement agent fees and net proceeds to us, if any, in this
offering may be substantially less than the maximum offering amounts set forth
above.
Rodman
& Renshaw, LLC
TABLE OF CONTENTS
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Prospectus
Supplement
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Page
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S-1
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S-8
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S-19
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S-20
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S-21
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S-22
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S-24
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S-26
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S-26
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S-26
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S-27
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Prospectus
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Page
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Prospectus
Summary
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3
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Risk
Factors
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7
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Note Concerning Forward-Looking
Statements
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8
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Incorporation of Information by
Reference
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9
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Where You Can Find More
Information
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10
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Use of
Proceeds
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10
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Market Price of and Dividends on
Common Equity and Related Stockholder Matters
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10
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Ratios of Earnings to Fixed
Charges and to Combined Fixed Charges and Preferred Stock
Dividends
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11
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Description of
Securities
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12
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Anti-Takeover Effects of
Provisions of Delaware Law and Our Charter
Documents
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18
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Plan of
Distribution
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19
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Legal
Matters
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21
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Experts
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21
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You
should rely only on the information contained in this prospectus supplement, the
accompanying prospectus or information incorporated by reference herein. We have
not authorized anyone else to provide you with different information. You should
not assume that the information in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the
front of those documents or that any document incorporated by reference is
accurate as of any date other than its filing date. You should not consider this
prospectus supplement or the accompanying prospectus to be an offer or
solicitation relating to the securities in any jurisdiction in which such an
offer or solicitation relating to the securities is not authorized. Furthermore,
you should not consider this prospectus supplement or the accompanying
prospectus to be an offer or solicitation relating to the securities if the
person making the offer or solicitation is not qualified to do so, or if it is
unlawful for you to receive such an offer or solicitation.
DESCRIPTION OF SECURITIES WE ARE OFFERING
In this offering, we are offering a
maximum of 9,629,629 units, consisting in the aggregate of 9,629,629 shares of
common stock and warrants to purchase an aggregate of 6,355,554 shares of common
stock. Each unit consists of one share of common stock, one Series A warrant to
purchase 0.33 of one share of common stock at an exercise price of $0.30 per
share and one Series B warrant to purchase 0.33 of one share of common stock at
an exercise price of $0.27 per share. Units will not be issued or
certificated. The shares of common stock and warrants are immediately separable
and will be issued separately. This prospectus supplement also
relates to the offering of 6,355,554 shares of our common stock issuable upon
exercise, if any, of the warrants.
Common
Stock
A description of the common stock we
are offering pursuant to this prospectus supplement is set forth under the
heading “Description of Securities,” starting on page 12 of the prospectus. As
of February 23, 2010, we had 96,736,949 shares of common stock
outstanding.
Warrants
The Series A and Series B warrants
offered in this offering will be issued in registered form pursuant to a
securities purchase agreement between each of the purchasers and us. You should
review the forms of securities purchase agreement and Series A and Series B
warrant which will be filed as exhibits to a Current Report on Form 8-K filed
with the SEC in connection with this offering, for a complete description of the
terms and conditions applicable to warrants. The following is a brief summary of
the Series A and Series B warrants and is subject in all respects to the
provisions contained in such Series A and Series B warrants.
Terms Applicable to the Series A
Warrants
Exercisability. Holders may
exercise the Series A warrants beginning one hundred and eighty one days after
issuance and at any time up to the date that is three years after the date such
Series A warrants become exercisable. The Series A warrants will be exercisable,
at the option of each holder, in whole or in part, by delivering to us a duly
executed exercise notice accompanied by payment in full for the number of shares
of our common stock purchased upon such exercise, except in the case of a
cashless exercise, as discussed below.
Exercise Price. Each Series A
warrant is exercisable for 0.33 of one share of common stock at an exercise
price of $0.30 per share of common stock being purchased. The exercise price is
subject to appropriate adjustment in the event of stock dividends and
distributions, stock splits, stock combinations, reclassifications or similar
events affecting our common stock.
Terms Applicable to the Series B
Warrants
Exercisability. Holders may
exercise the Series B warrants beginning immediately upon issuance and at any
time up to the date that is the one hundred and eightieth day after the date of
such issuance. The Series B warrants will be exercisable, at the option of each
holder, in whole or in part, by delivering to us a duly executed exercise notice
accompanied by payment in full for the number of shares of our common stock
purchased upon such exercise, except in the case of a cashless exercise, as
discussed below.
Exercise Price. Each Series A
warrant is exercisable for 0.33 of one share of common stock at an exercise
price of $0.27 per share of common stock being purchased. The exercise price is
subject to appropriate adjustment in the event of stock dividends and
distributions, stock splits, stock combinations, reclassifications or similar
events affecting our common stock.
Terms Applicable to Both the Series A
and Series B Warrants
Cashless Exercise. If, at any
time during the warrant exercisability period, the holder is not permitted to
sell shares of common stock issuable upon exercise of the warrant pursuant to
the registration statement, or an exemption from registration is not otherwise
available, and the fair market value of our common stock exceeds the exercise
price of the warrants, the holder may elect to effect a cashless exercise of the
warrants, in whole or in part, by surrendering the warrants to us, together with
delivery to us of a duly executed exercise notice, and canceling a
portion
of the relevant warrant in payment of the purchase price payable in respect of
the number of shares of our common stock purchased upon such
exercise.
Transferability. Subject to
applicable securities laws and otherwise set forth in the warrants, the warrants
are transferable, in whole or in part upon surrender of the warrants at the
principal office of the company or its designated agent, together with an
assignment form as provided in the warrants.
Exchange Listing. We do not
plan on making an application to list the warrants on the NYSE Amex, any
national securities exchange or other nationally recognized trading system. The
common stock underlying the warrants is expected to be listed on the NYSE
Amex.
Fundamental Transactions. In
the event of any fundamental transaction, as described in the warrants, which
generally includes any merger with or into another entity (whether or not we are
the surviving entity but excluding a migratory merger effected solely for the
purpose of changing our jurisdiction of incorporation), sale of all or
substantially all of our assets, tender offer or exchange offer, our
consummation of a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) or reclassification of our common stock, then upon any
subsequent exercise of a warrant, the holder shall have the right to receive, as
alternative consideration, for each share of our common stock that would have
been issuable upon such exercise immediately prior to the occurrence of such
fundamental transaction, the number of shares of common stock of the successor
or acquiring corporation or of Palatin, if it is the surviving corporation, and
any additional consideration receivable upon or as a result of such transaction
by a holder of the number of shares of our common stock for which the warrant is
exercisable immediately prior to such event.
Rights as a Stockholder.
Except as otherwise provided in the warrants or by virtue of such holder’s
ownership of shares of our common stock, the holders of the warrants do not have
the rights or privileges of holders of our common stock, including any voting
rights, until they exercise their warrants.
Waivers and Amendments. The
provisions of each warrant may be amended or modified or the provisions thereof
waived, only with the written consent of the Company and holders holding
warrants at least equal to 67% of the warrant shares issuable upon exercise of
all then outstanding warrants.
Other Provisions. Unless
otherwise specified in the applicable warrant, the holder will not have the
right to exercise any portion of the warrant if the holder, together with its
affiliates, would beneficially own in excess of 4.9% of the number of shares
outstanding immediately after giving effect to the exercise. The holder, upon
not less than 61 days’ prior notice to the Company, may increase or decrease
percentage ownership provided that in no event does the amount exceed 9.99% of
the number of shares of our common stock outstanding immediately after giving
effect to the exercise.
No fractional shares will be issued
upon exercise of the warrants, but rather the Company will pay a cash adjustment
in respect of such fraction in an amount equal to such fraction multiplied by
the exercise price.
Additional
Rights
Under the securities purchase
agreement, the purchasers have certain rights to participate in securities
offerings we effect for the next twelve months.
We have agreed to certain lock-up
provisions with regard to future sales of our common stock and other securities
convertible into or exercisable or exchangeable for common stock for a period of
thirty (30) days after the offering as set forth in the securities purchase
agreement.
We
are offering the units through a placement agent. Subject to the terms and
conditions contained in the placement agent agreement, dated February 24, 2010,
Rodman & Renshaw, LLC has agreed to act as the placement agent for the sale
of up to 9,629,629 units. The placement agent is not purchasing or selling any
shares or warrants by this prospectus supplement or the accompanying prospectus,
nor is it required to arrange for the purchase or sale of any specific number or
dollar amount of units, but has agreed to use its reasonable best efforts to
arrange for the sale of all units.
The placement agent agreement provides
that the obligations of the placement agent and the investors are subject to
certain conditions precedent, including the absence of any material adverse
change in our business and the receipt of customary legal opinions, letters and
certificates.
Confirmations and definitive
prospectuses will be distributed to all investors who agree to purchase the
units, informing investors of the closing date as to such units. We currently
anticipate that closing of the sale of units will take place on or about March
2, 2010. Investors will also be informed of the date and manner in which they
must transmit the purchase price for their units.
On the scheduled closing date, the
following will occur:
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we
will receive funds in the amount of the aggregate purchase price for the
units we sell;
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•
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we
will deliver to each of the investors, through the Deposit Withdrawal
Agent Commission system, the shares of common stock being purchased;
and
Rodman
& Renshaw, LLC will receive the placement agent’s fee in accordance
with the terms of the placement agent
agreement.
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We will pay the placement agent an
aggregate cash commission equal to 6.0% of the gross proceeds from the sale of
units. Subject to compliance with FINRA Rule 5110(f)(2)(D), we will also
reimburse the placement agent for legal and other expenses incurred by it in
connection with this offering up to a maximum of 0.8% of the aggregate gross
proceeds, but in no event more than $30,000. If all of the units offered are
sold, such reimbursement will not exceed $20,800. The placement agent will also
receive warrants to purchase shares of common stock equal to 5% of the aggregate
number of shares of common stock included in the units that are sold in the
offering with an exercise price of $0.3375 per share (125% of the public
offering price) and an expiration date of November 26, 2012 (the five year
anniversary of the effective date of the registration statement). Pursuant to
FINRA Rule 5110(g), for a period of six months after the issuance date of the
Rodman warrant, neither the Rodman warrant nor any warrant shares issued upon
exercise of the Rodman warrant shall be sold, transferred, assigned, pledged, or
hypothecated, or be the subject of any hedging, short sale, derivative, put, or
call transaction that would result in the effective economic disposition of the
securities by any person for a period of 180 days immediately following the date
of effectiveness or commencement of sales of this offering, except the transfer
of any security:
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(i)
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by
operation of law or by reason of reorganization of the
Company;
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(ii)
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to
any FINRA member firm participating in the offering and the officers or
partners thereof, if all securities so transferred remain subject to the
lock-up restriction set forth above for the remainder of the time
period;
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(iii)
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if
the aggregate amount of securities of the Company held by the holder of
the Rodman warrant or related person do not exceed 1% of the securities
being offered;
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(iv)
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that
is beneficially owned on a pro-rata basis by all equity owners of an
investment fund, provided that no participating member manages or
otherwise directs investments by the fund, and participating members in
the aggregate do not own more than 10% of the equity in the fund;
or
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(v)
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the
exercise or conversion of any security, if all securities received remain
subject to the lock-up restriction set forth above for the remainder of
the time period.
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The
following table shows the per share and total fees we will pay to the placement
agent in connection with the sale of our securities offered pursuant to this
prospectus supplement and the accompanying prospectus, assuming the purchase of
all of the securities offered hereby and excluding proceeds that we may receive
upon exercise of the warrants.
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Per
share placement agent fee
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$
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0.016
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Total
placement agent fees
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$
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156,000___
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The
estimated offering expenses payable by us, in addition to the placement agent’s
fee of $156,000, are approximately $110,000, which includes legal, accounting
and printing costs, and various other fees associated with registering and
listing the common stock. After deducting certain fees due to the placement
agent and our estimated offering expenses, we expect the net proceeds from this
offering to be approximately $2.33 million.
We have agreed to indemnify the
placement agent against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, and liabilities arising from breaches of
representations and warranties contained in the placement agent agreement. We
have also agreed to contribute to payments the placement agent may be required
to make in respect of such liabilities.
The placement agent agreement is
included as an exhibit to our Current Report on Form 8-K that we will file with
the SEC in connection with the consummation of this offering.
From time to time in the ordinary
course of business, the placement agent or its affiliates may in the future
engage in investment banking and/or other services with us for which they may
receive compensation, but we have no current agreement in place with the
placement agent.
The transfer agent for our common stock
to be issued in this offering is American Stock Transfer & Trust Company
located at 59 Maiden Lane, Plaza Level, New York, New York 10038.
Our common stock is traded on the NYSE
Amex under the symbol “PTN.”
LEGAL MATTERS
EXPERTS
The consolidated financial statements
of Palatin Technologies, Inc. as of June 30, 2009 and 2008, and for each of the
years in the three-year period ended June 30, 2009, have been incorporated by
reference in this prospectus and in the registration statement in reliance upon
the report of KPMG LLP, independent registered public accounting firm,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
This prospectus supplement and
accompanying prospectus constitute a part of a registration statement on Form
S-3 that we filed with the SEC under the Securities Act of 1933, as amended. We
refer you to this registration statement for further information about us and
the common stock and warrants to purchase our common stock offered
hereby.
We file annual, quarterly and special
reports and other information with the SEC (Commission File Number 001-15543).
These filings contain important information that does not appear in this
prospectus supplement or the accompanying prospectus. For further information
about us, you may read and copy any reports, statements and other information
filed by us at the SEC’s Public Reference Room at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549-0102. You may obtain further information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available on the SEC Internet site at
http://www.sec.gov,
which contains periodic reports and other information regarding issuers that
file electronically.
INCORPORATION
OF INFORMATION BY REFERENCE
We incorporate into this prospectus
supplement information contained in documents which we file with the SEC. We are
disclosing important information to you by referring you to those documents. The
information which we incorporate by reference is an important part of this
prospectus supplement, and certain information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below, and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934.
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·
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annual
report on Form 10-K for the year ended June 30, 2009, filed on September
28, 2009
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·
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quarterly
report on Form 10-Q for the quarter ended September 30, 2009, filed on
November 13, 2009
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·
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quarterly
report on Form 10-Q for the quarter ended December 31, 2009, filed on
February 16, 2010
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·
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current
report on Form 8-K dated August 12, 2009, filed on August 13,
2009
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·
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current
report on Form 8-K dated August 18, 2009, filed on August 21,
2009
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·
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current
report on Form 8-K dated September 8, 2009, filed on September 8,
2009
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·
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current
report on Form 8-K dated September 24, 2009, filed on September 29,
2009
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·
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current
report on Form 8-K dated November 16, 2009, filed on November 16,
2009
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·
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current
report on Form 8-K dated February 16, 2010, filed on February 16,
2010
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·
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description
of our common stock contained in our registration statement on Form 8-A
filed on December 13, 1999
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This prospectus supplement may contain
information that updates, modifies or is contrary to information in one or more
of the documents incorporated by reference in this prospectus supplement. To the
extent that any statements contained in a document incorporated by reference are
modified or superseded by any statements contained in this prospectus
supplement, such statements shall not be deemed incorporated in this prospectus
supplement except as so modified or superseded. Reports we file with the SEC
after the date of this prospectus supplement may also contain information that
updates, modifies or is contrary to information in this prospectus supplement or
in documents incorporated by reference in this prospectus supplement. Investors
should review these reports as they may disclose a change in our business,
prospectus, financial condition or other affairs after the date of this
prospectus supplement.
You may obtain a free copy of any or
all of the information incorporated by reference by writing or calling us.
Please direct your request to:
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Stephen
T. Wills
Chief
Financial Officer
Palatin
Technologies, Inc.
4C
Cedar Brook Drive
Cranbury,
New Jersey 08512
Telephone
(609) 495-2200
Fax
(609) 495-2201
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S-27
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Filed
pursuant to Rule 424(b)(5)
Registration
File No. 333-146392
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PALATIN TECHNOLOGIES,
INC.
4C Cedar Brook Drive
Cranbury, New Jersey 08512
(609) 495-2200
4C Cedar Brook Drive
Cranbury, New Jersey 08512
(609) 495-2200
$50,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may offer under this
prospectus from time to time, at prices and on terms to be determined by market
conditions at the time we make the offer, up to an aggregate of $50,000,000 of
our:
| • | common stock, par value $0.01 per share; | |
| • | preferred stock, par value $0.01 per share; | |
| • | debt securities; | |
| • | warrants to purchase common or preferred stock, or debt securities; or | |
| • | any combination of the above, separately or as units |
This
prospectus may not be used to sell our securities unless accompanied by a
prospectus supplement. Before you invest in our securities, you should carefully
read both this prospectus and the prospectus supplement related to the offering
of the securities.
Our common stock is
listed on The American Stock Exchange under the symbol PTN. On November 27,
2007, the closing price of the common stock was $0.26.
Investing in our
securities involves a high degree of risk. You should purchase these securities
only if you can afford a complete loss of your investment. See “Risk Factors” beginning on page
7.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
If we sell securities
through agents or underwriters, we will include their names and the fees,
commissions and discounts they will receive, as well as the net proceeds to us,
in the applicable prospectus supplement.
The date of this prospectus is November 27, 2007
| Page | |
| Prospectus Summary | 3 |
| Risk Factors | 7 |
| Note Concerning Forward-Looking Statements | 8 |
| Incorporation of Information by Reference | 9 |
| Where You Can Find More Information | 10 |
| Use of Proceeds | 10 |
| Market Price of and Dividends on Common Equity and Related Stockholder Matters | 10 |
| Ratios of Earnings to Fixed Charges and to Combined Fixed Charges and Preferred Stock Dividends | 11 |
| Description of Securities | 12 |
| Anti-Takeover Effects of Provisions of Delaware Law and Our Charter Documents | 18 |
| Plan of Distribution | 19 |
| Legal Matters | 21 |
| Experts | 21 |
2
Table of
Contents
PROSPECTUS
SUMMARY
This is a summary of our
business and this offering. For a more complete understanding of our business
and this offering, you should read the entire prospectus and the documents
incorporated by reference.
Palatin’s Business
Overview
We are a
biopharmaceutical company focused on discovering and developing targeted,
receptor-specific small molecule and peptide therapeutics. Our proprietary drug
development pipeline is based primarily on melanocortin (“MC”)-based
therapeutics, and we believe we are a leader in this area of pharmaceutical
research and development. Therapeutics affecting the activity of the MC family
of receptors may have the potential to treat a variety of conditions and
diseases, including sexual dysfunction, obesity and related disorders, cachexia
(extreme wasting, generally secondary to a chronic disease), skin pigmentation
disorders and inflammation-related diseases.
Bremelanotide is our
nasally administered MC-based peptide in clinical development for two distinct
indications, the treatment of male erectile dysfunction (“ED”) and the treatment
of female sexual dysfunction (“FSD”). In 2004, we entered into a collaborative
development and marketing agreement with King Pharmaceuticals, Inc. (“King”) to
jointly develop and commercialize bremelanotide. Pursuant to the agreement, we
and King shared all collaboration development costs based on an agreed
percentage. In September 2007, we received notice from King terminating the
agreement in accordance with its terms effective December 5, 2007. Termination
followed comments by the U.S. Food and Drug Administration (“FDA”) raising
serious concerns about the acceptable benefit/risk ratio to support the
progression of bremelanotide into Phase 3 studies for ED as a firstline therapy
in the general population. Upon termination, we will solely own all rights to
bremelanotide.
In January 2007, we
entered into an exclusive global licensing and research collaboration agreement
with AstraZeneca AB (“AstraZeneca”), a major international pharmaceutical and
healthcare business, to discover, develop and commercialize small molecule
compounds that target MC receptors for the treatment of obesity, diabetes and
related metabolic syndrome. The collaboration is based on Palatin’s MC receptor
obesity program and includes access to compound libraries, core technologies and
expertise in MC receptor drug discovery and development. We and AstraZeneca are
in the process of identifying clinical candidate MC therapeutic small molecules
for the treatment of obesity and related disorders.
We have developed a
library of novel natriuretic (promoting sodium excretion) receptor compounds,
and have identified a lead clinical candidate for the treatment of congestive
heart failure (“CHF”) for which we have completed preclinical studies, submitted
an Investigational New Drug (“IND”) application, and commenced Phase 1 clinical
trials in healthy volunteers. We are also conducting research to identify
additional clinical candidate compounds for the treatment of both chronic CHF
and acutely decompensated (rapidly deteriorated) CHF.
We are evaluating future
development and marketing activities involving NeutroSpec, our radiolabeled
monoclonal antibody product for imaging and diagnosing infection, with the
Mallinckrodt division of Covidien (“Mallinckrodt”), with whom we have a
strategic collaboration agreement. In December 2005, we and Mallinckrodt
voluntarily suspended the sales, marketing and distribution of NeutroSpec
following certain serious adverse events involving patients who received
NeutroSpec. NeutroSpec was approved for marketing for imaging and diagnosing
equivocal appendicitis by the FDA in July 2004.
Key elements of our
business strategy include: entering into alliances and partnerships with
pharmaceutical companies to facilitate the development, manufacture, marketing,
sale and distribution of product candidates we are investigating; expanding our
pipeline through the utilization of our MC expertise and patented drug discovery
platform; acquiring synergistic products and technologies; and partially funding
our development and discovery programs with the cash flow from our collaboration
agreements.
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We are concentrating our
efforts on the following products and development programs:
ED and FSD — Bremelanotide.
Bremelanotide is a patented, nasally administered peptide in clinical
development for the treatment of both ED and FSD. Bremelanotide, an MC
receptor-based agonist (which promotes a biologic function response)
therapeutic, is a synthetic analog of the naturally occurring hormone alpha-MSH
(melanocyte-stimulating hormone).
ED is the consistent
inability to attain and maintain an erection sufficient for sexual intercourse.
The condition is correlated with increasing age, cardiovascular disease,
hypertension, diabetes, hyperlipidemia and smoking. In addition, certain
prescription drugs and psychogenetic issues may contribute to ED. According to
the Massachusetts Male Aging Study, more than 50% of men aged 40-70 report
episodes of ED and more than 30 million men in the United States may be
afflicted with some form of ED, with less than 20% seeking treatment. The
incidence of ED increases with age. Studies show that chronic ED affects about
5% of men in their 40s and 15% to 25% of men by the age of 65. The current
market size for ED is more than $2.5 billion per year.
FSD is a multifactorial
condition that has anatomical, physiological, medical, psychological and social
components. Studies estimate FSD is prevalent in approximately 50% of women over
the age of 30 and that more than 35 million women in the United States may be
afflicted with some form of FSD. FSD includes disorders associated with desire,
arousal, orgasm and pain. There is tremendous competition to develop, market and
sell drugs for the treatment of ED and FSD.
Bremelanotide is the
first compound to enter clinical trials in a new drug class, MC receptor
agonists, under development to treat sexual dysfunction. Our research suggests
that bremelanotide works through activation of MC receptors in the central
nervous system, which is a different mechanism of action from currently marketed
ED therapies that act directly on the vascular system. As a result, it may offer
therapeutic benefits over currently marketed products. The current ED market is
primarily served by the PDE-5 inhibitors Viagra®, a brand of sildenafil,
Levitra®, a brand of vardenafil, and Cialis®, a brand of tadalafil. A
significant portion of ED patients are contraindicated for, or non-responsive
to, PDE-5 inhibitors.
We have conducted
clinical trials on a nasal formulation of bremelanotide, administered as a
single spray in one nostril, which results in a rapid onset of action. We have
completed various Phase 1 safety trials and Phase 2A and Phase 2B efficacy
clinical trials in male subjects and patients. Two recently completed Phase 2B
clinical trials evaluated the safety and efficacy of bremelanotide in patients
suffering from mild to severe ED, with one trial limited to non-diabetic
patients, and the other to diabetic patients. Both trials, conducted at clinical
trial sites throughout the United States, involved an “at home”, three-month
treatment period and evaluated a range of bremelanotide intranasal doses,
safety, treatment duration and patient populations.
We have delayed
initiation of Phase 3 clinical trials for ED, following responses in late August
2007 from the FDA raising serious concerns about the acceptable benefit/risk
ratio to support progression into Phase 3 as a first-line therapy in the general
population. The FDA questioned overall efficacy results and the clinical benefit
of bremelanotide in both general and diabetic populations, citing blood pressure
increases as its greatest safety concern. We are reviewing the FDA’s comments in
the context of our bremelanotide program to determine next steps. The FDA
indicated it was amenable to proposals for a different drug development pathway,
such as for a second-line therapy for ED in non-responders to approved PDE-5
inhibitors.
We have completed Phase 1
safety trials in female subjects and Phase 2A and Phase 2B efficacy clinical
trials in female patients with FSD. The Phase 2A trial included both
premenopausal and postmenopausal FSD patients, and showed, in both patient
populations, an increase in the level of sexual desire and genital arousal in
subjects receiving bremelanotide compared to subjects receiving placebo. The
Phase 2B trial also included both premenopausal and postmenopausal FSD patients,
with an “at home”
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two-month
treatment period. The Phase 2B trial used a single dose of bremelanotide, and
was to evaluate safety and identify potential efficacy endpoints for future
studies.
Collaborative Development and
Marketing Agreement with King. In August 2004, we entered into a
collaboration agreement with King to jointly develop and commercialize
bremelanotide. Pursuant to the terms of the agreement, we and King shared all
collaboration development and marketing costs based on an agreed percentage.
Following the decision to delay Phase 3 clinical trials for ED, we received
notice from King terminating the agreement in accordance with its terms
effective December 5, 2007. Upon termination, we will solely own all rights to
bremelanotide, without any financial obligation to King.
Obesity. We have an active
development program for MC receptor-targeted small molecule compounds for the
treatment of obesity, diabetes and related metabolic syndrome. Obesity is a
multifactorial condition with significant biochemical components relating to
satiety (feeling full), energy utilization and homeostasis. A number of
different metabolic and hormonal pathways are being evaluated by companies
around the world in efforts to develop better treatments for obesity. Scientific
research has established that MC receptors have a role in eating behavior and
energy homeostasis, and that MC receptor agonists, such as alpha-MSH, decrease
food intake and induce weight loss.
Obesity is a significant
healthcare issue, often correlated with a variety of cardiovascular and other
diseases, including diabetes. In the United States, approximately 65 percent of
adult Americans are categorized as being overweight or obese. Each year, obesity
causes at least 300,000 excess deaths in the United States, and healthcare costs
of American adults with obesity amount to approximately $100 billion.
Additionally, studies in adolescents indicate that there is a trend towards
increased prevalence of the disease.
MC receptor agonists are
also involved in other physiological responses, including sexual response. MC
receptor agonists with potential for use in the treatment of obesity generally
induce a sexual response. To our knowledge, there are no reports in the
scientific literature of MC receptor-target compounds which are effective in
animal or human studies for the treatment of obesity and which do not induce a
sexual response.
We have developed a class
of small molecule compounds targeting MC receptors which are effective in the
treatment of obesity in animal models but which do not induce a sexual response.
Certain of these compounds have been demonstrated to be effective in normal
diet-induced obese and genetically obese animal models for decreasing food
intake and body weight, without an increase in sexual response in normal animals
at the same or higher dose levels. Tests to date have been conducted only in
animal models and in laboratory tests. We believe that we have developed
approaches that allow us to differentiate MC receptor-targeted compounds useful
for treating obesity and related disorders from compounds that induce a sexual
response.
Research Collaboration and License
Agreement with AstraZeneca. We have an exclusive global licensing and
research collaboration agreement with AstraZeneca to discover, develop and
commercialize small molecule compounds that target MC receptors for the
treatment of obesity, diabetes and related metabolic syndrome. Pursuant to the
terms of the agreement, we received an upfront payment of $10 million from
AstraZeneca and are eligible for milestone payments totaling up to $300 million,
with up to $180 million contingent upon development and regulatory milestones
and the balance on achievement of sales targets, and royalties on sales of
approved products. AstraZeneca has assumed responsibility for product
commercialization, product discovery and development costs. We are providing
certain scientific expertise in the research collaboration at a negotiated rate.
Congestive Heart Failure. We
have a program for developing compounds that mimic natural peptides
(“peptidomimetics”) for the treatment of CHF. CHF is an illness in which the
heart is unable to pump blood efficiently, and includes acutely decompensated
CHF with dyspnea (shortness of breath) at rest or with minimal activity.
Endogenous (naturally produced) natriuretic peptides have a number of beneficial
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results,
including vasodilation (relaxation of blood vessels), natriuresis (excretion of
sodium), and diuresis (excretion of fluids). One product is commercially
available in the United States, Natrecor®, a brand of nesiritide, which is a
recombinant (genetically made) form of human B-type natriuretic peptide.
However, Natrecor® is approved only for use in acutely decompensated CHF with
administration by intravenous injection, typically limiting administration to a
hospital setting.
CHF directly affects
nearly five million people in the United States, with over 500,000 new cases
diagnosed each year. Annual medical treatment costs for CHF, which frequently
involves expensive hospitalization and therapies, are estimated at over $25
billion.
We have developed a
library of novel peptidomimetic natriuretic agonists. Certain of these compounds
have demonstrated efficacy in animal models when administered by subcutaneous
(under the skin) injection. These compounds remain active in animal models for
longer periods than do natural or recombinant natriuretic peptides.
We have identified a
clinical candidate drug for the treatment of CHF. The drug is being initially
evaluated in a subcutaneous form. We believe that a subcutaneous form of
peptidomimetic compound could be used in a clinic or doctor’s office, and would
not be limited to use in hospitals or specialized medical facilities. We have
completed toxicity testing and other preclinical studies with the clinical
candidate drug, filed an IND application, and commenced Phase 1 studies in
healthy volunteers. We are also developing an intravenous form of the
peptidomimetic compound for acutely decompensated CHF.
MIDAS Drug Development
Platform. Our obesity and other early-stage programs derived lead
compound series by utilizing our MIDAS™ (Metal Ion-induced Distinctive Array of
Structures) proprietary platform technology to design and synthesize novel
molecules that mimic the activity of peptides. MIDAS uses metal ions to fix the
three-dimensional configuration of peptides, forming conformationally rigid
molecules that remain folded specifically in their active forms. These MIDAS
molecules are simple to synthesize, are chemically and proteolytically stable,
and have the potential to be orally bioavailable. Unlike most other drug
discovery approaches, MIDAS can be used to generate both receptor antagonists
(which block a normal biological metabolic response) and agonists. In addition,
MIDAS molecules are information-rich and provide data on structure-activity
relationships that can be used to design small molecule, non-peptide drugs.
Generation of commercially viable protein and peptide drug molecules with
desirable properties continues to be arduous, expensive and labor-intensive. We
believe that our MIDAS technology simplifies the development process by
eliminating many of the inherent limitations associated with peptides and
proteins.
NeutroSpec®. NeutroSpec, our
trade name for technetium (99m Tc) fanolesomab, includes an anti-CD 15
monoclonal antibody which selectively binds to a type of white blood cell,
neutrophils, involved in the immune response. When labeled with the radioactive
tracer technetium and injected into the blood stream, the antibody binds to
neutrophils accumulated at the infection site, labeling these cells. As a
result, physicians can rapidly image and locate an infection using a gamma
camera, a common piece of hospital equipment that detects radioactivity.
In July 2004, we received
approval from the FDA to market NeutroSpec for imaging of patients with
equivocal signs and symptoms of appendicitis who are five years of age or older.
During 2005, we and Mallinckrodt reported to the FDA the occurrence of several
serious adverse events, including two deaths, involving patients with severe
underlying cardiopulmonary compromise who received NeutroSpec for off-label
uses. In December 2005, the FDA informed Mallinckrodt and us that it had
reconsidered the risk/benefit assessment of NeutroSpec and determined that the
product should not be administered to patients, until a further understanding
and review of the relationship between NeutroSpec and reported serious adverse
events is complete. Together with Mallinckrodt, we are reviewing data and
assessing approaches for understanding the relationship between NeutroSpec use
and the observed serious adverse events. All ongoing clinical trials and plans
for future clinical trials and regulatory approvals of NeutroSpec have been
suspended and no final decision concerning future activities involving
NeutroSpec has been
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made. We
anticipate making a decision on whether to seek to proceed with NeutroSpec in
the second half of calendar 2007.
Strategic Collaboration Agreement
with Mallinckrodt. Mallinckrodt has exclusive worldwide marketing and
distribution rights to NeutroSpec under our collaboration agreement. We are
responsible for the manufacture of NeutroSpec and Mallinckrodt agreed to pay us
a transfer price on each product unit sold to Mallinckrodt and a royalty on
their net sales of NeutroSpec. If NeutroSpec is reintroduced to the market, we
may receive milestone payments from Mallinckrodt on the achievement of
development, regulatory or sales objectives; however, we may not be able to
reintroduce NeutroSpec to the market or meet development or sales objectives.
The Offering
This prospectus is part
of a registration statement on Form S-3 that we filed with the Securities and
Exchange Commission utilizing a “shelf” registration process. Under this
process, we may sell any combination of the securities described in this
prospectus in one or more offerings up to a total dollar amount of $50.0
million. This prospectus provides you with a general description of the
securities we may offer. Each time we offer to sell securities under this
prospectus, we will provide a prospectus supplement containing specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. To the extent
that any information we provide in a prospectus supplement is inconsistent with
information in this prospectus, the information in the prospectus supplement
will modify or supersede this prospectus. You should read both this prospectus
and any prospectus supplement together with the additional information described
under the headings “Incorporation of Information by Reference” and “Where You
Can Find More Information.”
RISK FACTORS
Investing in our
securities involves risks which you should consider carefully. We have set forth
below risk factors related specifically to this offering. For risks related to
our business operations, see “Risk Factors” in our annual report on Form 10-K
for the year ended June 30, 2007 and all subsequent reports that we file with
the Securities and Exchange Commission (“SEC”) under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934. We have incorporated those
reports by reference into this prospectus. See “Incorporation of Information by
Reference” and “Where You Can Find More Information” below.
RISKS RELATED TO THE
OFFERING
We expect to sell additional equity
securities, which will cause dilution.
We expect to sell more
equity securities in the future to obtain operating funds. We may sell these
securities at a discount to the market price. Any future sales of equity will
dilute the holdings of existing stockholders, possibly reducing the value of
their investment.
Investors in this offering may suffer
immediate dilution.
As of June 30, 2007, we
had a net tangible book value of $18.5 million which yields a net tangible book
value of approximately $0.22 per share of common stock, assuming the conversion
of all then convertible preferred stock and no exercise of any warrants or
options. The net tangible book value per share is less than the current market
price per share. If you pay more than the net tangible book value per share for
stock in this offering, you will suffer immediate dilution.
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As of November 27, 2007, there were
16,893,733 shares of common stock underlying outstanding dilutive securities,
which if exercised or converted, could decrease the value of your shares.
As of November 27, 2007,
holders of our outstanding dilutive securities had the right to acquire the
following amounts of underlying common stock:
| • | 199,083 shares issuable on the conversion of immediately convertible preferred stock, for no further consideration; |
| • | 7,625,024 shares issuable on the exercise of warrants, at exercise prices ranging from $1.54 to $4.06 per share; |
| • | 6,531,253 shares issuable on the exercise of stock options, at exercise prices ranging from $1.00 to $7.75 per share; |
| • | 975,000 shares issuable under restricted stock units that vest if shares of our common stock trade at or above certain share prices; and |
| • | 1,563,373 shares issuable under restricted stock units that vest no later than September 30, 2008, subject to the fulfillment of service conditions. |
If the
holders convert or exercise those securities, or similar dilutive securities we
may issue in the future, you may experience dilution in the net tangible book
value of your common stock. In addition, the sale or availability for sale of
the underlying shares in the marketplace could depress our stock price. We have
registered or agreed to register for resale all of the underlying shares listed
above. Holders of registered underlying shares could resell the shares
immediately upon issuance, resulting in significant downward pressure on our
stock.
We will have broad discretion over
the use of the proceeds of this offering and may not realize a return.
We will have considerable
discretion in the application of the net proceeds of this offering. We have not
determined the amount of net proceeds that we will apply to various corporate
purposes, including potential acquisitions. We may use the net proceeds for
purposes that do not yield a significant return, if any, for our stockholders.
NOTE CONCERNING
FORWARD-LOOKING STATEMENTS
Statements in this
prospectus, as well as oral statements that our officers, directors, or
employees acting on our behalf may make, that are not historical facts,
constitute “forward-looking statements” which are made pursuant to the safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements do not constitute guarantees of future performance.
We caution investors that statements which are not strictly historical
statements contained in this prospectus, including, without limitation,
| • | current or future financial performance, |
|
| • | management's plans and objectives for future operations, |
|
| • | clinical trials and results, |
|
| • | product plans and performance, |
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| • | management's assessment of market factors, and |
|
| • | statements regarding the our strategy and plans and those of our
strategic partners, |
constitute
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that could cause our actual
results to be materially different from our historical results or from any
results expressed or implied by forward-looking statements. Our future operating
results are subject to risks and uncertainties and are dependent upon many
factors, including, without limitation, the risks identified under the caption
“Risk Factors,” and in our other SEC filings. The statements we make in this
prospectus are as of the date of this prospectus. We will not revise these
forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated events.
INCORPORATION OF
INFORMATION BY REFERENCE
We incorporate into this
prospectus information contained in documents which we file with the SEC. We are
disclosing important information to you by referring you to those documents. The
information which we incorporate by reference is an important part of this
prospectus, and certain information that we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below, and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934.
| • | annual
report on Form 10-K for the year ended June 30, 2007, filed on September
13, 2007 |
|
| • | quarterly report on Form 10-Q for the quarter ended September 30,
2007, filed on November 8, 2007 |
|
| • | current report on Form 8-K dated August 30, 2007, filed on August
30, 2007 |
|
| • | current report on Form 8-K dated September 6, 2007, filed on
September 11, 2007 |
|
| • | current report on Form 8-K dated September 10, 2007, filed on
September 12, 2007 |
|
| • | current report on Form 8-K dated September 25, 2007, filed on
September 27, 2007 |
|
| • | proxy
statement for our 2007 annual meeting of stockholders, filed on October
26, 2007 |
|
| • | the
description of our common stock contained in our registration statement on
Form 8-A filed on December 13, 1999 |
You may
obtain a free copy of any or all of the information incorporated by reference by
writing or calling us. Please direct your request to:
| Stephen T. Wills Chief Financial Officer Palatin Technologies, Inc. 4C Cedar Brook Drive Cranbury, New Jersey 08512 Telephone (609) 495-2200 Fax (609) 495-2201 |
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WHERE YOU CAN FIND MORE
INFORMATION
We file annual, quarterly
and special reports, proxy statements, registration statements and other
information with the SEC. You may read and copy any materials we file at the
SEC’s Public Reference Room at 100 F St. NE, Washington, DC 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The address of that website is
http://www.sec.gov. You can find information about Palatin on our website at
http://www.palatin.com. Information found on our website is not part of this
prospectus.
USE OF PROCEEDS
Unless we state otherwise
in a prospectus supplement, we will use the net proceeds from the sale of
securities under this prospectus for general corporate purposes, including
capital expenditures. From time to time, we evaluate the possibility of
acquiring businesses, products and technologies, and we may use a portion of the
proceeds as consideration for acquisitions. Until we use net proceeds for these
purposes, we may invest them in interest-bearing securities.
MARKET PRICE OF AND
DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock has been
quoted on The American Stock Exchange (AMEX) under the symbol PTN, since
December 21, 1999. It had previously traded on The NASDAQ Small Cap Market under
the symbol PLTN.
The table below provides,
for the fiscal quarters indicated, the reported high and low sales prices for
our common stock on AMEX since July 1, 2006.
| HIGH | LOW | |
| FISCAL YEAR ENDED JUNE 30, 2006: | ||
| First Quarter | $2.36 | $1.85 |
| Second Quarter | 4.03 | 1.96 |
| Third Quarter | 3.72 | 2.67 |
| Fourth Quarter | 2.88 | 1.95 |
| FISCAL YEAR ENDED JUNE 30, 2007: | ||
| First Quarter | 2.50 | 1.71 |
| Second Quarter | 3.03 | 1.85 |
| Third Quarter | 4.00 | 1.75 |
| Fourth Quarter | 2.13 | 1.80 |
| FISCAL YEAR ENDING JUNE 30, 2008: | ||
| First Quarter | 2.05 | 0.40 |
| Second Quarter, through November 27, 2007 | 0.401 | 0.26 |
Holders of common stock. On
November 27, 2007 we had 229 holders of record of common stock. On November 27,
2007 the closing sales price of our common stock as reported on the AMEX was
$0.26 per share.
Dividends and dividend
policy. We have never declared or paid any dividends. We currently intend
to retain earnings, if any, for use in our business. We do not anticipate paying
dividends in the foreseeable future.
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Dividend restrictions. Our
outstanding Series A Convertible Preferred Stock provides that we may not pay a
dividend or make any distribution to holders of any class of stock unless we
first pay a special dividend or distribution of $100 per share to the holders of
the Series A preferred stock.
RATIOS OF EARNINGS TO
FIXED CHARGES AND TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Ratio of earnings to
fixed charges. Ratio of earnings to fixed charges is computed by dividing
earnings by fixed charges. Earnings consist of income before income taxes plus
fixed charges. Fixed charges consist of interest expense, including amortized
discounts, premiums and capitalized expenses related to indebtedness.
The following table sets
forth our ratios of earnings to fixed charges for the last five fiscal years:
| Fiscal Year Ended June 30, |
|||||||||||
| |
2003 | 2004 | 2005 | 2006 | 2007 | ||||||
| Ratio
of earnings to fixed charges |
* | * | * | * | * | ||||||
| Deficiency | $20,768,349 | $26,317,859 | $14,357,976 | $28,958,882 | $27,751,525 | ||||||
*Less than
one to one coverage.
Ratio of earnings to
combined fixed charges and preferred stock dividends. Ratio of earnings to
combined fixed charges and preferred stock dividends is computed by dividing
earnings by the sum of fixed charges and preferred stock dividends. Earnings
consist of income before income taxes plus fixed charges. Fixed charges consist
of interest expense, including amortized discounts, premiums and capitalized
expenses related to indebtedness.
The following table sets
forth our ratios of earnings to combined fixed charges and preferred stock
dividends for the last five fiscal years:
| Fiscal Year Ended June 30, |
|||||||||||
| |
2003 | 2004 | 2005 | 2006 | 2007 | ||||||
| Ratio
of earnings to combined fixed charges and preferred stock
dividends |
* | * | * | * | * | ||||||
| Deficiency | $20,768,349 | $26,317,859 | $14,357,976 | $28,958,882 | $27,751,525 | ||||||
*Less than
one to one coverage.
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DESCRIPTION OF
SECURITIES
Common Stock
We have the authority to
issue 150,000,000 shares of common stock, par value $0.01 per share. As of
November 27, 2007, 85,204,169 shares of our common stock were outstanding, and a
maximum of 16,893,733 shares of common stock were issuable on conversion of
outstanding convertible preferred stock, exercise of outstanding options and
warrants, and vesting of performance-based stock grants. Holders of common stock
have one vote per share and have no preemption rights. Holders of common stock
have the right to participate ratably in all distributions, whether of dividends
or assets in liquidation, dissolution or winding up, subject to any superior
rights of holders of preferred stock outstanding at the time. See “Preferred
Stock” and “Series A Convertible Preferred Stock,” below.
Transfer Agent and Registrar.
American Stock Transfer & Trust Company is the transfer agent and registrar
for our common stock. Their address is 59 Maiden Lane, Plaza Level, New York, NY
10038 and their telephone number is (800) 937-5449.
Preferred Stock
We have the authority to
issue 10,000,000 shares of preferred stock. As of November 27, 2007, 4,997
shares of our preferred stock were outstanding (see “Series A Convertible
Preferred Stock” below). The description of preferred stock provisions set forth
below is not complete and is subject to and qualified in its entirety by
reference to our certificate of incorporation and the certificate of
designations relating to each series of preferred stock.
The board of directors
has the right, without the consent of holders of common stock, to designate and
issue one or more series of preferred stock, which may be convertible into
common stock at a ratio determined by the board. A series of preferred stock may
bear rights superior to common stock as to voting, dividends, redemption,
distributions in liquidation, dissolution, or winding up, and other relative
rights and preferences. The board may set the following terms of any series
preferred stock, and a prospectus supplement will specify these terms for each
series offered:
| • | the
number of shares constituting the series and the distinctive designation
of the series; |
|
| • | dividend rates, whether dividends are cumulative, and, if so, from
what date and the relative rights of priority of payment of
dividends; |
|
| • | voting
rights and the terms of the voting rights; |
|
| • | conversion privileges and the terms and conditions of conversion,
including provision for adjustment of the conversion rate; |
|
| • | redemption rights and the terms and conditions of redemption,
including the date or dates upon or after which shares may be redeemable,
and the amount per share payable in case of redemption, which may vary
under different conditions and at different redemption dates; |
|
| • | sinking fund provisions for the redemption or purchase of
shares; |
|
| • | rights
in the event of voluntary or involuntary liquidation, dissolution or
winding up of the corporation, and the relative rights of priority of
payment; and |
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| • | any
other relative powers, preferences, rights, privileges, qualifications,
limitations and restrictions of the series. |
Dividends on outstanding
shares of preferred stock will be paid or declared and set apart for payment
before any dividends may be paid or declared and set apart for payment on the
common stock with respect to the same dividend period.
If upon any voluntary or
involuntary liquidation, dissolution or winding up of the corporation, the
assets available for distribution to holders of preferred stock are insufficient
to pay the full preferential amount to which the holders are entitled, then the
available assets will be distributed ratably among the shares of all series of
preferred stock in accordance with the respective preferential amounts
(including unpaid cumulative dividends, if any) payable with respect to each
series.
Holders of preferred
stock will not be entitled to preemptive rights to purchase or subscribe for any
shares of any class of capital stock of the corporation. The preferred stock
will, when issued, be fully paid and nonassessable. The rights of the holders of
preferred stock will be subordinate to those of our general creditors.
We have previously issued
preferred stock in three series, designated Series A Convertible Preferred Stock
(“Series A”), Series B Convertible Preferred Stock (“Series B”) and Series C
Convertible Preferred Stock (“Series C”). All of the issued shares of Series B,
issued in 1998, and Series C, issued in 1999, were retired upon conversion into
common stock and are no longer outstanding.
Series A Convertible
Preferred Stock
The board of directors
established a series of 264,000 shares of preferred stock, designated Series A
Convertible Preferred Stock, par value $0.01 per share. We issued 137,780 shares
of Series A in 1997, of which 4,997 shares remain outstanding as of November 27,
2007, the rest having been converted into common stock. The Series A has the
following rights and preferences.
Optional conversion. Each
share of Series A is convertible at any time, at the option of the holder, into
the number of shares of common stock equal to $100 divided by the conversion
price, as defined in the Series A certificate of designations. The current
conversion price is $2.51, so each share of Series A is currently convertible
into approximately 40 shares of common stock.
Mandatory conversion. We may,
at our option, cause the conversion of the Series A, in whole or in part, on a
pro rata basis, into common stock, if the closing bid price of the common stock
has exceeded 200% of the conversion price for at least 20 trading days in any 30
consecutive trading day period, ending three days prior to the date of mandatory
conversion.
Price protection provisions.
The conversion price decreases if we sell common stock (or equivalents) for a
price per share less than the conversion price or less than the market price of
the common stock. The conversion price is also subject to adjustment upon the
occurrence of a merger, reorganization, consolidation, reclassification, stock
dividend or stock split which results in an increase or decrease in the number
of shares of common stock outstanding.
Dividend and distribution
preference. We may not pay a dividend or make any distribution to holders
of any other capital stock unless and until we first pay a special dividend or
distribution of $100 per share to the holders of Series A.
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Liquidation preference. Upon
(i) liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, (ii) sale or other disposition of all or substantially all of the
assets of the Company, or (iii) any consolidation, merger, combination,
reorganization or other transaction in which Palatin is not the surviving entity
or in which the shares of common stock constituting in excess of 50% of the
voting power of the Company are exchanged for or changed into other stock or
securities, cash and/or any other property, after payment or provision for
payment of the debts and other liabilities of the Company, the holders of Series
A will be entitled to receive, pro rata and in preference to the holders of any
other capital stock, an amount per share equal to $100 plus accrued but unpaid
dividends, if any.
Voting rights. Each holder of
Series A has the number of votes equal to the number of shares of common stock
issuable upon conversion of the holder’s Series A at the record date for
determination of the stockholders entitled to vote or, if no record date is
established, at the date a vote is taken. Except as provided above or as
required by applicable law, the holders of the Series A will be entitled to vote
together with the holders of the common stock and not as a separate class.
Debt Securities
The following
description, together with the additional information we include in any
applicable prospectus supplement, summarizes the material terms and provisions
of the debt securities that we may offer under this prospectus. While the terms
we have summarized below will apply generally to any future debt securities we
may offer, we will describe the particular terms of any debt securities that we
may offer in more detail in the applicable prospectus supplement. The terms of
any debt securities we offer under a prospectus supplement may differ from the
terms we describe below.
We will issue notes under
an indenture, which we will enter into with the trustee named in the indenture.
Any indenture will be qualified under the Trust Indenture Act of 1939.
We will describe in each
prospectus supplement the following terms relating to a series of debt
securities:
| • | the
title; |
|
| • | the
principal amount being offered, and if a series, the total amount
authorized and the total amount outstanding; |
|
| • | any
limit on the amount that may be issued; |
|
| • | whether or not we will issue the series of debt securities in
global form, and if so, the terms and who the depository will
be; |
|
| • | the
maturity date; |
|
| • | the
principal amount due at maturity, and whether the debt securities will be
issued with an original issue discount; |
|
| • | whether and under what circumstances, if any, we will pay
additional amounts on any debt securities held by a person who is not a
United States person for tax purposes, and whether we can redeem the debt
securities if we have to pay such additional amounts; |
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| • | the
annual interest rate, which may be fixed or variable, or the method for
determining the rate and the date interest will begin to accrue, the dates
interest will be payable and the regular record dates for interest payment
dates or the method for determining such dates; |
|
| • | whether or not the debt securities will be secured or unsecured,
and the terms of any secured debt; |
|
| • | the
terms of the subordination of any series of subordinated debt; |
|
| • | the
place where payments will be payable; |
|
| • | restrictions on transfer, sale or other assignment, if
any; |
|
| • | our
right, if any, to defer payment of interest and the maximum length of any
such deferral period; |
|
| • | the
date, if any, after which the conditions upon which, and the price at
which, we may, at our option, redeem the series of debt securities
pursuant to any optional or provisional redemption provisions and the
terms of those redemptions provisions; |
|
| • | the
date, if any, on which, and the price at which we are obligated, pursuant
to any mandatory sinking fund or analogous fund provisions or otherwise,
to redeem, or at the holder’s option to purchase, the series of debt
securities and the currency or currency unit in which the debt securities
are payable; |
|
| • | whether the indenture will restrict our ability to pay dividends,
or will require us to maintain any asset ratios or reserves; |
|
| • | whether we will be restricted from incurring any additional
indebtedness, issuing additional securities, or entering into a merger,
consolidation or sale of our business; |
|
| • | a
discussion of any material or special United States federal income tax
considerations applicable to the debt securities; |
|
| • | information describing any book-entry features; |
|
| • | provisions for a sinking fund purchase or other analogous fund, if
any; |
|
| • | any
provisions for payment of additional amounts for taxes and any provision
for redemption, if we must pay such additional amount with respect to any
debt security; |
|
| • | whether the debt securities are to be offered at a price such that
they will be deemed to be offered at an “original issue discount” as
defined in paragraph (a) of Section 1273 of the Internal Revenue
Code; |
|
| • | the
denominations in which we will issue the series of debt securities, if
other than denominations of $1,000 and any integral multiple
thereof; |
|
| • | the
terms on which a series of debt securities may be convertible into or
exchangeable for our common stock, any other of our securities or
securities of a third party, and whether conversion or exchange is
mandatory, at the option of the holder or at our option; |
|
| • | events
of default; |
|
| • | whether we and/or the debenture trustee may change an indenture
without the consent of any holders; |
|
| • | the
form of debt security and how it may be exchanged and
transferred; |
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| • | descriptions of the debenture trustee and paying agent, and the
method of payments; and |
|
| • | any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, including any additional events of default or covenants provided with respect to the debt securities, and any terms which may be required by us or advisable under applicable laws or regulations. |
Specific
indentures will contain additional important terms and provisions and will be
incorporated by reference as an exhibit to the registration statement that
includes this prospectus, or as an exhibit to a current report on Form 8-K,
incorporated by reference in this prospectus.
Warrants
The following
description, together with the additional information we may include in any
applicable prospectus supplement, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant
agreements and warrant certificates. While the terms summarized below will apply
generally to any warrants that we may offer, we will describe the particular
terms of any series of warrants in more detail in the applicable prospectus
supplement. The terms of any warrants offered under a prospectus supplement may
differ from the terms described below. Specific warrant agreements will contain
additional important terms and provisions and will be incorporated by reference
as an exhibit to the registration statement that includes this prospectus, or as
an exhibit to a current report on Form 8-K, incorporated by reference in this
prospectus.
General. We will describe in
the applicable prospectus supplement the terms of the series of warrants,
including:
| • | the
offering price and aggregate number of warrants offered; |
|
| • | the
currency for which the warrants may be purchased; |
|
| • | if
applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each such
security or each principal amount of such security; |
|
| • | if
applicable, the date on and after which the warrants and the related
securities will be separately transferable; |
|
| • | in the
case of warrants to purchase common stock or preferred stock, the number
of shares of common stock or preferred stock, as the case may be,
purchasable upon the exercise of one warrant and the price at which these
shares may be purchased upon exercise; |
|
| • | in the
case of warrants to purchase debt securities, the principal amount of debt
securities purchasable upon exercise of one warrant and the price at
which, and currency in which, this principal amount of debt securities may
be purchased upon exercise; |
|
| • | the
effect of any merger, consolidation, sale or other disposition of our
business on the warrant agreement and the warrants; |
|
| • | the
terms of any rights to redeem or call the warrants; |
|
| • | any
provisions for changes to or adjustments in the exercise price or number
of securities issuable upon exercise of the warrants; |
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| • | the
dates on which the right to exercise the warrants will commence and
expire; |
|
| • | the
manner in which the warrant agreement and warrants may be
modified; |
|
| • | federal income tax consequences of holding or exercising the
warrants; |
|
| • | the
terms of the securities issuable upon exercise of the warrants;
and |
|
| • | any other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
Before
exercising their warrants, holders of warrants will not have any of the rights
of holders of the securities purchasable upon such exercise, including:
| • | in the
case of warrants to purchase debt securities, the right to receive
payments of principal of, or premium, if any, or interest on, the debt
securities purchasable upon exercise or to enforce covenants in the
applicable indenture; or |
|
| • | in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any. |
Exercise of Warrants. Each
warrant will entitle the holder to purchase the securities that we specify in
the applicable prospectus supplement at the exercise price that we describe in
the applicable prospectus supplement. Unless we otherwise specify in the
applicable prospectus supplement, holders of the warrants may exercise the
warrants at any time up to 5:00 P.M. New York time on the expiration date that
we set forth in the applicable prospectus supplement. After the close of
business on the expiration date, unexercised warrants will become void.
Holders of the warrants
may exercise the warrants by delivering the warrant certificate representing the
warrants to be exercised together with specified information, and paying the
required amount to the warrant agent in immediately available funds, as provided
in the applicable prospectus supplement. We will set forth on the reverse side
of the warrant certificate and in the applicable prospectus supplement the
information that the holder of the warrant will be required to deliver to the
warrant agent.
Upon receipt of the
required payment and the warrant certificate properly completed and duly
executed at the corporate trust office of the warrant agent or any other office
indicated in the applicable prospectus supplement, we will issue and deliver the
securities purchasable upon such exercise. If fewer than all of the warrants
represented by the warrant certificate are exercised, then we will issue a new
warrant certificate for the remaining amount of warrants. If we so indicate in
the applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for the warrants (cashless
exercise).
Enforceability of Rights by Holders
of Warrants. Each warrant agent will act solely as our agent under the
applicable warrant agreement and will not assume any obligation or relationship
of agency or trust with any holder of any warrant. A single bank or trust
company may act as warrant agent for more than one issue of warrants. A warrant
agent will have no duty or responsibility in case of any default by us under the
applicable warrant agreement or warrant, including any duty or responsibility to
initiate any proceedings at law or otherwise, or to make any demand upon us. Any
holder of a warrant may, without the consent of the related warrant agent or the
holder of any other warrant, enforce by appropriate legal action its right to
exercise, and receive the securities purchasable upon exercise of, its warrants.
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ANTI-TAKEOVER EFFECTS OF
PROVISIONS OF DELAWARE LAW AND OUR CHARTER DOCUMENTS
Certificate of
Incorporation
Our certificate of
incorporation authorizes the issuance of up to 10,000,000 shares of preferred
stock, par value $.01 per share, of which 264,000 shares are currently
designated as Series A Convertible Preferred Stock. The board of directors has
the authority, without further approval of the stockholders, to issue and
determine the rights and preferences of other series of preferred stock, except
as limited by the certificate of designation for the Series A. The board could
issue one or more series of preferred stock with voting, conversion, dividend,
liquidation, or other rights which would adversely affect the voting power and
ownership interest of holders of common stock. This authority may have the
effect of deterring hostile takeovers, delaying or preventing a change in
control, and discouraging bids for our common stock at a premium over the market
price.
Section 203 of the
Delaware General Corporation Law
We are subject to Section
203 of the Delaware General Corporation Law, which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years
following the time that such stockholder became an interested stockholder,
unless:
| • | prior
to such time, the board of directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested holder; |
|
| • | upon
consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (a) by persons who are directors and
also officers and (b) by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or |
|
| • | at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two thirds of the outstanding voting stock which is not owned by the interested stockholder. |
In general,
Section 203 defines “business combination” to include the following:
| • | any
merger or consolidation involving the corporation and the interested
stockholder; |
|
| • | any
sale, transfer, pledge or other disposition of 10% or more of the assets
of the corporation involving the interested stockholder; |
|
| • | subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation to
the interested stockholder; |
|
| • | any
transaction involving the corporation that has the effect of increasing
the proportionate share of the stock or any class or series of the
corporation beneficially owned by the interested stockholder; or |
|
| • | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
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In general,
Section 203 defines “interested stockholder” as an entity or person beneficially
owning 15% or more of the outstanding voting stock of the corporation and any
entity or person affiliated with or controlling or controlled by such entity or
person.
Indemnification and
Limitation of Liability
Our
certificate of incorporation and bylaws require us to indemnify our directors,
officers, employees and agents against the costs (including fines, judgments and
attorney fees) from involvement in legal proceedings arising from their position
or service, provided that the person seeking indemnification acted:
| • | in
good faith; |
|
| • | in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation; and, |
|
| • | with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. |
The
certificate of incorporation and bylaws allow us to buy indemnification
insurance for this purpose.
Our
certificate of incorporation provides that, to the fullest extent permissible
under Delaware law, no director shall be personally liable to the corporation or
its stockholders for monetary damages for breach of a fiduciary duty as a
director. However, this provision does not eliminate the duty of care, and in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief that will remain available under Delaware law. In
addition, each director will continue to be subject to liability for (a) breach
of the director’s duty of loyalty to us or our stockholders, (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) violating Section 174 of the Delaware General Corporation
Law, or (d) any transaction from which the director derived an improper personal
benefit. The provision also does not affect a director’s responsibilities under
any other law, such as the federal securities laws or state or federal
environmental laws.
PLAN OF
DISTRIBUTION
We may sell securities
under this prospectus in public offerings:
| • | in “at
the market” offerings, within the meaning of Rule 415(a)(4) of the
Securities Act of 1933, as amended (the “Securities Act”), to or through a
market maker or into an existing trading market on an exchange or
otherwise; |
|
| • | through one or more underwriters or dealers; |
|
| • | through other agents; or |
|
| • | directly to investors. |
We may price the
securities we sell under this prospectus:
| • | at a
fixed public offering price or prices, which we may change from time to
time; |
|
| • | at
market prices prevailing at the times of sale; |
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| • | at
prices calculated by a formula based on prevailing market
prices; |
|
| • | at
negotiated prices; or |
|
| • | in a combination of any of the above pricing methods. |
If we use underwriters
for an offering, they will acquire securities for their own account and may
resell them from time to time in one or more transactions at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be subject to
the conditions set forth in the applicable underwriting agreement. We may offer
the securities to the public through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Subject to certain
conditions, the underwriters will be obligated to purchase all the securities of
the series offered by the prospectus supplement. The public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may change
from time to time. Only underwriters named in a prospectus supplement are
underwriters of the securities offered by that prospectus supplement.
We may also sell
securities directly or through agents. We will name any agent involved in an
offering and we will describe any commissions we will pay the agent in the
prospectus supplement. Unless the prospectus supplement states otherwise, our
agents will act on a best-efforts basis.
We may authorize agents
or underwriters to solicit offers by certain types of institutional investors to
purchase securities from us at the public offering price set forth in the
prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. We will describe the
conditions of these contracts and the commissions we must pay for solicitation
of these contracts in the prospectus supplement.
We may provide agents and
underwriters with indemnification against certain civil liabilities, including
liabilities under the Securities Act, or contribution with respect to payments
that the agents or underwriters may make with respect to such liabilities.
Underwriters or agents may engage in transactions with us, or perform services
for us, in the ordinary course of business. We may also use underwriters or
agents with whom we have a material relationship. We will describe the nature of
any such relationship in the prospectus supplement.
An underwriter may engage
in overallotment, stabilizing transactions, short covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934. Overallotment involves sales in excess of the offering size, which
create a short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Short covering transactions involve purchases of the securities in the
open market after the distribution is completed to cover short positions.
Penalty bids permit the underwriter to reclaim a selling concession from a
dealer when the securities originally sold by the dealer are purchased in a
covering transaction to cover short positions. These activities may cause the
price of our securities to be higher than it would otherwise be on the open
market. The underwriter may discontinue any of these activities at any time.
All securities we offer,
other than common stock, will be new issues of securities, with no established
trading market. Underwriters may make a market in these securities, but will not
be obligated to do so and may discontinue market making at any time without
notice. We cannot guarantee the liquidity of the trading markets for any
securities.
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LEGAL MATTERS
Unless otherwise
specified in the applicable prospectus supplement, the validity of the
securities covered by this prospectus will be passed upon for us by Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, New York. As of the date
of this prospectus, certain members of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C. hold (i) currently exercisable options under our 1996 stock
option plan to purchase an aggregate of 15,000 shares of common stock at prices
ranging from $4.00 to $6.00 per share, expiring from January 21, 2008 to
February 6, 2011, and (ii) shares of our common stock, which in the
aggregate equal less than one percent (1%) of the total issued and outstanding
shares of our common stock.
EXPERTS
The consolidated
financial statements of Palatin Technologies, Inc. and subsidiary as of June 30,
2007 and 2006, and for each of the years in the three-year period ended June 30,
2007, and management’s assessment of the effectiveness of internal control over
financial reporting as of June 30, 2007, have been incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
LLP, independent registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The audit report covering the June 30, 2007 consolidated financial
statements refers to the adoption of SFAS No. 123(R), “Share-Based Payment,”
effective July 1, 2005 using the modified prospective method.
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This
prospectus is part of a registration statement we filed with the SEC. You should
rely only on the information or representations contained in this prospectus and
any accompanying prospectus supplement. We have not authorized anyone to provide
information other than that provided in this prospectus and any accompanying
prospectus supplement. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any accompanying prospectus supplement is
accurate as of any date other than the date on the front of the document.
$50,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
Palatin Technologies, Inc.
PROSPECTUS
The date of this prospectus is November 27, 2007