424B5
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PROSPECTUS
SUPPLEMENT
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Filed
pursuant to Rule 424(b)(5)
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(To
Prospectus dated January 29, 2010)
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Registration
No. 333-164591
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GENEREX
BIOTECHNOLOGY CORPORATION
24,720,000
SHARES OF COMMON STOCK
WARRANTS
TO PURCHASE 24,000,000 SHARES OF COMMON STOCK
AND
24,000,000
SHARES OF COMMON STOCK UNDERLYING THE WARRANTS
Pursuant
to this prospectus supplement and the accompanying prospectus, we are offering
up to 24,000,000 shares of our common stock, par value $.001 per share, warrants
to purchase 24,000,000 shares of our common stock, and the shares of our common
stock issuable from time to time upon exercise of the warrants. The shares of
our common stock and the warrants are issuable pursuant to a Securities Purchase
Agreement dated as of January 24, 2011 by and between us and certain
institutional investors, which we refer to as the investors. Under
the Purchase Agreement, for aggregate consideration of $3,000,000, the investors
have agreed to purchase an aggregate of 12,000,000 shares of our common stock
together with warrants to purchase an aggregate of 12,000,000 shares of our
common stock. The warrants will be immediately exercisable, expire five years
after issuance and have an exercise price of $0.25 per share. The
investors also will have the right to purchase up to an additional $3,000,000 of
our common stock and warrants to purchase shares of our common stock during the
60 days following the closing of the initial investment on January 25,
2011. The purchase price of the additional shares, and the exercise
price of the additional warrants, will be $0.25 per share. In
consideration for the introduction to the investors, we also are issuing 720,000
shares of our common stock to Seahawk Capital Partners, Inc., which shares
represent 6% of the gross proceeds from the investors’ initial investment based
upon a price of $0.25 per share.
This
prospectus supplement covers the 24,720,000 shares of our common stock, the
warrants, and the 24,000,000 shares of our common stock issuable upon exercise
of the warrants.
Our
common stock is quoted on the OTC Bulletin Board under the symbol "GNBT.OB." On
January 24, 2011, the last reported bid price of our common stock was $0.2935
per share. The warrants will not be listed on any national securities
exchange.
As of
January 24, 2011, the number of outstanding voting and non-voting common shares
held by non-affiliates was 267,623,301. The aggregate market value of
our outstanding voting and non-voting common equity computed by reference using
the last reported bid of such common equity held by non-affiliates, as of
January 24, 2011 was $78,547,439.
Investing
in our securities involves a high degree of risk. Before buying any securities,
you should read the discussion of material risks of investing in our common
stock under the heading “Risk factors” starting on page S-7 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 supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
In
consideration for introducing us to the investors, we are paying Seahawk Capital
Partners, Inc., which we refer to as Seahawk, a finders’ fee equal to 8% of the
gross proceeds from the initial investment, consisting of 2% in cash ($60,000)
and 6% in shares of our common stock (720,000 shares), based on a per share
price of $0.25.
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Maximum
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Offering
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Per
share(1)
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Amount
(1)
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Offering
price
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$
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0.25
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$
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6,000,000
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Finders’
fee (2)
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$
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$
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60,000
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Proceeds,
before expenses, to us (maximum) (3)
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$
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$
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5,940,000
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(1)
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Offering
price, finders’ fee and proceeds assume that all shares offered hereby are
purchased by the investors. As described under “Plan of
Distribution” below, the investors may purchase up to $3,000,000 of shares
of our common stock and warrants to purchase shares of our common stock
within 60 days from the date hereof, subject to certain limitations and
qualifications. At the initial closing on January 25,
2011, the offering price per share will be $0.25. The offering
price of additional shares and the exercise price of the additional
warrants will be $0.25 per share.
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(2)
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The
finders’ fee shown is the maximum cash fee payable by us to
Seahawk. We have agreed to pay Seahawk a finders’ fee in cash
equal to 2% of the gross proceeds of the initial investment under this
offering (which will not include any monies received by us in respect of
the exercise of the warrants issued to the
investor).
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(3)
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The
proceeds shown exclude proceeds that we may receive upon exercise of the
warrants.
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We
estimate the total expenses will be approximately $40,000 with respect to the
initial closing, excluding the finders’ fee. Because the amounts to
be raised in any subsequent closing are subject to the discretion of the
investors, the actual offering amount and proceeds to us, if any, in this
offering may be substantially less than the maximum offering amounts set forth
above.
The date
of this prospectus supplement is January 25, 2011.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
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Page
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About
This Prospectus
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S-1
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Note
Regarding Forward-Looking Statements
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S-1
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About
Generex Biotechnology Corporation
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S-3
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Summary
of the Offering
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S-6
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Risk
Factors
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S-7
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Use
of Proceeds
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S-14
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Dividend
Policy
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S-15
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Dilution
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S-15
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Securities
Purchase Agreement
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S-15
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Description
of Securities
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S-16
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Plan
of Distribution
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S-17
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Legal
Matters
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S-18
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Where
You can Find Additional Information
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S-18
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Incorporation
of Certain Documents by Reference
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S-18
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ACCOMPANYING
PROSPECTUS
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Page
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About
this Prospectus
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1
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Summary
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1
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Risk
Factors
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2
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Cautionary
Note Regarding Forward-Looking Statements
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9
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Use
of Proceeds
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10
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Dilation
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10
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Description
of Our Capital Stock
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11
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Description
of Our Warrants
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15
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Description
of Our Units
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16
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Plan
of Distribution
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17
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Legal
Matters
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19
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Experts
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19
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Where
You Can Find More Information
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19
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Incorporation
of Certain Documents by Reference
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20
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This
prospectus supplement is not complete without, and may not be utilized except in
connection with, the accompanying prospectus dated January 29, 2010 and any
amendments to such prospectus. This prospectus supplement provides supplemental
information regarding us and updates certain information contained in the
accompanying prospectus and describes the specific terms of this offering. The
accompanying prospectus gives more general information, some of which may not
apply to this offering. We incorporate important information into this
prospectus supplement and the accompanying prospectus by reference.
ABOUT
THIS PROSPECTUS
This
document is in two parts. The first part is this prospectus supplement, which
describes the terms of this offering and also adds to and updates information
contained in the accompanying prospectus and the documents incorporated by
reference into the accompanying prospectus. The second part is the accompanying
prospectus, which gives more general information about the shares of our common
stock and other securities we may offer from time to time under our shelf
registration statement, some of which may not apply to the securities offered by
this prospectus supplement. To the extent there is a conflict between
the information contained in this prospectus supplement, on the one hand, and
the information contained in the accompanying prospectus or any document
incorporated by reference therein, on the other hand, the information in this
prospectus supplement shall control.
We
further note that the representations, warranties and covenants made by us in
any agreement that is filed as an exhibit to any document that is incorporated
by reference in the accompanying base prospectus were made solely for the
benefit of the parties to such agreement, including, in some cases, for the
purpose of allocating risk among the parties to such agreement, and should not
be deemed to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of the date when
made. Accordingly, such representations, warranties and covenants should not be
relied on as accurately representing the current state of our
affairs.
You
should rely only on the information contained or incorporated by reference in
this prospectus supplement and contained or incorporated by reference in the
accompanying prospectus. We have not authorized anyone, including the placement
agent, and the placement agent has not authorized anyone, to provide you with
different information. We are offering to sell, and seeking offers to buy, our
securities only in jurisdictions where offers and sales are permitted. The
information contained or incorporated by reference in this prospectus supplement
and contained or incorporated by reference in the accompanying prospectus is
accurate only as of the respective dates thereof, regardless of the time of
delivery of this prospectus supplement and the accompanying prospectus, or of
any sale of our securities offered hereby. It is important for you to read and
consider all information contained in this prospectus supplement and the
accompanying prospectus, including the documents incorporated by reference
herein and therein, in making your investment decision. You should also read and
consider the information in the documents we have referred you to in
“Incorporation of Certain Information by Reference” in this prospectus
supplement and “Where You Can Find More Information” in the accompanying
prospectus.
Unless
otherwise indicated, “Generex,” the “Company,” “we,” “us,” “our” and similar
terms refer to Generex Biotechnology Corporation.
This
offering of common stock and warrants is being made under a registration
statement on Form S-3 (Registration File no. 333-164591) that we filed with the
Securities and Exchange Commission, or the SEC, as part of a “shelf”
registration process and that the SEC declared effective on February 9, 2010.
Under the shelf registration process, we may offer to sell shares of our common
stock, $0.001 par value, shares of our preferred stock, $0.001 par value,
warrants to purchase shares of our common stock and/or preferred stock, and/or
units consisting of two or more of any such securities from time to time in one
or more offerings up to a total dollar amount of $150,000,000.
We are
not making any representation to you regarding the legality of an investment in
the common stock by you under applicable law. You should consult with your own
legal advisors as to the legal, tax, business, financial and related aspect of a
purchase of the common stock.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
Certain
matters in this prospectus supplement constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical facts, included in this prospectus
supplement that address activities, events or developments that we expect or
anticipate will or may occur in the future, including such matters as our
projections, future capital expenditures, business strategy, competitive
strengths, goals, expansion, market and industry developments and the growth of
our businesses and operations, are forward-looking statements. These
statements can be identified by introductory words such as "expects,"
“anticipates,” "plans," "intends," "believes," "will," "estimates," "projects"
or words of similar meaning, and by the fact that they do not relate strictly to
historical or current facts. Our forward-looking statements address, among other
things:
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our
expectations concerning product candidates for our
technologies;
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our
expectations concerning existing or potential development and license
agreements for third-party collaborations and joint
ventures;
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our
expectations of when different phases of clinical activity may commence
and conclude;
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our
expectations of when regulatory submissions may be filed or when
regulatory approvals may be received;
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our
expectations of when commercial sales of our products may commence and
when actual revenue from the product sales may be
received.
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Any or
all of our forward-looking statements may turn out to be wrong. They may be
affected by inaccurate assumptions that we might make or by known or unknown
risks and uncertainties. Actual outcomes and results may differ materially from
what is expressed or implied in our forward-looking statements. Among the
factors that could affect future results are:
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the
inherent uncertainties of product development based on our new and as yet
not fully proven technologies;
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the
risks and uncertainties regarding the actual effect on humans of seemingly
safe and efficacious formulations and treatments when tested
clinically;
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the
inherent uncertainties associated with clinical trials of product
candidates;
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the
inherent uncertainties associated with the process of obtaining regulatory
approval to market product
candidates;
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the
inherent uncertainties associated with commercialization of products that
have received regulatory approval;
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our
recent delisting from NASDAQ for failure to satisfy the minimum bid price
requirement; and
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our
ability to obtain the necessary financing to fund our
operations.
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Additional
factors that could affect future results are set forth below in this prospectus
supplement under the caption Risk Factors. We caution
investors that the forward-looking statements contained in this prospectus
supplement must be interpreted and understood in light of conditions and
circumstances that exist as of the date of this prospectus
supplement. We expressly disclaim any obligation or undertaking to
update or revise forward-looking statements made in this prospectus supplement
to reflect any changes in management's expectations resulting from future events
or changes in the conditions or circumstances upon which such expectations are
based.
Each
forward-looking statement should be read in context with, and in understanding
of, the various other disclosures concerning our company and our business made
elsewhere in this prospectus as well as our public filings with the SEC. You
should not place undue reliance on any forward-looking statement as a prediction
of actual results or developments. We are not obligated to update or revise any
forward-looking statements contained in this prospectus supplement or
any other filing to reflect new events or circumstances unless and to the extent
required by applicable law.
ABOUT
GENEREX BIOTECHNOLOGY CORPORATION
This
summary highlights selected information appearing elsewhere or incorporated by
reference in this prospectus supplement and accompanying prospectus and may not
contain all of the information that is important to you. This prospectus
supplement and the accompanying prospectus include or incorporate by reference
information about the shares we are offering as well as information regarding
our business and detailed financial data. You should read this prospectus
supplement and the accompanying prospectus in their entirety, including the
information incorporated by reference.
Overview
of Business
We are
engaged primarily in the research, development and commercialization of drug
delivery systems and technologies. Our primary focus at the present time is our
proprietary technology for the administration of formulations of large molecule
drugs to the oral (buccal) cavity using a hand-held aerosol applicator. Through
our wholly-owned subsidiary, Antigen Express, Inc., we have expanded our focus
to include immunomedicines incorporating proprietary vaccine
formulations.
We
believe that our buccal delivery technology is a platform technology that has
application to many large molecule drugs and provides a convenient,
non-invasive, accurate and cost-effective way to administer such drugs. We have
identified several large molecule drugs as possible candidates for development,
including estrogen, heparin, monoclonal antibodies, human growth hormone and
fertility hormone, but to date have focused our development efforts primarily on
one pharmaceutical product, Generex Oral-lyn™, an insulin formulation
administered as a fine spray into the oral cavity using our proprietary
hand-held aerosol spray applicator known as RapidMist™.
Generex
Oral-lyn™
Regulatory
Approvals and Clinical Trials
To date,
we have received regulatory approval in Ecuador, India, Lebanon and Algeria for
the commercial marketing and sale of Generex Oral-lyn™, although as per the
terms and conditions of the regulatory approval in India, a local clinical study
must be conducted before the product can be offered for commercial sale in that
country.
In March
2008, we initiated Phase III clinical trials for this product in the U.S. with
the first patient screening for such trials at a clinical study site in Texas.
The patient screening at other participating clinical sites in the U.S. and
Canada is ongoing. To date, over 450 patients have been enrolled in 70 clinical
sites around the world, including sites in the United States, Canada, Ecuador,
Bulgaria, Poland, Romania, Russia and Ukraine.
We have
submitted regulatory dossiers for Generex Oral-lyn™ in a number of other
countries including Bangladesh, Syria, Kenya, Yemen, Iraq, Iran, Libya and
Sudan. While we believe these countries will ultimately approve our
product for commercial sale, it could be some time before these approvals are
received and as such we do not anticipate recognizing any revenues for these
jurisdictions until the latter part of the 2011 calendar year, at the
earliest.
Special
Access Programs
In
October 2009, we received approval from the U.S. Food and Drug Administration
(the “FDA”) to charge to recover costs for the treatment use of Generex
Oral-lyn™ in patients with Type 1 or Type 2 diabetes mellitus in the FDA’s
Treatment Investigational New Drug program that provides for early access to
investigational treatments for life-threatening or otherwise serious
conditions.
We
received a Special Access Program (“SAP”) authorization from Health Canada for a
patient-specific, physician-supervised treatment of Type-1 diabetes with Generex
Oral-lyn™ in April 2008. SAP provides access to non-marketed drugs for
practitioners treating patients with serious or life-threatening conditions when
conventional therapies have failed, are not available or unsuitable. We received
a similar authorization from health authorities in Netherlands in September
2008. We will continue to expand our SAP participation in additional
countries around the world.
Marketing
We have
entered into licensing and distribution agreements with a number of
multinational distributors to assist us with the process of gaining regulatory
approval for the registration, marketing, distribution, and sale of Generex
Oral-lyn™ in countries throughout the world, including:
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Shreya
Life Sciences Pvt. Ltd. for India, Pakistan, Bangladesh, Nepal, Bhutan,
Sri Lanka, and Myanmar;
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Adcock
Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd. for South Africa,
Lesotho, Swaziland, Botswana, Namibia, Mozambique and
Zimbabwe;
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E&V
Alca Distribution Corp. for Albania, Montenegro, and
Kosovo;
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Medrey
S.A.L. (formerly MedGen Corp.) and Benta S.A.L. for
Lebanon;
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SciGen,
Ltd. for China, Hong Kong, Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam;
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Pharmaris
Perus S.A.C. for Peru;
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MediPharma
SA for Argentina;
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PMG
S.A. for Chile; and
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Dong
Sung Pharm. Co. Ltd. for South
Korea.
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In August
2008, we entered into a product licensing and distribution agreement with Dong
Sung Pharm Co. Ltd. for the importation, marketing, distribution and sale of
Generex Oral-lyn™ in South Korea. Under the seven-year agreement,
Dong-Sung will have an exclusive license. Per the terms of the
agreement, they paid us a USD $500,000 non-refundable license fee upon execution
and will pay us a USD $500,000 non-refundable license fee at such time as
governmental approval for the importation, marketing, distribution and sale of
the product in South Korea is obtained. Under this agreement, we are
responsible for procuring such governmental approval. In addition,
when it places its first purchase order, Dong-Sung will make a pre-payment to us
in the amount of USD $500,000, which will be applied against product purchase
orders.
Our
Generex MENA office, located in Dubai Healthcare City, has filed submissions of
the Generex Oral-Lyn™ dossier with regulatory agencies throughout the Middle
East and North Africa and has established a distribution network in over 20
countries. This distribution network is responsible for following up
with dossiers submitted in their specific regions and has also been actively
purchasing and distributing the company’s confectionary line of
products.
In India,
a marketing plan has already been submitted by Shreya Life Sciences Pvt. Ltd.,
to Generex on the marketing strategy for the distribution of Oral Recosulin™,
which is the trademark under which Shreya will market Generex Oral-lyn™ within
India. Per the requirements of the regulatory approval in India, an
in-country clinical study must be completed in India with Oral Recosulin™ before
commercial sales can commence.
Over-The-Counter
Glucose Product Line
Using our
buccal delivery technology, we have also launched a line of over-the-counter
glucose and energy sprays , including Glucose RapidSpray™, a fat-free,
low-calorie glucose formulation, Crave-NX™ 7-day Diet Aid Spray, a fat-free
glucose spray to aid in dieting, and BaBOOM!™ Energy Spray, a flavored glucose
“energy” spray supplemented with vitamins. We believe these products will
complement Generex Oral-lyn™ and may provide us with an additional revenue
stream prior to the commercialization of Generex Oral-lyn™ in other major
jurisdictions. To date, we have received modest revenues from sales of these
products. All three products are available in retail stores and
independent pharmacies in the United States and Canada. In addition,
the products are being distributed in the Middle East through our Generex MENA
office in Dubai. We expect other distribution territories for these products to
include South Africa, India, South America and other jurisdictions worldwide. We
are currently pursuing European registrations for these products.
Other
Product Candidates
In
October 2008, we announced the enrollment of subjects in our bioequivalence
clinical trial of MetControl™, our proprietary Metformin medicinal chewing gum
product, conducted in the United States. Fertin Pharma A/S, a leading
Danish manufacturer of medicinal chewing gum, produced clinical materials for
the trial. The protocol for the study is an open-label,
two-treatment, two-period, randomized, crossover study comparing MetControl™ and
immediate release Metformin™ tablets in healthy volunteers. The study results
that we received and analyzed in December 2008 demonstrated bioequivalence and
will allow us to proceed with additional research and developmental initiatives
and to consider regulatory agency registration applications. We are
compiling the data from this study and may run similar studies, which will allow
us to file a marketing application with various global regulatory agencies,
including the United States, in the latter part of the 2011 calendar
year.
Our
subsidiary, Antigen, concentrates on developing proprietary vaccine formulations
that work by stimulating the immune system to either attack offending agents
(i.e., cancer cells, bacteria, and viruses) or to stop attacking benign elements
(i.e., self proteins and allergens). Our immunomedicine products are based on
two platform technologies and are in the early stages of development. We
continue clinical development of Antigen’s synthetic peptide vaccines designed
to stimulate a potent and specific immune response against tumors expressing the
HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a Phase
II clinical trial and patients with prostate cancer and against avian influenza
in two completed Phase I trials. An additional Phase I trial has been initiated
recently in patients with either breast or ovarian cancer. The
synthetic vaccine technology has particularly advantages for pandemic or
potentially pandemic viruses, such as the H5N1 avian and H1N1 swine
flu. In addition to pandemic influenza viruses, development efforts
also are underway for seasonal influenza virus, HIV, HPV, melanoma, ovarian
cancer, allergy and Type I diabetes mellitus. We have established collaborations
with clinical investigators at academic centers to advance these
technologies.
Competition
We face
competition from other providers of alternate forms of insulin. Some of our most
significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, have announced
that they will discontinue development and/or sale of their inhalable forms of
insulin. Generex Oral-lyn™ is not an inhaled insulin; rather, it is a buccally
absorbed formulation with no residual pulmonary deposition. We believe that our
buccal delivery technology offers several advantages over inhaled insulin,
including the avoidance of pulmonary inhalation, which requires frequent
physician monitoring, ease of use and portability.
Brief
Company Background
We are a
development stage company. From inception through the end of the fiscal quarter
ended October 31, 2010, we have received only limited revenues from operations.
In the first quarter of fiscal 2011 and cumulatively since inception in November
1995, we have received $173,943 and $4,964,448, respectively in revenue. This
revenue has been comprised mainly of the sale of our confectionary products,
although we have recognized $600,000 relating to upfront license fees for the
signing of license and distribution agreements for Generex Oral-lyn™. These
numbers do not reflect deferred sales to customers during the respective periods
with the right of return.
We
operate in only one segment: the research, development and commercialization of
drug delivery systems and technologies for metabolic and immunological
diseases.
We were
incorporated in the State of Delaware in 1997. Our principal executive offices
are located at 33 Harbour Square, Suite 202, Toronto, Canada, and our telephone
number at that address is (416) 364-2551. We maintain an Internet website at
www.generex.com. We make available free of charge on or through our
website our filings with the SEC.
We
have not incorporated by reference into this prospectus supplement or the
accompanying prospectus the information in, or that can be accessed through, our
website, and you should not consider it to be part of this prospectus supplement
or the accompanying prospectus.
SUMMARY
OF THE OFFERING
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The
Issuer
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Generex Biotechnology Corporation, a Delaware
corporation
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The
Purchase Agreement
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Under
the Purchase Agreement between us and the investors dated as of January
24, 2011, the investors agreed to purchase 12,000,000 shares of our common
stock together with warrants to purchase an aggregate of 12,000,000 shares
of our common stock for an aggregate purchase price of
$3,000,000.
In
addition to the initial investment, under the Purchase Agreement, the
investors may purchase up to $3,000,000 of our common stock and warrants
to purchase shares of our common stock within the 60 days after the
closing of the initial investment.
For
more information concerning the Purchase Agreement, see "The Securities
Purchase Agreement" beginning on page S-15 of this prospectus
supplement.
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The
initial investment
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The
investors have agreed to purchase an aggregate of 12,000,000 shares of our
common stock together with warrants to purchase an aggregate of 12,000,000
shares of our common stock for a total purchase price of $3,000,000. The
warrants will be immediately exercisable and expire five years after
issuance. At the initial closing on January 25, 2011, the offering price
per share and the exercise price per warrant share will be
$0.25. This prospectus supplement covers the 12,000,000 shares
of our common stock, the warrants, and the 12,000,000 shares of our common
stock issuable upon exercise of the warrant.
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Subsequent
sale to the investors
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The
investors have the option, at their election, to purchase up to an
aggregate of $3,000,000 of our common stock and warrants to purchase
shares of our common stock within 60 days of the initial
investment. The purchase price of the additional shares and the
exercise price of the additional warrants will be $0.25 per
share. This prospectus supplement covers up to 12,000,000
additional shares of our common stock and the additional warrants to
purchase shares of our common stock that may be issued to the investors
upon their election and the 12,000,000 shares of our common stock issuable
upon exercise of such warrants.
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Finders’
shares
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In
consideration for introducing us to the investors, we are paying Seahawk a
finders’ fee equal to 8% of the gross proceeds from the initial
investment, consisting of 2% in cash ($60,000) and 6% in shares of our
common stock based upon the per share price of $0.25 (720,000
shares)..
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Common
stock outstanding before and after this offering
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Before
this offering, 277,801,282 shares of our common stock were outstanding as
of January 24, 2011. After this offering, 289,801,282 shares of
our common stock will be outstanding assuming that the warrants are not
exercised and the investors do not purchase any shares of our common stock
and warrants during the 60 days after the initial
investment. After this offering, 325, 801,282 shares of our
common stock will be outstanding assuming that the warrants are exercised
and that we issue to the investors an additional 12,000,000 shares of our
common stock and warrants to purchase 12,000,000 shares of our common
stock and that such warrants are exercised pursuant to the Purchase
Agreement.
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Unless
the context requires otherwise, all share and per-share common stock
information in this prospectus supplement assumes that 277, 801,282 shares
of our common stock were outstanding before this offering. The number of
outstanding shares of our common stock excludes shares that may be issued
upon the exercise or conversion of the following securities as of January
24, 2011:
· 6,722,219 shares of our
common stock that, as of the date of this prospectus supplement, are
issuable upon the exercise of outstanding options under our stock plans
and
·
41,707,815 shares of our common stock that, as of the date of this
prospectus supplement, are issuable upon the exercise of outstanding
warrants other than those covered by this prospectus
supplement.
These
additional options and warrants are exercisable at prices ranging from
$0.001 to $3.75 per share, with a weighted average exercise price for the
options of $0.49 per share and a weighted average exercise price for the
warrants of $0.55 per share.
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Use
of proceeds
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Working
capital and/or general corporate purposes.
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Market
for securities
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Our
common stock is quoted on the OTC Bulletin Board under the symbol
"GNBT.OB." The warrants are not listed on any national
securities exchange, and there is no public market for the
warrants.
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Risk
Factors
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Investing
in our securities involves a high degree of risk. See "Risk Factors"
beginning on page S-7 of this prospectus supplement and in the documents
we incorporate by reference in this prospectus supplement for a discussion
of matters that you should
consider.
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Unless
otherwise indicated, this prospectus supplement assumes the sale of the maximum
number of common shares offered hereunder.
RISK
FACTORS
Any
of the risks, uncertainties and other factors could have a materially adverse
effect on our business, financial condition or results of operations and could
cause the trading price of our common stock to decline
substantially.
Risks
Related to Our Financial Condition
We
have a history of losses and will incur additional losses.
We are a
development stage company with a limited history of operations, and do not
expect sufficient revenues to support our operation in the immediately
foreseeable future. In the three months ended October 31, 2010, we
received revenues of $173,943 which were primarily from sales of our
over-the-counter confectionary products. In the fiscal year ended
July 31, 2010, we received modest revenues of approximately $1,172,611 which
were also primarily from sales of our over-the-counter confectionary
products. We have not recognized any revenue from the sale of our
oral insulin product in Ecuador, Algeria or India to date, including during the
first three months of fiscal 2011, although we have recognized $600,000 in
licensing fee revenue relating to the signing of licensing and distribution
agreements for the sale of Generex Oral-lyn™. We do not expect to receive any
revenues in Ecuador until we enter into a definitive manufacturing and
distribution agreement with our business partner there. While we have entered
into a licensing and distribution agreement with a leading Indian-based
pharmaceutical company and insulin distributor, we do not anticipate recognizing
revenue from sales of Generex Oral-lyn™ in India until at least the latter part
of calendar year 2011, as we have to complete an in-country clinical study
before the product can be offered for commercial sale in India. We
have entered in to a subdistribution agreement in Lebanon, but do not expect any
significant revenue from the launch of the product in that country in fiscal
year 2011.
To date,
we have not been profitable and our accumulated net loss available to
shareholders was $332,179,739 at October 31, 2010. Our losses have resulted
principally from costs incurred in research and development, including clinical
trials, and from general and administrative costs associated with our
operations. While we seek to attain profitability, we cannot be sure that we
will ever achieve product and other revenue sufficient for us to attain this
objective.
With the
exception of Generex Oral-lyn™, which has received regulatory approval in
Ecuador, India (subject to the completion of an in-country study), Lebanon and
Algeria, and our over-the-counter glucose and energy spray products, Glucose
RapidSpray™, BaBOOM!™ Energy Spray and Crave-NX™, our product candidates are in
research or early stages of pre-clinical and clinical development. We will need
to conduct substantial additional research, development and clinical trials. We
will also need to receive necessary regulatory clearances both in the United
States and foreign countries and obtain meaningful patent protection for and
establish freedom to commercialize each of our product candidates. We must also
complete further clinical trials and seek regulatory approvals for Generex
Oral-lyn™ in countries outside of Ecuador, India, Lebanon and Algeria. We cannot
be sure that we will obtain required regulatory approvals, or successfully
research, develop, commercialize, manufacture and market any other product
candidates. We expect that these activities, together with future general and
administrative activities, will result in significant expenses for the
foreseeable future.
We
will need additional capital.
To
progress in product development or marketing, we will need additional capital
which may not be available to us. This may delay our progress in product
development or market.
We will
require funds in excess of our existing cash resources:
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To
proceed with the development of our buccal insulin
product;
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To
finance the research and development of new products based on our buccal
delivery and immunomedicine technologies, including clinical testing
relating to new products;
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To
finance the research and development activities of our subsidiary Antigen
with respect to other potential
technologies;
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To
commercially launch and market developed
products;
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To
develop or acquire other technologies or other lines of
business;
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To
establish and expand our manufacturing
capabilities;
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To
finance general and administrative activities that are not related to
specific products under development;
and
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To
otherwise carry on business.
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In the
past, we have funded most of our development and other costs through equity
(including convertible debt) financing. We expect that our current
cash position will not be sufficient to meet our working capital needs for the
next twelve months based on the pace of our planned activities. Therefore, we
will require additional funds to support our working capital requirements and
any expansion or other activities, or will need to significantly reduce our
clinical trials and other planned activities. Because our operating
and capital resources are insufficient to meet future requirements, we will have
to raise additional funds in the near future to continue the development and
commercialization of our products. Unforeseen problems, including materially
negative developments in our clinical trials or in general economic conditions,
could interfere with our ability to raise additional equity capital or
materially adversely affect the terms upon which such funding is
available.
It is
possible that we will be unable to obtain additional funding as and when we need
it. If we were unable to obtain additional funding as and when needed, we could
be forced to delay the progress of certain development efforts. Such a scenario
poses risks. For example, our ability to bring a product to market and obtain
revenues could be delayed, our competitors could develop products ahead of us,
and/or we could be forced to relinquish rights to technologies, products or
potential products.
Our
research and development and marketing efforts may be highly dependent on
corporate collaborators and other third parties who may not devote sufficient
time, resources and attention to our programs, which may limit our efforts to
successfully develop and market potential products.
Because
we have limited resources, we have sought to enter into collaboration agreements
with other pharmaceutical companies that will assist us in developing, testing,
obtaining governmental approval for and commercializing products using our
buccal delivery and immunomedicine technologies. Any collaborator with whom we
may enter into such collaboration agreements may not support fully our research
and commercial interests since our program may compete for time, attention and
resources with such collaborator's internal programs. Therefore, these
collaborators may not commit sufficient resources to our program to move it
forward effectively, or that the program will advance as rapidly as it might if
we had retained complete control of all research, development, regulatory and
commercialization decisions.
Risks
Related to Our Technologies
With
the exception of Generex Oral-lyn™, Glucose RapidSpray™, BaBOOM! ™ Energy Spray
and Crave-Nx™, our technologies and products are at an early stage of
development and we cannot expect significant revenues in respect thereof in the
foreseeable future.
We have
no products approved for commercial sale at the present time with the exception
of Generex Oral-lyn™ in Ecuador, Lebanon, Algeria and India(subject to further
study), and our glucose sprays which are available over-the-counter
in certain retail outlets in the United States and Canada and in the Middle
East. To be profitable, we must not only successfully research, develop and
obtain regulatory approval for our products under development, but also
manufacture, introduce, market and distribute them once development is
completed. We have yet to manufacture, market and distribute these products on a
large-scale commercial basis, and we expect to receive only modest revenues, if
any, from product sales in fiscal year 2011. We may not be successful in one or
more of these stages of the development or commercialization of our products,
and/or any of the products we develop may not be commercially viable. Until we
can establish that they are commercially viable products, we will not receive
significant revenues from ongoing operations.
Until
we receive regulatory approval to sell our pharmaceutical products in additional
countries, our ability to generate revenues from operations may be limited and
those revenues may be insufficient to sustain operations. Many factors impact
our ability to obtain approvals for commercially viable products.
Our only
pharmaceutical product that has been approved for commercial sale by drug
regulatory authorities is our oral insulin spray formulation, and that approval
was obtained in Ecuador, Lebanon, Algeria and India (subject to the completion
of an in-country study). We have begun the regulatory approval process for our
oral insulin, buccal morphine and fentanyl products in other countries, and we
have initiated late stage clinical trials of Generex Oral-lyn™ at some of our
clinical trial sites in North America according to the Phase III clinical
plan.
Our
immunomedicine products are in the pre-clinical stage of development, with the
exception of a Phase II trial in human patients with stage II HER-2/neu positive
breast cancer (U.S.), a Phase I trial in human patients with prostate cancer
(Athens, Greece) completed in August 2009, a Phase I trial in human patients
with breast or ovarian cancer (U.S.) and a Phase I trial in human volunteers of
a peptide vaccine for use against the H5N1 avian influenza virus (Beirut,
Lebanon).
Pre-clinical
and clinical trials of our products, and the manufacturing and marketing of our
technologies, are subject to extensive, costly and rigorous regulation by
governmental authorities in the United States, Canada and other countries. The
process of obtaining required regulatory approvals from the FDA and other
regulatory authorities often takes many years, is expensive and can vary
significantly based on the type, complexity and novelty of the product
candidates. For these reasons, it is possible we will not receive regulatory
approval for any prescription pharmaceutical product candidate in any countries
other than Ecuador, Lebanon, Algeria and India.
In
addition, we cannot be sure when or if we will be permitted by regulatory
agencies to undertake additional clinical trials or to commence any particular
phase of clinical trials. Because of this, statements in this Annual Report
regarding the expected timing of clinical trials cannot be regarded as actual
predictions of when we will obtain regulatory approval for any "phase" of
clinical trials.
Delays in
obtaining United States or other foreign approvals for our pharmaceutical
products could result in substantial additional costs to us, and, therefore,
could adversely affect our ability to compete with other companies. If
regulatory approval is ultimately granted in any countries other than Ecuador,
Lebanon, Algeria and India, the approval may place limitations on the intended
use of the product we wish to commercialize, and may restrict the way in which
we are permitted to market the product.
Due
to legal and factual uncertainties regarding the scope and protection afforded
by patents and other proprietary rights, we may not have meaningful protection
from competition.
Our
long-term success will substantially depend upon our ability to protect our
proprietary technologies from infringement, misappropriation, discovery and
duplication and avoid infringing the proprietary rights of others. Our patent
rights and the patent rights of biotechnology and pharmaceutical companies in
general, are highly uncertain and include complex legal and factual issues.
Because of this, our pending patent applications may not be granted. These
uncertainties also mean that any patents that we own or will obtain in the
future could be subject to challenge, and even if not challenged, may not
provide us with meaningful protection from competition. Due to our financial
uncertainties, we may not possess the financial resources necessary to enforce
our patents. Patents already issued to us or our pending applications may become
subject to dispute, and any dispute could be resolved against us.
Because a
substantial number of patents have been issued in the field of alternative drug
delivery and because patent positions can be highly uncertain and frequently
involve complex legal and factual questions, the breadth of claims obtained in
any application or the enforceability of our patents cannot be predicted.
Consequently, we do not know whether any of our pending or future patent
applications will result in the issuance of patents or, to the extent patents
have been issued or will be issued, whether these patents will be subject to
further proceedings limiting their scope, will provide significant proprietary
protection or competitive advantage, or will be circumvented or
invalidated.
Also
because of these legal and factual uncertainties, and because pending patent
applications are held in secrecy for varying periods in the United States and
other countries, even after reasonable investigation we may not know with
certainty whether any products that we (or a licensee) may develop will infringe
upon any patent or other intellectual property right of a third party. For
example, we are aware of certain patents owned by third parties that such
parties could attempt to use in the future in efforts to affect our freedom to
practice some of the patents that we own or have applied for. Based upon the
science and scope of these third-party patents, we believe that the patents that
we own or have applied for do not infringe any such third-party patents;
however, we cannot know for certain whether we could successfully defend our
position, if challenged. We may incur substantial costs if we are required to
defend our intellectual property in patent suits brought by third parties. These
legal actions could seek damages and seek to enjoin testing, manufacturing and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue to
manufacture or market the accused product or process.
Risks
Related to Marketing of Our Potential Products
We
may not become, or stay, profitable even if our pharmaceutical products are
approved for sale.
Even if
we obtain regulatory approval to market our oral insulin product outside of
Ecuador, India, Lebanon and Algeria or to market any other prescription
pharmaceutical product candidate, many factors may prevent the product from ever
being sold in commercial quantities. Some of these factors are beyond our
control, such as:
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acceptance
of the formulation or treatment by health care professionals and diabetic
patients;
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the
availability, effectiveness and relative cost of alternative diabetes or
immunomedicine treatments that may be developed by competitors;
and
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the
availability of third-party (i.e. insurer and governmental agency)
reimbursements.
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We will
not receive significant revenues from Generex Oral-lyn™ or any of our other
pharmaceuticals products that may receive regulatory approval until we can
successfully manufacture, market and distribute them in the relevant
markets.
Similarly,
the successful commercialization of our over-the-counter glucose spray products
may be hindered by manufacturing, marketing and distribution
limitations.
We have
to depend upon others for marketing and distribution of our products, and we may
be forced to enter into contracts limiting the benefits we may receive and the
control we have over our products. We intend to rely on collaborative
arrangements with one or more other companies that possess strong marketing and
distribution resources to perform these functions for us. We may not be able to
enter into beneficial contracts, and we may be forced to enter into contracts
for the marketing and distribution of our products that substantially limit the
potential benefits to us from commercializing these products. In addition, we
will not have the same control over marketing and distribution that we would
have if we conducted these functions ourselves.
We
may not be able to compete with treatments now being marketed and developed, or
which may be developed and marketed in the future by other
companies.
Our
products will compete with existing and new therapies and treatments. We are
aware of a number of companies currently seeking to develop alternative means of
delivering insulin, as well as new drugs intended to replace insulin therapy at
least in part. We are also aware of a number of companies currently seeking to
develop alternative means of enhancing and suppressing peptides. In the longer
term, we also face competition from companies that seek to develop cures for
diabetes and other malignant, infectious, autoimmune and allergic diseases
through techniques for correcting the genetic deficiencies that underlie such
diseases.
Numerous
pharmaceutical, biotechnology and drug delivery companies, hospitals, research
organizations, individual scientists and nonprofit organizations are engaged in
the development of alternatives to our technologies. Some of these companies
have greater research and development capabilities, experience, manufacturing,
marketing, financial and managerial resources than we do. Collaborations or
mergers between large pharmaceutical or biotechnology companies with competing
drug delivery technologies could enhance our competitors’ financial, marketing
and other resources. Developments by other drug delivery companies could make
our products or technologies uncompetitive or obsolete. Accordingly, our
competitors may succeed in developing competing technologies, obtaining FDA
approval for products or gaining market acceptance more rapidly than we
can.
Some of
our most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, have
announced that they will discontinue development and/or sale of their inhalable
forms of insulin. Unlike inhaled insulin formulations, Generex Oral-lyn™ is a
buccally absorbed formulation with no residual pulmonary deposition. We believe
that our buccal delivery technology offers several advantages over inhaled
insulin, including the avoidance of pulmonary inhalation, which requires
frequent physician monitoring, ease of use and portability.
If
government programs and insurance companies do not agree to pay for or reimburse
patients for our pharmaceutical products, our success will be
impacted.
Sales of
our oral insulin formulation in Ecuador, Lebanon, Algeria and India and our
other potential pharmaceutical products in other markets will depend in part on
the availability of reimbursement by third-party payers such as government
health administration authorities, private health insurers and other
organizations. Third-party payers often challenge the price and
cost-effectiveness of medical products and services. Governmental approval of
health care products does not guarantee that these third-party payers will pay
for the products. Even if third-party payers do accept our product, the amounts
they pay may not be adequate to enable us to realize a profit. Legislation and
regulations affecting the pricing of pharmaceuticals may change before our
products are approved for marketing and any such changes could further limit
reimbursement.
Risks
Related to Potential Liabilities
We
face significant product liability risks, which may have a negative effect on
our financial condition.
The
administration of drugs or treatments to humans, whether in clinical trials or
commercially, can result in product liability claims whether or not the drugs or
treatments are actually at fault for causing an injury. Furthermore, our
pharmaceutical products may cause, or may appear to have caused, serious adverse
side effects (including death) or potentially dangerous drug interactions that
we may not learn about or understand fully until the drug or treatment has been
administered to patients for some time. Product liability claims can be
expensive to defend and may result in large judgments or settlements against us,
which could have a severe negative effect on our financial condition. We
maintain product liability insurance in amounts we believe to be commercially
reasonable for our current level of activity and exposure, but claims could
exceed our coverage limits. Furthermore, due to factors in the insurance market
generally and our own experience, we may not always be able to purchase
sufficient insurance at an affordable price. Even if a product liability claim
is not successful, the adverse publicity and time and expense of defending such
a claim may interfere with our business.
Risks
Related to the Market for Our Common Stock
Our
stock price is below $5.00 per share and is treated as a “penny stock”, which
places restrictions on broker-dealers recommending the stock for
purchase.
Our
common stock is defined as “penny stock” under the Securities Exchange Act of
1934, as amended, which we refer to as the Exchange Act, and the rules
promulgated thereunder. The SEC has adopted regulations that define “penny
stock” to include common stock that has a market price of less than $5.00 per
share, subject to certain exceptions. These rules include the following
requirements:
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broker-dealers
must deliver, prior to the transaction a disclosure schedule prepared by
the SEC relating to the penny stock
market;
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broker-dealers
must disclose the commissions payable to the broker-dealer and its
registered representative;
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broker-dealers
must disclose current quotations for the
securities;
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if
a broker-dealer is the sole market-maker, the broker-dealer must disclose
this fact and the broker-dealers presumed control over the market;
and
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a
broker-dealer must furnish its customers with monthly statements
disclosing recent price information for all penny stocks held in the
customer’s account and information on the limited market in penny
stocks.
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Additional
sales practice requirements are imposed on broker-dealers who sell penny stocks
to persons other than established customers and accredited investors. For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and must have received the purchaser’s written
consent to the transaction prior to sale. If our common stock remains subject to
these penny stock rules these disclosure requirements may have the effect of
reducing the level of trading activity in the secondary market for our common
stock. As a result, fewer broker-dealers may be willing to make a market in our
stock, which could affect a shareholder’s ability to sell their
shares.
The
price of our common stock may be volatile.
There may
be wide fluctuations in the price of our common stock. These fluctuations may be
caused by several factors including:
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announcements
of research activities and technology innovations or new products by us or
our competitors;
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changes
in market valuation of companies in our industry
generally;
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variations
in operating results;
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changes
in governmental regulations;
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developments
in patent and other proprietary
rights;
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public
concern as to the safety of drugs or treatments developed by us or
others;
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results
of clinical trials of our products or our competitors' products;
and
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regulatory
action or inaction on our products or our competitors'
products.
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From time
to time, we may hire companies to assist us in pursuing investor relations
strategies to generate increased volumes of investment in our common stock. Such
activities may result, among other things, in causing the price of our common
stock to increase on a short-term basis.
Furthermore,
the stock market generally and the market for stocks of companies with lower
market capitalizations and small biopharmaceutical companies, like us, have from
time to time experienced, and likely will again experience significant price and
volume fluctuations that are unrelated to the operating performance of a
particular company. During the third calendar quarter of 2008 and
continuing to date, we, like many other publicly traded companies, have
experienced a sharp decline in the price of our stock attributable to concerns
about the current global recession.
Provisions
of our Restated Certificate of Incorporation could delay or prevent the
acquisition or sale of our business.
Our
Restated Certificate of Incorporation permits our Board of Directors to
designate new series of preferred stock and issue those shares without any vote
or action by our stockholders. Such newly authorized and issued shares of
preferred stock could contain terms that grant special voting rights to the
holders of such shares that make it more difficult to obtain stockholder
approval for an acquisition of our business or increase the cost of any such
acquisition.
The
price of our common stock may be affected by a limited trading volume, may
fluctuate significantly and may not reflect the actual value of our
business.
There may
be a limited public market for our common stock on the OTC bulletin board
market, and there can be no assurance that an active trading market will
continue. An absence of an active trading market could adversely affect our
stockholders’ ability to sell our common stock in short time periods, or at
all. Our common stock has experienced, and is likely to experience in
the future, significant price and volume fluctuations that could adversely
affect the market price of our common stock without regard to our operating
performance. In addition, we believe that factors, such as possible quarterly
fluctuations in our financial results, changes in the overall economy and the
volatility of the financial markets, could cause the price of our common stock
to fluctuate substantially. Thus, the price at which shares of our
common stock may trade from time to time may not reflect the actual value of our
business or the actual value of our common stock.
Our
recent equity financing will dilute current stockholders and could prevent the
acquisition or sale of our business.
The
equity financing transactions into which we have recently entered have and will
dilute current stockholders. Currently approximately 40,890,583 shares of common
stock are issuable upon exercise of the warrants that we issued in a private
placement in March 2008, in the registered direct offerings conducted in June,
August and September 2009 and in connection with the sales to Seaside 88, LP in
April, May and June 2010, which represents approximately 13% of
the shares of common stock currently outstanding. Assuming the
holders of the warrants convert and exercise all of the warrants into shares of
common stock, the number of shares of issued and outstanding common stock will
increase significantly, and current stockholders will own a smaller percentage
of the outstanding common stock of Generex. The issuance of shares of common
stock pursuant to the warrants will also have a dilutive effect on earnings per
share and may adversely affect the market price of the common
stock.
In
addition, the issuance of shares of common stock upon exercise of the warrants
issued in the March 2008 private placement, the registered direct offerings in
June, August and September 2009 and in connection with the sales to Seaside in
April, May and June 2010 could have an anti-takeover effect because such
issuance will make it more difficult for, or discourage an attempt by, a party
to obtain control of Generex by tender offer or other means. The issuance of
common stock upon the exercise of the warrants will increase the number of
shares entitled to vote, increase the number of votes required to approve a
change of control of the company, and dilute the interest of a party attempting
to obtain control of the company.
If we
raise funds through one or more additional equity financings in the future, it
will have a further dilutive effect on existing holders of our shares by
reducing their percentage ownership. The shares may be sold at a time when the
market price is low because we need the funds. This will dilute existing holders
more than if our stock price was higher. In addition, equity financings normally
involve shares sold at a discount to the current market price.
Risks
Related to This Offering and Ownership of Our Common Stock and
Warrants
Our management team will have broad
discretion over the use of the net proceeds from this
offering.
Our
management will use its discretion to direct the net proceeds from this
offering. We intend to use all of the net proceeds, together with cash on
hand, for working capital and/or general corporate purposes. General
corporate purposes may include continuation of thee clinical trials of, and
commercialization of, our oral insulin formulation, the research and development
of other products, and general and administrative expenses. Our
management’s judgments may not result in positive returns on your investment and
you will not have an opportunity to evaluate the economic, financial or other
information upon which our management bases its decisions.
You
will pay a higher price than the net tangible book value per share of our common
stock, and upon exercise of the warrants, our net tangible book value per share
may be less than the exercise price of warrant.
The
offering price of the securities offered in this offering is substantially
higher than the adjusted net tangible book value per share of our common stock.
Therefore, if you purchase shares of our common stock in this offering, you will
incur immediate and substantial dilution in the net tangible book value per
share of our common stock from the price that you pay for shares of our common
stock. Upon exercise of the warrants, our net tangible book value per share may
be less than the exercise price of the warrants, which would also result in the
holder experiencing immediate dilution because the per share exercise price of
the warrants would be higher than the net tangible book value per share of the
outstanding common stock at the time of exercise.
There
is no public market for the warrants being offered in this
offering.
There is
no established public trading market for the warrants being offered in this
offering, and we do not expect a market to develop. We do not intend to apply
for listing of the warrants on any securities exchange. Without an active
market, the liquidity of the warrants will be limited.
There
can be no assurance that the price of shares of our common stock will meet or
exceed the exercise price of the warrants during the exercise period or at any
time thereafter.
Unless
the price of our common stock equals or exceeds the exercise price of the
warrants at the time of their exercise, the holders may not be able to exercise
the warrants profitably. There can be no assurance that the price of
our common stock will meet or exceed the exercise price of the warrants during
the exercise period or at any time thereafter. The warrants may be worthless and
expire unexercised if the price of our common stock does not exceed the warrant
exercise price.
This
offering will trigger the price protection feature of certain of our outstanding
warrants and dilute current stockholders.
In March
2008, we entered into a securities purchase agreement and related documents with
existing institutional investors relating to a private placement of 8% secured
convertible notes and warrants. We refer to these warrants as the
outstanding warrants. The initial exercise price of the outstanding
warrants was $1.21 per share, but the exercise price was subsequently reduced
initially to $0.50 per share and then to $0.33 per share as a result of a price
protection provision triggered by our offering of stock in a private placement
in May 2009. This price protection feature allows for the reduction
in the exercise price of the outstanding warrants in the event we subsequently
issue common stock or securities convertible into or exercisable for common
stock, such as options and warrants, at a price per share less than the
outstanding warrant exercise price then in effect. In addition, with
any reduction to the outstanding warrant exercise price, the number of shares of
common stock that may be purchased upon exercise of each outstanding warrant
will be increased or decreased proportionately, so that after such adjustment
the aggregate outstanding warrant exercise price payable for the adjusted number
of shares issuable upon exercise will be the same as the aggregate outstanding
warrant exercise price in effect immediately prior to such
adjustment. Currently, outstanding warrants to purchase 16,500,000
shares of our common stock remain. We anticipate that the adjusted
exercise price for the outstanding warrants will be $0.25 per share and that the
number of shares issuable upon exercise of the outstanding warrants will
increase to 21,784,410.
Sales
of our common stock following the offering may cause the market price of our
common stock to fall.
The
initial issuance of shares of our common stock and the issuance of shares of our
common stock upon the exercise of the warrants could have the effect of
depressing the market price for shares of our common stock. Likewise, if the
investors purchase shares of our common stock and warrants to purchase shares of
common stock at their election during the 60 days after the initial investment
and subsequently sell shares of our common stock, including those issuable upon
exercise of the warrants, such sales may have the effect of depressing the
market price for shares of our common stock.
USE
OF PROCEEDS
We
estimate that the net proceeds to us from the sale of common shares to be
offered by this prospectus supplement will be approximately $2,900,000 at the
initial closing, after deducting the estimated expenses of the initial
closing. As described under “Plan of Distribution” below, the
investors may purchase, at their election, up to an aggregate of $3,000,000 of
shares of common stock and warrants to purchase shares of common stock during
the 60 days following the initial closing, subject to certain limitations and
qualifications. At the initial closing on January 25, 2011, the
offering price per share will equal $0.25. The purchase price of
additional shares at a subsequent closing held at the investor’s election and
the exercise price of additional warrants at such subsequent closing will be
$0.25 per share.
Unless
otherwise indicated, we intend to use the net proceeds from this offering for
working capital and/or general corporate purposes, including to continue the
clinical trials of, and commercialization of, our oral insulin formulation, in
the research and development of other products, and for general and
administrative expenses.
Until we
use the net proceeds of this offering for the above purposes, we intend to
invest the funds in short-term, investment grade, interest-bearing securities.
We cannot predict whether the proceeds invested will yield a favorable return.
We have not yet determined the amount or timing of the expenditures for the
categories listed above, and these expenditures may vary significantly depending
on a variety of factors. As a result, we will retain broad discretion over the
use of the net proceeds from this offering.
DIVIDEND
POLICY
We have
not paid dividends on our common stock in the past and have no present intention
of paying dividends in the foreseeable future.
DILUTION
If you
invest in our common stock, you will experience dilution to the extent of the
difference between the price per share you pay in this offering and the net book
value per share of our common stock immediately after this
offering.
Our net
book value as of October 31, 2010 was approximately $3,919,759, or $0.01 per
share of common stock. Net book value per share is equal to our total
assets minus total liabilities as of October 31, 2010, all divided by the number
of shares of common stock outstanding as of October 31,
2010. Assuming we sell 24,000,000 shares of common stock, the maximum
number of shares we are offering pursuant to this prospectus supplement, at an
offering price of $0.25 per share, and after deducting our estimated offering
expenses payable by us, our as adjusted net book value would have been
approximately $6,940,243, or approximately $0.02 per share of common stock, as
of October 31, 2010. This represents no change in net book value per
share to existing stockholders and no dilution per share to new investors. The
following table illustrates this calculation on a per share basis:
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|
|
|
|
|
Offering
price for one share of common stock
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|
|
0.25
|
|
|
Net Book
value per share as of October 31, 2010
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|
$
|
0.01
|
|
|
Increase
per share attributable to the offering
|
|
$
|
0.01
|
|
|
As
Adjusted net book value 0.25 per share after this offering
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|
|
0.02
|
|
|
Dilution
per share to new investors
|
|
|
0.01
|
|
The above
illustration of dilution per share to investors participating in this offering
assumes no exercise of outstanding options or warrants to purchase our common
stock. The exercise of outstanding options and warrants having an exercise price
less than the offering price will increase dilution to new
investors.
As
described under “Plan of Distribution” below, the investors have agreed to
purchase 12,000,000 shares of our common stock together with a warrant to
purchase 12,000,000 shares of our common stock for an aggregate purchase price
of $3,000,000. The investors have the option, at their election, to
purchase up to $3,000,000 of our common stock and warrants to purchase shares of
our common stock within 60 days of the initial investment. At the
initial closing on January 25, 2011, the purchase price per share will be
$0.25. The purchase price of additional shares at a subsequent
closing held at the investor’s election and the exercise price of additional
warrants issued at such subsequent closing will be $0.25 per share.
SECURITIES
PURCHASE AGREEMENT
The
common stock in this offering will be issued pursuant to a securities purchase
agreement between the investors and us. You should review a copy of the
securities purchase agreement, which will be filed as an exhibit 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 the common
stock. The following is a brief summary of the securities purchase
agreement and is subject in all respects to the provisions contained in the
common stock purchase agreement.
On
January 24, 2011, we entered into a Securities Purchase Agreement, or Purchase
Agreement, with the investors. The Purchase Agreement requires us to issue
and the investors to purchase 12,000,000 shares of our common stock together
with warrants to purchase 12,000,000 shares of our common stock for an aggregate
purchase price of $3,000,000. At the initial closing on January 25,
2011, the offering price per share will be $0.25. The investors also
have the option, at their election, to purchase up to $3,000,000 of our common
stock and warrants to purchase shares of our common stock within 60 days of the
initial investment, subject to certain qualifications and
limitations. The purchase price of the additional shares and the
exercise price of the additional warrants will be $0.25 per share.
The
investors may, immediately upon written notice to us, terminate the Purchase
Agreement at any time, if the initial closing or the subsequent closing, if any,
has not been consummated on the initial closing date or the subsequent closing
date, as applicable; provided, however, no such termination will affect the
right of any party to sue for any breach by any other party. The
Purchase Agreement contains representations and warranties and covenants for
each party, which must be true and have been performed at each closing.
The investors have agreed not to engage in any activities in violation of
Regulation SHO with respect to the shares of our common stock, the warrants and
the shares of our common stock issuable upon exercise of the
warrants.
This
prospectus supplement and the accompanying prospectus relate to the offering of
up to 24,720,000 shares of our common stock and warrants to purchase up to
24,000,000 shares of common stock. This prospectus supplement also
relates to the offering of shares of our common stock upon the exercise, if any,
of the warrants issued in this offering.
Common
Stock
The
material terms and provisions of our common stock are described under the
caption “Description of Our Capital Stock” starting on page 11 of the
accompanying prospectus.
Warrants
The
material terms and provisions of the warrants being offered pursuant to this
prospectus supplement and the accompanying prospectus are summarized below. This
summary is subject to, and qualified in its entirety by, the form of warrant,
which will be provided to the investor in this offering and will be filed as an
exhibit to a Current Report on Form 8-K.
The
warrants issued at the initial closing date will provide for an exercise price
of $0.25 per share and will be immediately exercisable at the option of the
holder for a period of five years after the issue date of the
warrants. If the investors exercise their option to purchase
additional shares and warrants within 60 days of the initial closing date, the
exercise price of warrants issued at such subsequent closing date will be $0.25
per share. The exercise price of the warrants will be subject to
adjustment in the case of stock splits, stock dividends, combinations of shares
and similar recapitalization transactions. The exercise price of the
warrants will also be subject to an adjustment upon the occurrence of certain
events, including the issuance by us of securities at a price per share less
than the exercise price then in effect. If we issue shares of common stock
or options exercisable for or securities convertible into common stock at an
effective price per share of common stock less than the exercise price then in
effect, the exercise price will be reduced to the effective price of the new
issuance. In addition, with any reduction to the exercise price, the number of
shares of common stock that may be purchased upon exercise of each warrant will
be increased, so that after such adjustment the aggregate warrant exercise price
payable for the adjusted number of shares issuable upon exercise will be the
same as the aggregate warrant exercise price in effect immediately prior to such
adjustment.
The
holder will not have the right to exercise any portion of the warrants if the
holder, together with its affiliates, would, subject to limited exceptions,
beneficially own in excess of 4.99% of the number of shares of our common stock
outstanding immediately after the exercise. The holder may elect to change this
beneficial ownership limitation from 4.99% to 9.99% of the number of shares of
our common stock outstanding immediately after the exercise upon 61 days’ prior
written notice to us.
The
warrant holders must surrender payment in cash of the exercise price of the
shares being acquired upon exercise of the warrants. If, however, we
are unable to offer and sell the shares underlying these warrants pursuant to
this prospectus supplement due to the ineffectiveness of the registration
statement of which this prospectus supplement is a part, then the warrants may
be exercised on a “net” or “cashless” basis.
PLAN
OF DISTRIBUTION
In
consideration for introducing us to the investors, we are paying Seahawk a
finders’ fee equal to 8% of the gross proceeds from the initial investment,
consisting of 2% in cash ($60,000) and 6% in shares of our common stock, based
on a per share price of $0.25 (720,000 shares). We have entered into
a securities purchase agreement directly with the investors in connection with
this offering, and we will only sell to the investors who have entered into a
securities purchase agreement.
On
January 24, 2011, we entered into a Securities Purchase Agreement with the
investors. The Purchase Agreement requires us to issue and the investors
to purchase an aggregate of 12,000,000 shares of our common stock together with
a warrant to purchase an aggregate of 12,000,000 shares of our common stock for
a total purchase price of $3,000,000. At the initial closing on
January 25, 2011, the purchase price per share will be $0.25. The
investors also have the option, at their election, to purchase up to $3,000,000
of our common stock and warrants to purchase shares of our common stock within
60 days of the initial investment, subject to certain qualifications and
limitations. The purchase price of the additional shares and the
exercise price of the additional warrants will be $0.25 per share.
The
investors may, immediately upon written notice to us, terminate the Purchase
Agreement at any time, if the initial closing or the subsequent closing, if any,
has not been consummated on the initial closing date or the subsequent closing
date, as applicable; provided, however, no such termination will affect the
right of any party to sue for any breach by any other party, The
Purchase Agreement contains representations and warranties and covenants for
each party, which must be true and have been performed at each
closing. The investors have agreed not to engage in any
activities in violation of Regulation SHO with respect to the shares of our
common stock, the warrants and the shares of our common stock issuable upon
exercise of the warrants.
We have
agreed to indemnify and hold harmless the investors against certain liabilities
in connection with the sale of our common stock under the Purchase
Agreement.
This is a
brief summary of the material provisions of the Purchase Agreement and does not
purport to be a complete statement of its terms and conditions. A copy of
the Purchase Agreement will be filed with the SEC and incorporated by reference
into the registration statement of which this prospectus supplement forms a
part. See “Where You Can Find More Information” below.
The
investors may sell the securities being offered hereby in one or more of the
following methods from time to time:
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•
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through
ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
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•
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directly
to investors in privately negotiated
transactions;
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•
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to
a broker or dealer, including sales to a broker or dealer as principal and
resale by such broker or dealer for its own account pursuant to this
prospectus supplement and the accompanying
prospectus;
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•
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through
a block trade, which may involve crosses, in which the broker or dealer
will attempt to sell the securities as agent but may position and resell a
portion of the block as principal to facilitate the
transaction;
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•
|
through
agents to the public or to
investors;
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•
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to
underwriters for resale to the public or to investors;
or
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•
|
through
a combination of any of these methods of
sale.
|
The
securities may be sold from time to time in one or more transactions
at:
|
•
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fixed
prices, which may be changed;
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•
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the
prevailing market price at the time of
sale;
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•
|
varying
prices determined at the time of sale;
or
|
Sales may
be effected in transactions:
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•
|
in
the over-the-counter market; or
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|
•
|
any
other method permitted pursuant to applicable
law.
|
The
investors also may resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that the criteria and requirements of that rule have been
satisfied.
The
investors might be, and any broker-dealers that act in
connection with the sale of securities may be, deemed to
be “underwriters” within the meaning of Section 2(a)(11) of the
Securities Act, and any commissions received by such broker-dealers and any
profit on the resale of the securities sold by them while acting as principals
may be deemed to be underwriting discounts or commissions under the Securities
Act.
LEGAL
MATTERS
Certain
legal matters pertaining to the validity of the securities being offered hereby
will be passed on by Eckert Seamans Cherin & Mellott, LLC, Two Liberty
Place, 50 South 16th Street, 22nd Floor, Philadelphia, PA
19102. Members of the firm own additional shares of the Company’s
common stock (less than one percent in total) that they purchased from time to
time for cash, either from us or in the public market.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed a registration statement on Form S-3 with the SEC. This prospectus
supplement and accompanying prospectus, which are a part of the registration
statement, do not contain all of the information contained in the registration
statement. Because some information is omitted, you should refer to the
registration statement and its exhibits for additional information. For example,
the descriptions in this prospectus supplement and accompanying prospectus
regarding the contents of any of our contracts, agreements or other documents
are not necessarily complete and you should refer to the exhibits attached to
the registration statement or incorporated by reference for copies of the actual
contract, agreement or other document. You may obtain a copy of the registration
statement from the SEC at the address listed below or from the SEC’s web
site.
We are
subject to the information and periodic reporting requirements of the Exchange
Act, and in accordance therewith file periodic reports, current reports, proxy
statements and other information with the SEC. Such periodic reports, current
reports, proxy statements, other information and a copy of the registration
statement on Form S-3 may be inspected by anyone without charge and copies of
these materials may be obtained upon the payment of the fees prescribed by the
SEC, at the Public Reference Room maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The registration
statement on Form S-3 and the periodic reports, current reports, proxy
statements and other information filed by us are also available through the
Internet web site maintained by the SEC at the following address:
http://www.sec.gov .
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC
allows us to “incorporate by reference” the information contained in documents
that we file with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus supplement and the
accompanying prospectus. Information in this prospectus supersedes information
incorporated by reference that we filed with the SEC prior to the date of this
prospectus, while information that we file later with the SEC will automatically
update and supersede this information.
The
following documents (other than current reports or portions thereof furnished
under Item 2.02 or Item 7.01 of Form 8-K) heretofore filed with the SEC by us
under the Securities and Exchange Act of 1934, as amended, are incorporated
herein by reference:
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(a)
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Our
Annual Report on Form 10-K filed with the SEC on October 14, 2010, for the
year ended July 31, 2010;
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(b)
|
Amendment
No. 1 to our Annual Report on Form 10-K/A filed with the SEC on November
24, 2010, for the year ended July 31,
2010;
|
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(b)
|
Our
Quarterly Report on Form 10-Q filed with the SEC on December 10, 2010, for
the quarter ended October 31, 2010;
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(c)
|
Amendment
No. 2 to our Quarterly Report on Form 10-Q/A filed with the SEC on
December 10, 2010 for the quarter ended October 31,
2009;
|
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(d)
|
Amendment
No. 2 to our Quarterly Report on Form 10-Q/A filed with the SEC on
December 10, 2010 for the quarter ended January 31,
2010;
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(d)
|
The
portions of our Definitive Proxy Statement on Schedule 14A pertaining to
our annual meeting initially scheduled for July 28, 2010 that are deemed
“filed” with the SEC under the Securities Exchange Act of 1934, as
amended, as filed with the SEC on June 15,
2010;
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(e)
|
The
portions of our Definitive Proxy Statement on Schedule 14A, as revised,
pertaining to our special meeting initially scheduled for September 17,
2010 that are deemed “filed” with the SEC under the Securities Exchange
Act of 1934, as amended, as filed with the SEC on August 27,
2010;
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(f)
|
Additional
soliciting materials pertaining to the special meeting initially scheduled
for September 17, 2010 and adjournments thereof that are deemed “filed”
with the SEC under the Securities Exchange Act of 1934, as amended, as
filed with the SEC on August 27, 2010, September 16, 2010, September 17,
2010, October 12, 2010, October 14, 2010, October 15, 2010 and October 18,
2010;
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(e)
|
Our
Current Reports on Form 8-K filed with the SEC on August 2, 2010,
September 17, 2010, October 1, 2010, October 12, 2010, October 15, 2010,
October 20, 2010, November 1, 2010, January 21, 2011 and January 25, 2011;
and
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(f)
|
The
description of our common stock contained in our Form 10 filed with the
SEC on December 14, 1998, as amended by a Form 10/A filed with the SEC on
February 24, 1999, and including any amendment or report subsequently
filed for the purpose of updating the
description.
|
All
documents (other than current reports or portions thereof furnished under Item
2.02 or Item 7.01 of Form 8-K) subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), prior to the termination of the offering shall be
deemed to be incorporated by reference in this registration statement and to be
a part hereof from the date of filing of such documents; except as to any
portion of any future annual or quarterly report to stockholders or document
that is not deemed filed under such provisions. For the purposes of this
prospectus, any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
You may
request a copy of these documents, which will be provided to you at no cost, by
writing or telephoning us using the following contact information:
Generex
Biotechnology Corporation
Attention:
Mark Fletcher, Secretary
33
Harbour Square, Suite 202
Toronto,
Ontario
Canada
M5J 2G2
(416)
364-2551
PROSPECTUS
GENEREX
BIOTECHNOLOGY CORPORATION
$150,000,000
Common
Stock
Preferred
Stock
Warrants
Units
[Missing
Graphic Reference]
We may
offer and sell, from time to time, shares of our common stock, preferred stock,
warrants and/or units consisting of two or more of any such securities on terms
to be determined at the time of sale. The preferred stock may be convertible
into shares of our common stock and the warrants may be exercisable for shares
of our common stock or shares of our preferred stock. We may offer these
securities separately or together in one or more offerings with a maximum
aggregate offering price of $150,000,000.
Specific
terms of the securities being sold as well specific terms of these offerings
will be provided in supplements to this prospectus. You should read this
prospectus and any prospectus supplements, including any information
incorporated herein or therein, carefully before you invest.
The
securities being sold may be sold on a delayed basis or continuous basis
directly by us, through dealers, agents or underwriters designated from time to
time, or through any combination of these methods. If any dealers, agents or
underwriters are involved in the sale of the securities in respect of which this
prospectus is being delivered, we will disclose their names and the nature of
our arrangements with them in any prospectus supplement. The net proceeds we
expect to receive from any such sale will also be included in the applicable
prospectus supplement.
Our
common stock is listed on the NASDAQ Capital Market
under the symbol "GNBT." The last sale price of our common stock on January 28,
2010, as reported by NASDAQ, was $0.59 per share. None of the other securities
offered under this prospectus are publicly traded.
Investing in our common stock
involves risks. See “Risk Factors” beginning on page 3 to read about the factors you should
consider before investing.
[Missing Graphic Reference]
This
prospectus may not be used to offer and sell securities unless accompanied by a
prospectus supplement for the securities being sold.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date
of this prospectus is January 29, 2010
TABLE
OF CONTENTS
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Page
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About
this Prospectus
|
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1
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|
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Summary
|
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1
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Risk
Factors
|
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2
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Cautionary
Note Regarding Forward-Looking Statements
|
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9
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Use
of Proceeds
|
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10
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Dilution
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10
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Description
of our Capital Stock
|
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11
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Description
of Our Warrants
|
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15
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Description
of Our Units
|
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16
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Plan
of Distribution
|
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17
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Legal
Matters
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19
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Experts
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19
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Where
You Can Find More Information
|
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19
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Incorporation
of Certain Documents by Reference
|
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20
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i
ABOUT THIS
PROSPECTUS
This
prospectus is a part of a registration statement that we filed with the
Securities and Exchange Commission, or SEC, utilizing a “shelf” registration
process. Under this shelf registration process, we may sell one or more series
or classes our common stock, preferred stock and/or warrants in one or more
offerings up to an aggregate maximum offering price of $150,000,000 (or its
equivalent in foreign or composite currencies). This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities under this shelf registration, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement that we may authorize to be provided to
you may also add, update or change information contained in this prospectus or
in any documents that we have incorporated by reference into this prospectus.
You should read this prospectus and any applicable prospectus supplement,
together with the information incorporated herein by reference as described
under the heading “Where You Can Find More Information.”
You
should rely only on the information contained or incorporated by reference in
this prospectus and in any prospectus supplement. We have not authorized anyone
to provide you with different information. We will not make an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
The information contained in this prospectus and any prospectus supplement is
accurate only as of the date of this prospectus or such prospectus supplement,
and the information contained in any document incorporated herein or therein by
reference is accurate only as the date of such document incorporated by
reference, regardless of the time of delivery or any sale of our
securities.
Prospectus
Summary
This
summary highlights selected information from this prospectus and does not
contain all of the information that you need to consider in making your
investment decision. You should carefully read the entire prospectus, including
the risks of investing discussed under “Risk Factors” beginning on page 3, the
information incorporated by reference, including our financial statements, and
the exhibits to the registration statement of which this prospectus is a
part.
Throughout
this prospectus, references to “Generex,” the “Company,” “we,” “us,” and “our”
refer to Generex Biotechnology Corporation.
Our
Company
The
initial product, Generex Oral-lyn™, that we have developed is an oral insulin
formulation for use in the treatment of diabetes. The formulation is sprayed
into the mouth using our RapidMist™ device, a small and lightweight aerosol
applicator that administers a metered dose for absorption. Absorption occurs
through the mucous membranes in the buccal cavity.
To date,
we have received regulatory approval in Ecuador, India, Lebanon and Algeria for
the commercial marketing and sale of Generex Oral-lyn™. We have
initiated Phase III clinical trials for this product and currently have patients
enrolled in clinical sites around the world, including sites in the United
States, Canada, Bulgaria, Poland, Romania, Russia and Ukraine.
Using our
buccal delivery technology, we also have launched a line of over-the-counter
glucose and energy sprays to complement Generex Oral-lyn™. We believe
these products may provide us with an additional revenue stream prior to the
commercialization of Generex Oral-lyn™ in those markets where we have received
regulatory approval.
While we
have also pursued the application of our technology for the buccal delivery of
pharmaceutical products such as morphine, fentanyl citrate and low molecular
weight heparin, our focus has remained on the buccal delivery of
insulin.
In August
2003, we acquired Antigen Express, Inc. Antigen concentrates on
developing proprietary vaccine formulations that work by stimulating the immune
system to either attack offending agents (i.e., cancer cells, bacteria, and
viruses) or to stop attacking benign elements (i.e., self proteins and
allergens). Our immunomedicine product candidates are based on two platform
technologies and are in the research, pre-clinical and clinical stages of
development.
We are a
development stage company. From inception through the end of the fiscal quarter
ended October 31, 2009, we have received only limited revenues from operations.
In the fiscal years ended July 31, 2009 and 2008, we received approximately
$1,118,509 and $124,891 in revenue. The revenue in fiscal 2009 included $550,000
relating to an upfront license fee for the signing of a license and distribution
agreement for Generex Oral-lyn™, while the remainder of the revenue in both
fiscal periods pertained to the sale of our confectionary products. These
numbers do not reflect deferred sales to customers during the respective periods
with the right of return.
We
operate in only one segment: the research, development and commercialization of
drug delivery systems and technologies for metabolic and immunological
diseases.
We were
incorporated in the State of Delaware in 1997. Our principal offices
are located at 33 Harbour Square, Suite 202, Toronto, Ontario, Canada M5J 2G2.
Our telephone number is (416) 364-2551 and our Internet address is www.generex.com.
Information contained in, or accessible through, our website does not constitute
a part of this prospectus. Copies of our current and periodic
reports filed with the SEC are available at the SEC Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549, and online at
www.sec.gov.
The
Securities We May Offer
The
descriptions of the securities contained in this prospectus, together with the
applicable prospectus supplements, summarize all the material terms and
provisions of the various types of securities that we may offer. We
will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If
we indicate in the applicable prospectus supplement, the terms of the securities
may differ from the terms we have summarized below.
We may
sell from time to time, in one or more offerings:
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preferred
stock which may be convertible into shares of our common
stock;
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warrants
to purchase any of the securities listed above;
or
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units
consisting of two or more of any such securities on terms to be determined
at the time of sale.
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In this
prospectus, we refer to the common stock, preferred stock, warrants and units
collectively as "securities." The total dollar amount of all securities that we
may sell will not exceed $150,000,000.
This
prospectus may not be used to consummate a sale of securities unless it is
accompanied by a prospectus supplement.
RISK
FACTORS
An
investment in our stock is very speculative and involves a high degree of risk.
You should carefully consider the following important factors, as well as the
other information in this prospectus, any accompanying prospectus supplement and
the other reports that we have filed heretofore (and will file hereafter) with
the SEC, before purchasing our stock. The risks described below are not the only
ones we face. Additional risks not presently known to us or that we currently
believe are immaterial may also impair our business operations and financial
results. If any of the following risks actually occurs, our business, financial
condition or results of operations could be adversely affected. In such case,
the trading price of our common stock could decline and you could lose all or
part of your investment. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks we face described below.
Risks
Related to Our Financial Condition
We
have a history of losses and will incur additional losses.
We are a
development stage company with a limited history of operations, and do not
expect sufficient revenues to support our operation in the immediately
foreseeable future. In the three months ended October 31, 2009,
we received revenues of $97,542 from sales of our over-the-counter confectionary
products. In the fiscal year ended July 31, 2009, we received modest
revenues of approximately $618,509 from sales of these products. We
did not recognize any revenue from the sale of our oral insulin product in
Ecuador or India in fiscal 2009, although we did recognize $500,000 in licensing
fee revenue relating to the signing of a licensing and distribution agreement
for the sale of Generex Oral-lyn™ in Korea. We do not expect to receive any
revenues in Ecuador until we enter into a definitive manufacturing and
distribution agreement with our business partner there. While we have entered
into a licensing and distribution agreement with a leading Indian-based
pharmaceutical company and insulin distributor, we do not anticipate significant
revenue from the initial commercial launch of Generex Oral-lyn™ in India
sometime this fiscal year. We also have entered in subdistribution
agreements in Lebanon and Algeria but did not receive any revenue from the
launch of the product in those countries in calendar year 2009.
To date,
we have not been profitable and our accumulated net loss available to
shareholders was $302,180,145 at October 31, 2009. Our losses have resulted
principally from costs incurred in research and development, including clinical
trials, and from general and administrative costs associated with our
operations. While we seek to attain profitability, we cannot be sure that we
will ever achieve product and other revenue sufficient for us to attain this
objective.
With the
exception of Generex Oral-lyn™ which is currently available for sale in Ecuador
and has been approved for sale in India, Lebanon and Algeria and our
over-the-counter glucose and energy spray products, Glucose RapidSpray™,
BaBOOM!™ Energy Spray and Crave-Nx™, our product candidates are in research or
early stages of pre-clinical and clinical development. We will need to conduct
substantial additional research, development and clinical trials. We will also
need to receive necessary regulatory clearances both in the United States and
foreign countries and obtain meaningful patent protection for and establish
freedom to commercialize each of our product candidates. We must also complete
further clinical trials and seek regulatory approvals for Generex Oral-lyn™ in
countries outside of Ecuador, India, Lebanon and Algeria. We cannot be sure that
we will obtain required regulatory approvals, or successfully research, develop,
commercialize, manufacture and market any other product candidates. We expect
that these activities, together with future general and administrative
activities, will result in significant expenses for the foreseeable
future.
We
will need additional capital.
To
progress in product development or marketing, we will need additional capital
which may not be available to us. This may delay our progress in product
development or market.
We will
require funds in excess of our existing cash resources:
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To
proceed with the development of our buccal insulin
product;
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To
finance the research and development of new products based on our buccal
delivery and immunomedicine technologies, including clinical testing
relating to new products;
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To
finance the research and development activities of our subsidiary Antigen
with respect to other potential
technologies;
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To
commercially launch and market developed
products;
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To
develop or acquire other technologies or other lines of
business;
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To
establish and expand our manufacturing
capabilities;
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To
finance general and administrative activities that are not related to
specific products under development;
and
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To
otherwise carry on business.
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In the
past, we have funded most of our development and other costs through equity
financing. We anticipate that our existing capital resources will enable us to
maintain currently planned operations through the next twelve months. However,
this expectation is based on our current operating plan, which could change as a
result of many factors, and we may need additional funding sooner than
anticipated. Because our operating and capital resources are insufficient to
meet future requirements, we will have to raise additional funds in the near
future to continue the development and commercialization of our products.
Unforeseen problems, including materially negative developments in our clinical
trials or in general economic conditions, could interfere with our ability to
raise additional equity capital or materially adversely affect the terms upon
which such funding is available.
It is
possible that we will be unable to obtain additional funding as and when we need
it. If we were unable to obtain additional funding as and when needed, we could
be forced to delay the progress of certain development efforts. Such a scenario
poses risks. For example, our ability to bring a product to market and obtain
revenues could be delayed, our competitors could develop products ahead of us,
and/or we could be forced to relinquish rights to technologies, products or
potential products.
Our
research and development and marketing efforts may be highly dependent on
corporate collaborators and other third parties who may not devote sufficient
time, resources and attention to our programs, which may limit our efforts to
successfully develop and market potential products.
Because
we have limited resources, we have sought to enter into collaboration agreements
with other pharmaceutical companies that will assist us in developing, testing,
obtaining governmental approval for and commercializing products using our
buccal delivery and immunomedicine technologies. Any collaborator with whom we
may enter into such collaboration agreements may not support fully our research
and commercial interests since our program may compete for time, attention and
resources with such collaborator's internal programs. Therefore, these
collaborators may not commit sufficient resources to our program to move it
forward effectively, or that the program will advance as rapidly as it might if
we had retained complete control of all research, development, regulatory and
commercialization decisions.
Risks
Related to Our Technologies
With
the exception of Generex Oral-lyn™, Glucose RapidSpray™, BaBOOM! ™ Energy Spray
and Crave-Nx™, our technologies and products are at an early stage of
development and we cannot expect significant revenues in respect thereof in the
foreseeable future.
We have
no products approved for commercial sale at the present time with the exception
of Generex Oral-lyn™ in Ecuador, Lebanon, Algeria and India and our glucose
sprays which are available over-the-counter in certain retail outlets in the
United States and Canada and in the Middle East. To be profitable, we must not
only successfully research, develop and obtain regulatory approval for our
products under development, but also manufacture, introduce, market and
distribute them once development is completed. We have yet to manufacture,
market and distribute these products on a large-scale commercial basis, and we
expect to receive only modest revenues from product sales in fiscal year 2010.
We may not be successful in one or more of these stages of the development or
commercialization of our products, and/or any of the products we develop may not
be commercially viable. Until we can establish that they are commercially viable
products, we will not receive significant revenues from ongoing
operations.
Until
we receive regulatory approval to sell our pharmaceutical products in additional
countries, our ability to generate revenues from operations may be limited and
those revenues may be insufficient to sustain operations. Many factors impact
our ability to obtain approvals for commercially viable products.
Our only
pharmaceutical product that has been approved for commercial sale by drug
regulatory authorities is our oral insulin spray formulation, and that approval
was obtained in Ecuador, Lebanon, Algeria and India. We have begun the
regulatory approval process for our oral insulin, buccal morphine and fentanyl
products in other countries, and we have initiated late stage clinical trials of
Generex Oral-lyn™ at some of our clinical trial sites in North America according
to the Phase III clinical plan.
Our
immunomedicine products are in the pre-clinical stage of development, with the
exception of a Phase II trial in human patients with stage II HER-2/neu positive
breast cancer (U.S.), a Phase I trial in human patients with prostate cancer
(Athens, Greece), a Phase I trial in human patients with breast or ovarian
cancer (U.S.) and a Phase I trial in human volunteers of a peptide vaccine for
use against the H5N1 avian influenza virus (Beirut, Lebanon).
Pre-clinical
and clinical trials of our products, and the manufacturing and marketing of our
technologies, are subject to extensive, costly and rigorous regulation by
governmental authorities in the United States, Canada and other countries. The
process of obtaining required regulatory approvals from the FDA and other
regulatory authorities often takes many years, is expensive and can vary
significantly based on the type, complexity and novelty of the product
candidates. For these reasons, it is possible we will not receive regulatory
approval for any prescription pharmaceutical product candidate in any countries
other than Ecuador, Lebanon, Algeria and India.
In
addition, we cannot be sure when or if we will be permitted by regulatory
agencies to undertake additional clinical trials or to commence any particular
phase of clinical trials. Because of this, statements in this Annual Report
regarding the expected timing of clinical trials cannot be regarded as actual
predictions of when we will obtain regulatory approval for any "phase" of
clinical trials.
Delays in
obtaining United States or other foreign approvals for our pharmaceutical
products could result in substantial additional costs to us, and, therefore,
could adversely affect our ability to compete with other companies. If
regulatory approval is ultimately granted in any countries other than Ecuador,
Lebanon, Algeria and India, the approval may place limitations on the intended
use of the product we wish to commercialize, and may restrict the way in which
we are permitted to market the product.
Due
to legal and factual uncertainties regarding the scope and protection afforded
by patents and other proprietary rights, we may not have meaningful protection
from competition.
Our
long-term success will substantially depend upon our ability to protect our
proprietary technologies from infringement, misappropriation, discovery and
duplication and avoid infringing the proprietary rights of others. Our patent
rights and the patent rights of biotechnology and pharmaceutical companies in
general, are highly uncertain and include complex legal and factual issues.
Because of this, our pending patent applications may not be granted. These
uncertainties also mean that any patents that we own or will obtain in the
future could be subject to challenge, and even if not challenged, may not
provide us with meaningful protection from competition. Due to our financial
uncertainties, we may not possess the financial resources necessary to enforce
our patents. Patents already issued to us or our pending applications may become
subject to dispute, and any dispute could be resolved against us.
Because a
substantial number of patents have been issued in the field of alternative drug
delivery and because patent positions can be highly uncertain and frequently
involve complex legal and factual questions, the breadth of claims obtained in
any application or the enforceability of our patents cannot be predicted.
Consequently, we do not know whether any of our pending or future patent
applications will result in the issuance of patents or, to the extent patents
have been issued or will be issued, whether these patents will be subject to
further proceedings limiting their scope, will provide significant proprietary
protection or competitive advantage, or will be circumvented or
invalidated.
Also
because of these legal and factual uncertainties, and because pending patent
applications are held in secrecy for varying periods in the United States and
other countries, even after reasonable investigation we may not know with
certainty whether any products that we (or a licensee) may develop will infringe
upon any patent or other intellectual property right of a third party. For
example, we are aware of certain patents owned by third parties that such
parties could attempt to use in the future in efforts to affect our freedom to
practice some of the patents that we own or have applied for. Based upon the
science and scope of these third-party patents, we believe that the patents that
we own or have applied for do not infringe any such third-party patents;
however, we cannot know for certain whether we could successfully defend our
position, if challenged. We may incur substantial costs if we are required to
defend our intellectual property in patent suits brought by third parties. These
legal actions could seek damages and seek to enjoin testing, manufacturing and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue to
manufacture or market the accused product or process.
Risks
Related to Marketing of Our Potential Products
We
may not become, or stay, profitable even if our pharmaceutical products are
approved for sale.
Even if
we obtain regulatory approval to market our oral insulin product outside of
Ecuador, India, Lebanon and Algeria or to market any other prescription
pharmaceutical product candidate, many factors may prevent the product from ever
being sold in commercial quantities. Some of these factors are beyond our
control, such as:
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acceptance
of the formulation or treatment by health care professionals and diabetic
patients;
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the
availability, effectiveness and relative cost of alternative diabetes or
immunomedicine treatments that may be developed by competitors;
and
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the
availability of third-party (i.e., insurer and governmental agency)
reimbursements.
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We will
not receive significant revenues from Generex Oral-lyn™ or any of our other
pharmaceuticals products that may receive regulatory approval until we can
successfully manufacture, market and distribute them in the relevant
markets.
Similarly,
the successful commercialization of our over-the-counter glucose spray products
may be hindered by manufacturing, marketing and distribution
limitations.
We have
to depend upon others for marketing and distribution of our products, and we may
be forced to enter into contracts limiting the benefits we may receive and the
control we have over our products. We intend to rely on collaborative
arrangements with one or more other companies that possess strong marketing and
distribution resources to perform these functions for us. We may not be able to
enter into beneficial contracts, and we may be forced to enter into contracts
for the marketing and distribution of our products that substantially limit the
potential benefits to us from commercializing these products. In addition, we
will not have the same control over marketing and distribution that we would
have if we conducted these functions ourselves.
We
may not be able to compete with treatments now being marketed and developed, or
which may be developed and marketed in the future by other
companies.
Our
products will compete with existing and new therapies and treatments. We are
aware of a number of companies currently seeking to develop alternative means of
delivering insulin, as well as new drugs intended to replace insulin therapy at
least in part. We are also aware of a number of companies currently seeking to
develop alternative means of enhancing and suppressing peptides. In the longer
term, we also face competition from companies that seek to develop cures for
diabetes and other malignant, infectious, autoimmune and allergic diseases
through techniques for correcting the genetic deficiencies that underlie such
diseases.
Numerous
pharmaceutical, biotechnology and drug delivery companies, hospitals, research
organizations, individual scientists and nonprofit organizations are engaged in
the development of alternatives to our technologies. Some of these companies
have greater research and development capabilities, experience, manufacturing,
marketing, financial and managerial resources than we do. Collaborations or
mergers between large pharmaceutical or biotechnology companies with competing
drug delivery technologies could enhance our competitors’ financial, marketing
and other resources. Developments by other drug delivery companies could make
our products or technologies uncompetitive or obsolete. Accordingly, our
competitors may succeed in developing competing technologies, obtaining FDA
approval for products or gaining market acceptance more rapidly than we
can.
Some of
our most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, have
announced that they will discontinue development and/or sale of their inhalable
forms of insulin. Unlike inhaled insulin formulations, Generex Oral-lyn™ is a
buccally absorbed formulation with no residual pulmonary deposition. We believe
that our buccal delivery technology offers several advantages over inhaled
insulin, including the avoidance of pulmonary inhalation, which requires
frequent physician monitoring, ease of use and portability.
If
government programs and insurance companies do not agree to pay for or reimburse
patients for our pharmaceutical products, our success will be
impacted.
Sales of
our oral insulin formulation in Ecuador, Lebanon, Algeria and India and our
other potential pharmaceutical products in other markets will depend in part on
the availability of reimbursement by third-party payers such as government
health administration authorities, private health insurers and other
organizations. Third-party payers often challenge the price and
cost-effectiveness of medical products and services. Governmental approval of
health care products does not guarantee that these third-party payers will pay
for the products. Even if third-party payers do accept our product, the amounts
they pay may not be adequate to enable us to realize a profit. Legislation and
regulations affecting the pricing of pharmaceuticals may change before our
products are approved for marketing and any such changes could further limit
reimbursement.
Risks
Related to Potential Liabilities
We
face significant product liability risks, which may have a negative effect on
our financial condition.
The
administration of drugs or treatments to humans, whether in clinical trials or
commercially, can result in product liability claims whether or not the drugs or
treatments are actually at fault for causing an injury. Furthermore, our
pharmaceutical products may cause, or may appear to have caused, serious adverse
side effects (including death) or potentially dangerous drug interactions that
we may not learn about or understand fully until the drug or treatment has been
administered to patients for some time. Product liability claims can be
expensive to defend and may result in large judgments or settlements against us,
which could have a severe negative effect on our financial condition. We
maintain product liability insurance in amounts we believe to be commercially
reasonable for our current level of activity and exposure, but claims could
exceed our coverage limits. Furthermore, due to factors in the insurance market
generally and our own experience, we may not always be able to purchase
sufficient insurance at an affordable price. Even if a product liability claim
is not successful, the adverse publicity and time and expense of defending such
a claim may interfere with our business.
Risks
Related to the Market for Our Common Stock
Our
common stock could be delisted from The NASDAQ Capital Market.
On July
23, 2008, we received notice from The NASDAQ Stock Market that we were not
compliance with Marketplace Rule 4310(c)(4) (now known as Listing Rule
5550(a)(2)), which requires us to have a minimum bid price per share of at least
$1.00 for thirty (30) consecutive business days. In accordance with
this Rule, we had 180 calendar days, or until January 20, 2009, subject to
extension, to regain compliance with this Rule.
Our
initial compliance period of 180 calendar days ending on January 20, 2009 was
subsequently extended until November 9, 2009 due to NASDAQ’s temporary
suspension of the minimum bid price requirement from October 16, 2008 until
August 3, 2009.
On
November 9, 2009, we received a letter from NASDAQ indicating that we had not
regained compliance with the $1.00 minimum bid price required for continued
listing under Listing Rule 5550(a)(2) within the grace period previously allowed
by NASDAQ following the initial notice of noncompliance on
July 23, 2008.
Pursuant
to Listing Rule 5810(c)(3)(A), NASDAQ has given us an additional 180 calendar
day compliance period because we met all other initial inclusion criteria (other
than the minimum bid price requirement) as of January 6,
2009. Therefore, we have 180 calendar days, or until
May 5, 2010, to regain compliance with the rule. To regain compliance
with the minimum bid price requirement, the closing bid price of our common
stock must close at $1.00 per share or more for a minimum of ten consecutive
business days.
If, by
May 5, 2010, we do not regain compliance with Listing Rule 5550(a)(2), we will
receive written notification that our stock will be delisted. At that
time, we may appeal the delisting determination to a NASDAQ Hearings
Panel. An appeal to the Hearings Panel would stay the delisting. . If
we are not successful in such an appeal, our stock would be delisted from the
NASDAQ Capital Market and likely trade on NASDAQ’s over-the-counter bulletin
board, assuming we meet the requisite criteria.
The
price of our common stock may be volatile.
There may
be wide fluctuations in the price of our common stock. These fluctuations may be
caused by several factors including:
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announcements
of research activities and technology innovations or new products by us or
our competitors;
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changes
in market valuation of companies in our industry
generally;
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variations
in operating results;
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changes
in governmental regulations;
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developments
in patent and other proprietary
rights;
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public
concern as to the safety of drugs or treatments developed by us or
others;
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results
of clinical trials of our products or our competitors' products;
and
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regulatory
action or inaction on our products or our competitors'
products.
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From time
to time, we may hire companies to assist us in pursuing investor relations
strategies to generate increased volumes of investment in our common stock. Such
activities may result, among other things, in causing the price of our common
stock to increase on a short-term basis.
Furthermore,
the stock market generally and the market for stocks of companies with lower
market capitalizations and small biopharmaceutical companies, like us, have from
time to time experienced, and likely will again experience significant price and
volume fluctuations that are unrelated to the operating performance of a
particular company. During the third calendar quarter of 2008 and
continuing to date, we, like many other publicly traded companies, have
experienced a sharp decline in the price of our stock attributable to concerns
about the current global recession. The widespread decline in stock
prices led The NASDAQ Stock Market to further extend its temporary suspension of
enforcement of the minimum bid price requirement until
July 31, 2009.
Provisions
of our Restated Certificate of Incorporation could delay or prevent the
acquisition or sale of our business.
Our
Restated Certificate of Incorporation permits our Board of Directors to
designate new series of preferred stock and issue those shares without any vote
or action by our stockholders. Such newly authorized and issued shares of
preferred stock could contain terms that grant special voting rights to the
holders of such shares that make it more difficult to obtain stockholder
approval for an acquisition of our business or increase the cost of any such
acquisition.
Our
recent equity financing will dilute current stockholders and could prevent the
acquisition or sale of our business.
The
equity financing transactions into which we have recently entered have and will
dilute current stockholders. Currently approximately 42,680,284 shares of common
stock are issuable upon exercise of the warrants that we issued on March 31,
2008, May 15, 2009, June 15, 2009, August 6, 2009 and September 14, 2009
(without regard to additional shares which may become issuable due to
anti-dilution adjustments or in connection with payments of interest), which
represents approximately 17% of the shares of common stock currently
outstanding. Assuming the holders of the warrants convert and
exercise all of the warrants into shares of common stock, the number of shares
of issued and outstanding common stock will increase significantly, and current
stockholders will own a smaller percentage of the outstanding common stock of
Generex. The issuance of shares of common stock pursuant to the warrants will
also have a dilutive effect on earnings per share and may adversely affect the
market price of the common stock.
In
addition, the issuance of shares of common stock upon exercise of the warrants
sold in the offerings that closed on June 15, 2009, August 6, 2009 and September
14, 2009 and sold in our March 31, 2008 private placement could have an
anti-takeover effect because such issuance will make it more difficult for, or
discourage an attempt by, a party to obtain control of Generex by tender offer
or other means. The issuance of common stock upon the exercise of the warrants
will increase the number of shares entitled to vote, increase the number of
votes required to approve a change of control of the company, and dilute the
interest of a party attempting to obtain control of the company.
If we
raise funds through one or more additional equity financings in the future,
including if we exercise our right to issue and sell shares under the sales
agreement with Wm Smith, it will have a further dilutive effect on existing
holders of our shares by reducing their percentage ownership. The shares may be
sold at a time when the market price is low because we need the funds. This will
dilute existing holders more than if our stock price was higher. In addition,
equity financings normally involve shares sold at a discount to the current
market price.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have
made statements in this prospectus that may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Act"). The Act limits our liability in any lawsuit based on
forward-looking statements that we have made. All statements, other than
statements of historical facts, included in this prospectus that address
activities, events or developments that we expect or anticipate will or may
occur in the future, including such matters as our projections, future capital
expenditures, business strategy, competitive strengths, goals, expansion, market
and industry developments and the growth of our businesses and operations, are
forward-looking statements. These statements can be identified by introductory
words such as "expects," “anticipates,” "plans," "intends," "believes," "will,"
"estimates," "projects" or words of similar meaning, and by the fact that they
do not relate strictly to historical or current facts. Our forward-looking
statements address, among other things:
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our
expectations concerning product candidates for our
technologies;
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our
expectations concerning existing or potential development and license
agreements for third-party collaborations and joint
ventures;
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our
expectations of when different phases of clinical activity may commence
and conclude;
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our
expectations of when regulatory submissions may be filed or when
regulatory approvals may be received;
and
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our
expectations of when commercial sales of our products may commence and
when actual revenue from the product sales may be
received.
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Any or
all of our forward-looking statements may turn out to be wrong. They may be
affected by inaccurate assumptions that we might make or by known or unknown
risks and uncertainties. Actual outcomes and results may differ materially from
what is expressed or implied in our forward-looking statements. Among the
factors that could affect future results are:
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the
inherent uncertainties of product development based on our new and as yet
not fully proven technologies;
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the
risks and uncertainties regarding the actual effect on humans of seemingly
safe and efficacious formulations and treatments when tested
clinically;
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the
inherent uncertainties associated with clinical trials of product
candidates;
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the
inherent uncertainties associated with the process of obtaining regulatory
approval to market product
candidates;
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the
inherent uncertainties associated with commercialization of products that
have received regulatory approval;
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the
volatility of, and recent decline in, our stock price and the impact on
our ability to pay installments due on our outstanding senior secured
notes in stock rather than cash;
and
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our
ability to obtain the necessary financing to fund our
operations.
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Additional
factors that could affect future results are set forth above under the caption
“Risk Factors.” We caution investors that the forward-looking
statements contained in this prospectus must be interpreted and understood in
light of conditions and circumstances that exist as of the date of this
prospectus. We expressly disclaim any obligation or undertaking to update or
revise forward-looking statements to reflect any changes in management's
expectations resulting from future events or changes in the conditions or
circumstances upon which such expectations are based. You are
advised, however, to consult any further disclosures we make on related subjects
in our 10-K, 10-Q and 8-K reports to the SEC.
USE
OF PROCEEDS
Except as
described in any prospectus supplement, we currently intend to use the net
proceeds from this offering for general corporate purposes, including to
continue the clinical trials of, and commercialization and manufacturing of, our
oral insulin formulation, in the research and development of other products, and
for general and administrative expenses. We may also issue the securities
offered under this prospectus in connection with product license and supply
agreements, research collaboration agreements and to our commercial vendors and
suppliers in exchange for products and services.
Each time
we issue securities, we will provide a prospectus supplement that will contain
information about how we intend to use the proceeds from each such
offering.
Until we
use the net proceeds of this offering for the above purposes, we intend to
invest the funds in short-term, investment grade, interest-bearing securities.
We cannot predict whether the proceeds invested will yield a favorable return.
We have not yet determined the amount or timing of the expenditures for the
categories listed above, and these expenditures may vary significantly depending
on a variety of factors. As a result, we will retain broad discretion over the
use of the net proceeds from this offering.
We cannot
guarantee that we will receive any proceeds in connection with any offering
hereunder because we may choose not to issue any of the securities covered by
this prospectus.
DILUTION
We will
set forth in a prospectus supplement the following information regarding any
material dilution of the equity interests of investors purchasing securities in
an offering under this prospectus:
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the
net tangible book value per share of our equity securities before and
after the offering;
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the
amount of the increase in such net tangible book value per share
attributable to the cash payments made by purchasers in the offering;
and
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the
amount of the immediate dilution from the public offering price which will
be absorbed by such purchasers.
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DESCRIPTION
OF OUR CAPITAL STOCK
Set forth
below is a summary of the material terms of our capital stock. This summary is
not complete. We encourage you to read our Restated Certificate of Incorporation
and our Amended and Restated By-Laws that we have previously filed with the SEC.
See “Where You Can Find More Information.”
General
Our
authorized capital stock consists of: (i) 750,000,000 shares of common stock,
par value $.001 per share, of which 249,702,601 shares were outstanding as of
January 28, 2010, and (ii) 1,000,000 shares of undesignated preferred stock, par
value $.001 per share.
Common
Stock
Holders
of common stock are entitled to one vote for each share owned as of record on
all matters on which shareholders may vote. Holders of common stock
do not have cumulative voting rights in the election of
directors. Therefore, the holders of more than 50% of the outstanding
shares can elect the entire Board of Directors. The holders of common
stock are entitled, upon liquidation or dissolution of the company, to receive
pro rata all remaining assets available for distribution to stockholders after
payment to any preferred shareholders who may have preferential
rights. The common stock has no preemptive or other subscription
rights, and there are no conversion rights or redemption provisions. All
outstanding shares of common stock are validly issued, fully paid, and
nonassessable.
Undesignated
Preferred Stock
Our Board
of Directors has the authority to issue up to 1,000,000 shares of preferred
stock in one or more series and fix the number of shares constituting any such
series, the voting powers, designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, including the dividend rights, dividend rate, terms of
redemption (including sinking fund provisions), redemption price or prices,
conversion rights and liquidation preferences of the shares constituting any
series, without any further vote or action by the stockholders. For example, the
Board of Directors is authorized to issue a series of preferred stock that would
have the right to vote, separately or with any other series of preferred stock,
on any proposed amendment to our Restated Certificate of Incorporation or on any
other proposed corporate action, including business combinations and other
transactions.
The terms
of any particular series of preferred stock will be described in the prospectus
supplement relating to the offering of shares of that particular series of
preferred and may include, among other things:
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the
title and stated value;
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the
number of shares authorized;
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the
liquidation preference per share;
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the
dividend rate, period and payment date, and method of calculation
(including whether cumulative or
non-cumulative);
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terms
and amount of any sinking fund;
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provisions
for redemption or repurchase, if applicable, and any restrictions on the
ability of the company to exercise such redemption and repurchase
rights;
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conversion
rights and rates, if applicable, including the conversion price and how
and when it will be calculated and
adjusted;
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Preemptive
rights, if any;
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Restrictions
on sale, transfer and assignment, if
any;
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the
relative ranking and preferences of the preferred stock;
and
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any
other specific terms, rights or limitations of, or restrictions on, such
preferred stock.
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Anti-Takeover
Provisions
We are
not aware of any pending takeover attempt or interest in making such an attempt.
Our Restated Certificate of Incorporation and Amended and Restated Bylaws
contain certain provisions which may be deemed to be "anti-takeover" in that
they may deter, discourage or make more difficult the assumption of control of
Generex by another corporation or person through a tender offer, merger, proxy
contest or similar transaction or series of transactions.
Authorized but Unissued
Shares: The authorized but unissued shares of our common stock and
preferred stock are available for future issuance without stockholder approval,
subject to any limitations imposed by the NASDAQ Stock Market. The Board of
Directors may set the rights, preferences and terms of new preferred stock,
without shareholder approval. Shares of preferred stock could be issued quickly
without shareholder approval, with terms calculated to delay or prevent a change
in control of Generex. Our stockholders do not have preemptive rights with
respect to the purchase of these shares. Therefore, such issuance could result
in a dilution of voting rights and book value per share of the common stock. No
shares of preferred stock are currently outstanding, and we have no present plan
to issue any preferred stock.
Advance Notice Requirements for
Stockholder Proposals and Director Nominations: Our Amended and Restated
Bylaws provide that a stockholder seeking to bring business before an annual
meeting of stockholders, or to nominate candidates for election as directors,
must provide timely notice of such stockholder’s intention in writing. To be
timely, a stockholder’s notice must be received not less than 60 days nor more
than 90 days prior to the meeting at which such proposal or candidate is to be
considered. However, if we do not give prior notice or make public disclosure of
the date of the meeting at least 70 days prior to the meeting date, notice by
the stockholder is considered timely if it is received no later than the close
of business on the 10th day following the day on which such notice was mailed or
public disclosure was made. If a stockholder desires to have a proposal included
in Generex’s proxy statement, notice of such proposal must be received not less
than 120 days prior to the first anniversary of the date of Generex’s notice of
the previous year’s annual meeting. These advance notice provisions may preclude
stockholders from bringing matters before a meeting or from making nominations
for directors.
Special Meetings of
Stockholders: Our Amended and Restated Bylaws provide that special
meetings of stockholders may be called only by the Board of Directors, the
Chairman of the Board or the President, and may be called by the Board upon the
request of the holders of a majority of the outstanding shares of stock of the
company entitled to vote at the meeting. Further, business transacted at any
special meeting of stockholders is limited to matters relating to the purpose or
purposes stated in the notice of meeting.
General Effect of Anti-Takeover
Provisions: The overall effect of these provisions may be to deter a
future tender offer or other takeover attempt that some stockholders might view
to be in their best interests at that time. In addition, these provisions may
have the effect of assisting our current management in retaining its position
and place it in a better position to resist changes which some stockholders may
want to make if dissatisfied with the conduct of our business.
Stockholder
Rights Plan
At our
annual meeting on May 30, 2006, our stockholders approved the adoption of a
stockholder rights plan that will allow our Board of Directors to declare a
dividend of one share purchase right for each outstanding share of our common
stock. Our Board of Directors has considered adoption of this plan but has not
yet approved its adoption. We expect that any stockholder rights plan adopted by
our Board will contain terms substantially as described below:
The terms
of the rights plan will provide for a dividend distribution of one preferred
share purchase right, which we refer to as a “Right,” for each outstanding share
of our common stock. The dividend will be payable on a date established by the
Board to the stockholders of record on that date. Each Right will entitle the
registered holder to purchase from Generex one one-hundredth of a share of
preferred stock (each a “Preferred Share” and, collectively, the “Preferred
Shares”) at a price of $.01 per one one-hundredth of a share of preferred stock,
subject to certain adjustments. Each Preferred Share will have designations and
powers, preferences and rights, and the qualifications, limitations and
restrictions which make its value approximately equal to the value of one share
of our common stock.
The
Rights will not be exercisable until the earlier to occur of:
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(i)
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the
date of a public announcement that a person, entity or group of affiliated
or associated persons have acquired beneficial ownership of 20% or more of
our outstanding shares of common stock, which we refer to as an "Acquiring
Person", or
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(ii)
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10
business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or entity becomes an
Acquiring Person) following the commencement of, or announcement of an
intention to commence, a tender offer or exchange offer the consummation
of which would result in any person or entity becoming an Acquiring Person
(the earlier of such dates being called the "Distribution
Date").
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Until the
Distribution Date, the Rights will be transferable with and only with shares of
our common stock. The Rights will expire ten years after adoption of the
stockholders rights plan unless the Rights are earlier redeemed or exchanged by
Generex.
Preferred
Shares purchasable upon exercise of the Rights will not be redeemable. Each
Preferred Share will be entitled to a minimum preferential quarterly dividend
payment of $1.00 but will be entitled to an aggregate dividend of 100 times the
dividend declared per share of common stock. In the event of liquidation, the
holders of the Preferred Shares would be entitled to a minimum preferential
liquidation payment of $100 per share, but would be entitled to receive an
aggregate payment equal to 100 times the payment made per share of common stock.
Each Preferred Share will have 100 votes, voting together with the common stock.
Finally, in the event of any merger, consolidation or other transaction in which
shares of common stock are exchanged, each Preferred Share will be entitled to
receive 100 times the amount of consideration received per share of common
stock. These rights will be protected by customary anti-dilution provisions.
Because of the nature of the Preferred Shares' dividend and liquidation rights,
the value of one one-hundredth of a Preferred Share should approximate the value
of one share of common stock. The Preferred Shares would rank junior to any
other series of our preferred stock.
In the
event that any person or group of affiliated or associated persons becomes an
Acquiring Person, proper provision will be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person and its associates
and affiliates (which will thereafter be void), will for a 60-day period have
the right to receive upon exercise that number of shares of Preferred Stock
having a market value of two times the exercise price of the Right (or, if such
number of shares is not and cannot be authorized, Generex may issue Preferred
Shares, cash, debt, stock or a combination thereof in exchange for the Rights).
This right will terminate 60 days after the date on which the Rights become
nonredeemable (as described below), unless there is an injunction or similar
obstacle to exercise of the Rights, in which event this right will terminate 60
days after the date on which the Rights again become exercisable.
The
rights plan will contain certain exceptions to the characterization of a person
or group as an "Acquiring Person." That term shall not be deemed to
include:
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a
subsidiary of Generex,
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any
employee benefit or compensation plan of
Generex,
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any
entity holding shares of common stock for or pursuant to the terms of any
such employee benefit or compensation plan
or
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any
officer, director or current 5% holder as of the date the rights plan is
implemented.
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The
rights plan may also except certain institutional shareholders from the
definition of “Acquiring Person.” In addition, except under limited
circumstances, no person or entity shall become an Acquiring Person as the
result of the acquisition of shares of common stock by Generex which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such person or entity to 20% or more of the shares
of common stock then outstanding.
The
stockholders rights plan may also contain what is commonly known as a
“flip-over” provision. In the event that Generex is acquired in a merger or
other business combination transaction or 50% or more of its consolidated assets
or earning power are sold to an Acquiring Person, its associates or affiliates
or certain other persons in which such persons have an interest, the plan will
require that proper provision be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
At any
time after an Acquiring Person becomes an Acquiring Person and prior to the
acquisition by such Acquiring Person of 50% or more of the outstanding shares of
Generex’s common stock, our Board of Directors may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one share of common stock, or one one-hundredth
of a Preferred Share, per Right (or, at our election, Generex may issue cash,
debt, stock or a combination thereof in exchange for the Rights), subject to
adjustment.
At any
time prior to the earliest of (i) the day of the first public announcement that
a person has become an Acquiring Person or (ii) the final expiration date of the
rights, our Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.001 per Right. Following the expiration of the above periods,
the Rights become nonredeemable. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price.
The
Rights would have certain anti-takeover effects. The Rights would cause
substantial dilution to a person or group that attempts to acquire Generex on
terms not approved by our Board of Directors. The Rights should not interfere
with any merger or other business combination approved by our Board of Directors
since the Rights could be amended to permit such acquisition or redeemed by us
at $.001 per Right prior to the earliest of (i) the time that a person or group
has acquired beneficial ownership of 20% or more of our shares of common stock
or (ii) the final expiration date of the rights.
Dividend
Policy
Holders
of our common stock are entitled to receive such dividends as the Board of
Directors may from time to time declare. The Board may declare dividends only
when dividends are legally available. Under the Delaware General Corporation
Law, the Board may only declare dividends out of our capital surplus (generally
the amount of its paid-in capital above the par value of the outstanding stock)
or out of net profits for the fiscal year with respect to which the dividends
are paid. We have never paid any dividends on our common stock and do
not anticipate paying dividends in the foreseeable future.
Transfer
Agent
StockTrans,
Inc., 44 West Lancaster Avenue, Ardmore, PA 19003, is the transfer agent and
registrar for our common stock.
Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol
"GNBT."
DESCRIPTION OF OUR
WARRANTS
This
description summarizes only the terms of any warrants that we may offer under
this prospectus and related warrant agreements and is not complete. You should
refer to the warrant agreement, including the form of the warrant, relating to
the specific warrants being offered for complete terms, which will be described
and included in an accompanying prospectus supplement. Such warrant agreement,
together with the form of the warrant, will be filed with the SEC in connection
with the offering of the specific warrants.
We may
issue warrants for the purchase of common or preferred stock. Warrants may be
issued independently or together with common or preferred stock, and may be
attached to or separate from any offered securities.
We will
issue each series of warrants under a separate warrant agreement. We may enter
into the warrant agreement with a warrant agent and, if so, we will indicate the
name and address of the warrant agent in the applicable prospectus supplement
relating to the particular series of warrants.
The
particular terms of any issue of warrants will be described in the prospectus
supplement relating to the series. Those terms may include:
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the
title of such warrants;
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the
aggregate number of such warrants;
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the
price or prices at which such warrants will be
issued;
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the
currency or currencies (including composite currencies) in which the price
of such warrants may be payable;
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the
terms of the securities issuable upon exercise of such warrants and the
procedures and conditions relating to the exercise of such
warrants;
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the
price at which the securities issuable upon exercise of such warrants may
be acquired;
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the
dates on which the right to exercise such warrants will commence and
expire;
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any
provisions for adjustment of the number or amount of securities receivable
upon exercise of the warrants or the exercise price of the
warrants;
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if
applicable, the minimum or maximum amount of such warrants that may be
exercised at any one time;
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if
applicable, the designation and terms of the securities with which such
warrants are issued and the number of such warrants issued with each such
security or principal amount of such
security;
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if
applicable, the date on and after which such warrants and the related
securities will be separately
transferable;
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if
applicable, the redemption or call provisions of such
warrants;
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information
with respect to book-entry procedures, if any;
and
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any
other terms of such warrants, including terms, procedures and limitations
relating to the exchange or exercise of such
warrants.
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The
prospectus supplement relating to any warrants to purchase equity securities may
also include, if applicable, a discussion of certain U.S. federal income tax and
ERISA considerations.
Exercise of
Warrants
Each
warrant will entitle its holder to purchase the number of shares of common or
preferred stock at the exercise price set forth in, or calculable as set forth
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 the expiration date set forth in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants will become void. We will specify the place or places
where, and the manner in which, warrants may be exercised in the applicable
prospectus supplement. We will set forth on the reverse side of the applicable
certificate (or in the form of exercise notice attached to each warrant) and in
the applicable prospectus supplement the information that the holder of the
warrant will be required to deliver upon exercise.
Upon
receipt of payment and the warrant properly completed and duly executed, we
will, as soon as practicable, forward the purchased securities. If less than all
of the warrants represented by the warrant are exercised, a new warrant will be
issued for the remaining warrants.
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, such holder’s
warrants.
Prior to
the exercise of any warrants to purchase preferred stock or common stock,
holders of the warrants will not have any of the rights of holders of the
preferred stock or common stock purchasable upon exercise, including the right
to vote or to receive any payments of dividends.
DESCRIPTION
OF OUR UNITS
We may
issue units comprised of two or more of the other securities described in this
prospectus in any combination. Each unit will be issued so that the holder of
the unit is also the holder of each security included in the unit. Thus, the
holder of a unit will have the rights and obligations of a holder of each
included security. The units will be issued under units agreements, and we may
enter into such unit agreements with a bank or trust company, as unit agent, as
detailed in the prospectus supplement relating to units being
offered.
The
prospectus supplement will describe:
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the
designation and terms of the units and of the securities comprising the
units, including whether and under what circumstances the securities
comprising the units may be held or transferred
separately;
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A
description of the terms of any unit agreement governing the
units;
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A
description of the provisions for the payment, settlement, transfer or
exchange of the units;
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A
discussion of material U.S. federal income tax considerations, if
applicable; and
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whether
the units will be issued in fully registered or global
form.
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The
descriptions of the units in this prospectus and in any prospectus supplement
are summaries of the material provisions of the applicable agreements. These
descriptions do not restate those agreements in their entirety and may not
contain all the information that you may find useful. We urge you to read the
applicable agreements because they, and not the summaries, define your rights as
holders of the units. For more information, please review the form of the
relevant agreements, which will be filed with the SEC promptly after the
offering of units and will be available as described under the heading “Where
You Can Find Additional Information”.
PLAN
OF DISTRIBUTION
We may
sell any of the securities being offered pursuant to this prospectus from time
to time in one or more of the following ways:
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directly
to purchasers;
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to
or through underwriters;
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through
dealers or agents;
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in
privately negotiated transactions;
or
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through
a combination of methods.
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We may
distribute the securities from time to time in one or more transactions at a
fixed price or prices, which may be changed, at market prices prevailing at the
time of sale, at prices related to the prevailing market prices or at negotiated
prices. We may also determine the price or other terms of the securities offered
under this prospectus by use of an electronic auction.
The
prospectus supplement with respect to the securities being offered will set
forth the terms of the offering, including:
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the
names of the underwriters, dealers or agents, if
any,
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the
terms of the securities being offered, including the purchase price of the
securities and the net proceeds to
us,
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any
underwriting discounts and other items constituting underwriters’
compensation,
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any
over-allotment options under which underwriters may purchase additional
securities from us, and
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any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which the securities may be
listed.
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Also, if
applicable, we will describe in the prospectus supplement how any auction will
determine the price or any other terms, how potential investors may participate
in the auction and the nature of the underwriters’ obligations with respect to
the auction.
If
required under applicable state securities laws, we will sell the securities
only through registered or licensed brokers or dealers. In addition, in some
states, we may not sell securities unless they have been registered or qualified
for sale in the applicable state or unless we have complied with an exemption
from any registration or qualification requirements.
If
underwriters are used in an offering, we will sign an underwriting agreement
with the underwriters and will specify the name of each underwriter and the
terms of the transaction (including any underwriting discounts and other terms
constituting compensation of the underwriters and any dealers) in a prospectus
supplement. If an underwriting syndicate is used, the managing
underwriter(s) will be specified on the cover of the prospectus supplement.
If underwriters are used in the sale, the offered securities will be acquired by
the underwriters for their own accounts and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Any public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time. Unless otherwise set forth in the
prospectus supplement, the obligations of the underwriters to purchase the
offered securities will be subject to conditions precedent, and the underwriters
will be obligated to purchase all of the offered securities if any are
purchased.
If
dealers are used in an offering, we will sell the securities to the dealers as
principals. The dealers then may resell the securities to the public at varying
prices which they determine at the time of resale. The names of the dealers and
the terms of the transaction will be specified in a prospectus
supplement.
The
securities may be sold directly by us or through agents we designate. If agents
are used in an offering, the names of the agents and the terms of the agency
will be specified in a prospectus supplement. Unless otherwise indicated in a
prospectus supplement, the agents will act on a best-efforts basis for the
period of their appointment.
Dealers
and agents named in a prospectus supplement may be deemed to be underwriters
(within the meaning of the Securities Act of 1933, as amended, or the Securities
Act) of the securities described therein.
We may
sell securities directly to one or more purchasers, in which case underwriters
or agents would not be involved in the transaction. In addition, we may sell the
securities directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any
resales thereof.
Further,
we may authorize agents, underwriters or dealers 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 to these contracts and the commissions
we must pay for solicitation of these contracts in an applicable prospectus
supplement.
Underwriters,
dealers and agents may be entitled to indemnification by us against specific
civil liabilities, including liabilities under the Securities Act or to
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof, under underwriting or other agreements.
Certain underwriters, dealers or agents and their associates may engage in
transactions with, and perform services for us in the ordinary course of
business.
Any
underwriter may engage in over-allotment transactions, stabilizing transactions,
short-covering transactions and penalty bids in accordance with
Regulation M under the Exchange Act. Over-allotment 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 underwriters 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.
Those activities may cause the price of the securities to be higher than it
would otherwise be. If commenced, the underwriters may discontinue any of the
activities at any time. We make no representation or prediction as to the
direction or magnitude of any effect that such transactions may have on the
price of the securities. For a description of these activities, see the
information under the heading “Underwriting” in the applicable prospectus
supplement.
Any
common stock sold pursuant to a prospectus supplement will be eligible for
listing and trading on the NASDAQ Capital Market, subject to official notice of
issuance. Any underwriters to whom securities are sold by us for public offering
and sale may make a market in the securities, but the underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice.
As of the
date of this prospectus, we have not entered into any agreements, understandings
or arrangements with any underwriters, broker-dealers or other parties regarding
the sale of securities with the following exception. On October 14,
2009, we entered into an At Market Issuance Sales Agreement with Wm Smith &
Co., under which we may sell an aggregate of $20,000,000 in gross proceeds of
our common stock from time to time through Wm Smith & Co., as the agent for
the offer and sale of the common stock. Wm Smith may sell the common
stock by any method permitted by law, including sales deemed to be an “at the
market” offering as defined in Rule 415 of the Securities Act, including without
limitation sales made directly on NASDAQ Capital Market, on any other existing
trading market for the common stock or to or through a market
maker. Wm Smith may also sell the common stock in privately
negotiated transactions, subject to our prior approval. On October
29, 2009, we announced that in light of general market conditions, we would not
exercise our right to issue and sell shares of our common stock the agreement
with Wm Smith & Co. until further notice. As of the date of this
prospectus, no period of time has been fixed within which the securities will be
offered or sold.
LEGAL
MATTERS
Unless
the applicable prospectus supplement indicates otherwise, the validity of the
issuance of the securities offered in this prospectus will be passed upon for us
by Eckert Seamans Cherin & Mellott, LLC, Two Liberty Place, 50 South 16th
Street, 22nd Floor, Philadelphia, PA 19102. Certain members of the
firm of Eckert Seamans Cherin & Mellott, LLC own additional shares (less
than one percent in total) that they purchased from time to time for cash,
either from us or in the public market.
Any
underwriters will also be advised about legal matters by their own counsel,
which will be named in the prospectus supplement.
EXPERTS
The
consolidated financial statements of Generex Biotechnology Corporation appearing
in Generex Biotechnology Corporation’s Annual Report (Form 10-K) for the year
ended July 31, 2009 have been audited by MSCM LLP, an independent registered
public accounting firm (successor to Danziger Hochman Partners, LLP), as set
forth in their reports thereon included therein, and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements and other documents with the SEC. You may read any
copy any document we file at the SEC’s Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. You can obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC
maintains an Internet site at www.sec.gov, from which you
can electronically access our SEC filings.
You
should rely only on the information contained or incorporated by reference in
this prospectus and in any accompanying prospectus supplement. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. The securities offered under this prospectus are offered
only in jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this Prospectus,
regardless of the time of delivery of this Prospectus or any sale of the
securities.
This
prospectus constitutes a part of a Registration Statement we filed with the
Commission under the Securities Act. This prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the company and our securities, reference is
hereby made to the Registration Statement. The Registration Statement may be
inspected at the public reference facilities maintained by the Commission at the
addresses set forth in the preceding paragraph. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete, and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC
allows us to “incorporate by reference” the information contained in documents
that we file with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus and any prospectus
supplement. Information in this prospectus supersedes information incorporated
by reference that we filed with the SEC prior to the date of this prospectus,
while information that we file later with the SEC will automatically update and
supersede this information.
The
following documents (other than current reports or portions thereof furnished
under Item 2.02 or Item 7.01 of Form 8-K) heretofore filed with the SEC by us
under the Securities and Exchange Act of 1934, as amended, are incorporated
herein by reference:
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(a)
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Our
Annual Report on Form 10-K filed with the SEC on October 14, 2009 , for
the year ended July 31, 2009;
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|
(b)
|
Our
Quarterly Report on Form 10-Q filed with the SEC on December 11, 2009, for
the quarter ended October 31, 2009;
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(c)
|
The
portions of our Definitive Proxy Statement on Schedule 14A that are deemed
“filed” with the SEC under the Securities Exchange Act of 1934, as
amended, filed on June 18, 2009;
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|
(d)
|
Our
Current Reports on Form 8-K filed with the SEC on August 6, 2009,
September 15, 2009, October 1, 2009, October 14, 2009, October 15, 2009,
October 20, 2009, October 23, 2009, October 30, 2009, November 11, 2009
and December 19, 2009; and
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|
(e)
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The
description of our common stock contained in our Form 10 filed with the
SEC on December 14, 1998, as amended by a Form 10/A filed with the SEC on
February 24, 1999, and including any amendment or report subsequently
filed for the purpose of updating the
description.
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All
documents (other than current reports or portions thereof furnished under Item
2.02 or Item 7.01 of Form 8-K) subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), prior to the termination of the offering shall
be deemed to be incorporated by reference in this registration statement and to
be a part hereof from the date of filing of such documents; except as to any
portion of any future annual or quarterly report to stockholders or document
that is not deemed filed under such provisions. For the purposes of this
prospectus, any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
You may
request a copy of these documents, which will be provided to you at no cost, by
writing or telephoning us using the following contact information:
Generex
Biotechnology Corporation
Attention:
Mark Fletcher, Executive Vice President and General Counsel
33
Harbour Square, Suite 202
Toronto,
Ontario
Canada
M5J 2G2
(416)
364-2551
PROSPECTUS
GENEREX
BIOTECHNOLOGY CORPORATION
$150,000,000
Common Stock
Preferred
Stock
Warrants
Units
January
29. 2010