As
filed with the Securities and Exchange Commission on March
6, 2007.
Registration
No. 333-______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM F-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
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pSivida
Limited
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(Exact
name of Registrant as specified in its charter)
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Western
Australia,
Commonwealth
of Australia
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2834
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Not
Applicable
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
No.)
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Level
12 BGC Centre
28
The Esplanade
Perth
WA 6000
Australia
61
(8) 9226 5099
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(Address,
including zip code, and telephone number, including area code, of
Registrant’s principal executive offices)
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Lori
H. Freedman, Esq.
Vice
President, Corporate Affairs, General Counsel and
Secretary
pSivida
Limited
400
Pleasant Street
Watertown,
MA 02472
(617)
926-5000
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(Name,
address, including zip code, and telephone number, including area
code, of
agent for service)
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Copies
to:
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Lawrence
Goodman, Esq.
Peter
F. Stewart, Esq.
Curtis,
Mallet-Prevost, Colt & Mosle LLP
101
Park Avenue
New
York, NY 10178
Tel:
(212) 696-6000
Fax:
(212) 697-1559
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Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Securities to be Registered (1)
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Amount
to be Registered
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Proposed
Maximum Offering Price Per Share (2)
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Proposed
Maximum Aggregate Offering Price
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Amount
of Registration Fee (2)
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Ordinary
Shares, no par value
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(3)
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(3)
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(3)
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Warrants
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(3)
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(3)
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(3)
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Preference
Shares
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(3)
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(3)
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(3)
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Units
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(3)
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(3)
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(3)
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Total:
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$60,000,000
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$60,000,000
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$1,842
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(1)
American Depositary Shares (“ADSs”) evidenced by American Depositary Receipts
issuable on deposit of the equity shares registered hereby have been registered
under a separate statement on Form F-6, Registration No. 333-122158. Each ADS
represents ten ordinary shares.
(2)
The
registration fee is calculated in accordance with Rule 457(o) under the
Securities Act.
(3)
Omitted pursuant to General Instruction II(c) of Form F-3 under the Securities
Act.
The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said
Section 8(a), may determine.
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The
information in this prospectus is not complete and may be changed.
We may
not sell these securities until the registration statement filed
with the
Securities and Exchange Commission is effective. This prospectus
is not an
offer to sell these securities and it is not soliciting an offer
to buy
these securities in any, jurisdiction where the offer or sale is
not
permitted.
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Preliminary
Prospectus, subject to completion, dated March
6,
2007.
PSIVIDA LIMITED
Ordinary
Shares, Preference Shares, Warrants and Units
pSivida
Limited may offer from time to time, in one or more series or issuances and
at
prices and on terms that will be determined at the time of offering up to
US$60,000,000 in gross proceeds to pSivida Limited of:
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Ordinary
Shares
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·
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Warrants
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Preference
Shares
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Units
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We
will
provide specific terms of these securities in supplements to this prospectus
at
the time when we offer them. You should read this prospectus and applicable
supplement carefully before you invest in any of these securities.
Our
ADSs
are quoted on the NASDAQ Global Market under the symbol “PSDV”. The last
reported sale price of our ADSs on the NASDAQ Global Market on March 2, 2007
was
US$1.75.
Our
ordinary shares are listed on the Australian Stock Exchange under the symbol
“PSD”. On March 2, 2007, the closing price of our ordinary shares on the
Australian Stock Exchange was A$0.22, equivalent to a price of approximately
US$1.72 per ADS based on the Federal Reserve Bank of New York noon buying
exchange rate on that date of A$1.00 = US$0.7839. Our ordinary shares
are also listed on the Frankfurt, Berlin, Munich and Stuttgart stock exchanges
under the symbol “PSI” and on the OFEX International Market Service under the
symbol “PSD”.
Investing
in our ADSs involves risks. See “Risk Factors” beginning on
page 5.
Neither
the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is , 2007
TABLE
OF CONTENTS
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2
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The
Company
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2
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Risk
Factors
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5
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Use
of Proceeds
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21
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Forward-Looking
Statements
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22
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Capitalization
and Indebtedness
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22
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Plan
of Distribution
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23
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Currency
Translation
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25
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Description
of Ordinary Shares
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25
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Description
of Preference Shares
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25
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Description
of Warrants
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26
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Description
of Units
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27
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Legal
Matters
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27
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Experts
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27
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Enforceability
of Civil Liabilities
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27
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Expenses
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28
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Where
You Can Find Additional Information
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28
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Incorporation
by Reference
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28
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You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information that is different. This
prospectus is not an offer to sell, nor is it seeking an offer to buy, these
securities in any jurisdiction where the offer or sale of these securities
is
not permitted. You should assume that the information contained in this
prospectus is accurate as of the date on the front of this prospectus
only.
-i-
References
in this prospectus to “pSivida”, “the company”, “we”, “us”, “our”, or similar
terms refer to pSivida Limited, except as otherwise indicated. On December
30,
2005, we completed the acquisition of Control Delivery Systems, Inc., which
was
renamed pSivida Inc. We make reference to Control Delivery Systems as “CDS” or
as “pSivida Inc.” generally depending on whether such reference relates to that
company before or after the acquisition. As of July 1, 2006, the NASDAQ National
Market changed its name to the NASDAQ Global Market. References to the NASDAQ
Global Market relating to periods before such date refer to the NASDAQ National
Market.
In
this registration statement we make reference to Australian Equivalents to
International Financial Reporting Standards as “A-IFRS” and accounting
principles generally accepted in the United States of America as “U.S. GAAP.”
References to “A$” are to Australian dollars and references to “US$” and “US
dollars” are to United States dollars. In our financial statements references to
“$” are to Australian dollars and references to “US$” are to United States
dollars. On June 30, 2005, the Federal Reserve Bank of New York Noon Buying
Rate
was US$0.7618 = A$1.00, on June 30, 2006 such exchange rate was US$0.7423
=
A$1.00 and on December 29, 2006 such exchange rate was US$0.7884 =
A$1.00.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission utilizing a “shelf” registration process. Under this
shelf registration process, we may sell any combination of the securities
described in this prospectus in one or more offerings resulting in gross
proceeds to us of up to US$60,000,000. This prospectus provides you with
a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may
also
add, update or change information contained in this prospectus. To the extend
that any statement that we make in a prospectus supplement is inconsistent
with
statements made in this prospectus, you should assume that the statements
made
in the prospectus supplement modify or supersede those made in this prospectus.
You should read both this prospectus and any prospectus supplement together
with
additional information described under the heading “Where
you can find additional information” on
page
28 of
this
prospectus.
THE
COMPANY
pSivida
Limited is an Australian company existing pursuant to the Australian
Corporations Act 2001 whose shares are listed on the Australian Stock Exchange,
the NASDAQ Global Market, the Frankfurt Stock Exchange and London’s OFEX
International Market Service. Our corporate headquarters are located at Level
12
BGC Centre, 28 The Esplanade, Perth WA 6000, Australia, and our phone number
is
+61 (8) 9226 5099. We also operate subsidiaries in the United Kingdom,
Singapore, Australia and the United States.
Our
Business
pSivida
is a global, bio-nanotech company focusing on the development of products
utilizing our proprietary technologies for targeted and controlled drug
delivery. We are developing three key technologies as follows:
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Durasert™
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BioSilicon™
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CODRUG™
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The
following are the key features, attributes and status of our three key
technologies and associated product developments.
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Durasert:
This
technology uses a drug core with one or more surrounding polymer
layers.
The drug permeates through the polymers into the body at a controlled
and
pre-determined rate for periods of up to three years in our approved
products. We believe that this technology may allow delivery periods
of up
to 10 years. Two products based on this technology have been developed
and
approved by the U.S. Food and Drug Administration, or FDA: Vitrasert®, for
AIDS-associated cytomegalovirus infections of the eye, and Retisert®, for
uveitis. These two products are licensed to and marketed by Bausch
&
Lomb. A third product utilizing the technology, Medidur™, is partnered
with Alimera Sciences and is in Phase III clinical trials for the
treatment of diabetic macular edema, or DME. The technology is
also being
evaluated by a number of pharmaceutical companies for the delivery
of
their proprietary therapeutics for both ophthalmic and non-ophthalmic
disease indications. A subcategory of our Durasert technology is
our
biodegradable drug delivery device technology, which we identify
under the
Zanisert™ trademark.
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BioSilicon:
This
technology uses nanostructured elemental silicon. This novel-porous
biomaterial has been shown to be both biodegradable and biocompatible.
For
the delivery of therapeutics it has been shown to enhance dissolution
and
bioavailability of poorly soluble molecules and to provide controlled
release. BrachySil™, our lead BioSilicon application, is a targeted
oncology product, which is presently in Phase II clinical trials
for the
treatment of both primary liver cancer and pancreatic cancer. BioSilicon
is being evaluated for the delivery of proprietary molecules in
partnership with pharmaceutical and biotechnology companies, for
oral and
sub-cutaneous dosage forms. It also has potential applications
in
diagnostics, nutraceuticals and food
packaging.
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CODRUG:
Our third drug delivery technology, CODRUG, allows for the simultaneous
release of two or more drugs at a controlled rate from the same
product.
It involves chemically linking two or more drugs together in such
a manner
that once administered in the body they separate into the original
active
drug. A library of CODRUG compounds has been synthesized and Phase
I
clinical trials have been undertaken in post-surgical pain and
two
dermatological indications.
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Our
Strategy
Our
commercialization strategy is to concentrate on internal product development,
the licensing of the Durasert, BioSilicon and CODRUG technology platforms,
and
the generation and potential sale of non-core intellectual
property.
The
generation of value from our drug delivery technologies is being achieved
through two core product development routes:
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Development
of our own products utilizing our proprietary technologies to produce
new
and improved versions of previously approved (generic) drug molecules
and
therapeutic agents, i.e., reformulated generics. These products
will be
licensed out to development and marketing partners at an appropriate
stage
to maximize their value to us.
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Establishment
of drug delivery partnerships with pharmaceutical and biotechnology
companies to develop novel and improved formulations of their proprietary
drug molecules and therapeutics. The objective of these partnerships
is to
generate value by licensing our drug delivery technologies for
third
parties’ specific drug
molecules and applications.
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Recent
Developments
On
July
6, 2006, we announced that BioSilicon has
shown
the capability to act as an adjuvant when delivered with an antigen. An adjuvant
is any substance that is capable of enhancing a host response towards an
active
agent and is often used in conjunction with antigens to enhance the immune
response of humans and animals. An antigen is any substance capable of eliciting
an immune response. A patent application has been filed in the UK for the
use of
BioSilicon as an adjuvant.
On
July
31, 2006, we announced that Gavin Rezos had resigned for personal and family
reasons as Managing Director and Chief Executive Officer of pSivida and its
subsidiaries. Mr. Rezos agreed to make himself available in Australia as
requested by us to help achieve certain goals pending the appointment of
a
permanent replacement.
On
August
28, 2006, we announced that Heather Zampatti resigned as a director of the
Company.
-3-
On
September 14, 2006, we amended the terms of the subordinated convertible
promissory note that we issued on November 16, 2005 to an institutional
investor. The note continues to have a three year term and bears 8% interest
payable quarterly. We may make future interest payments in cash or, under
certain circumstances, in the form of our NASDAQ-listed ADSs. The note
conversion price was adjusted to US$2.00 per ADS, subject to further adjustment
based upon certain events or circumstances, including, without limitation,
if
108% of the average market price of our ADSs for the ten trading days ending
prior to April 30, 2007 is lower than the then current conversion price.
The
current adjusted conversion price is US$1.62 per ADS. In connection with
the
amendment, we repaid US$2.5 million (A$3.3 million) of the outstanding principal
and agreed to pay US$1.0 million (A$1.3 million) in related penalties, which
were paid on September 14, 2006. The investor’s conditional redemption rights
under the terms of the initial note were replaced by unilateral redemption
rights for up to 50% of the amended note principal at July 31, 2007 and January
31, 2008. The investor retains its existing warrants to purchase 633,803
additional ADSs, exercisable for six years at a current exercise price of
US$7.17 per ADS. In connection with the amendments, we agreed with the
institutional investor to extend the deadline for the registration statement
required by the registration rights agreement to be declared effective by
the
SEC through October 15, 2006, with increased penalties if that deadline were
missed. Our registration statement was declared effective on September 29,
2006.
We were also released from the restrictions on future fundraising transactions
contained in the original note documentation. We also granted the investor
an
additional warrant to purchase 5.7 million ADSs exercisable for five years
with
an exercise price of US$1.80 per ADS, a security interest in our current
royalties, subject to release of that security upon any disposition by us
of the
royalty stream, and a guaranty by our U.S. subsidiary, pSivida Inc.
On
September 19, 2006, we announced the initiation of a Phase II clinical trial
of
Mifepristone as an eye drop treatment for steroid associated elevated
intraocular pressure. The investigator-sponsored trial will involve up to
45
patients in the United States.
On
September 26, 2006, we issued additional subordinated convertible
promissory notes in the principal amount of US$6.5 million (A$8.65 million)
to
institutional investors. The notes were initially convertible into ADSs
at a
conversion price of US$2.00 per ADS (A$0.27 per ordinary share), subject
to
adjustment based on certain events or circumstances, including if 108%
of the
average market price of our ADSs for the ten trading days prior to April
30,
2007 is lower than the current conversion price. The current adjusted conversion
price is US$1.62 per ADS. The notes bear interest at a rate equal to 8%
per
annum, and mature three years from issuance. Interest is payable quarterly
in
arrears in cash or, under certain circumstances, ADSs at an 8% discount
to the
10 day volume weighted average trading price. We also issued warrants to
the
institutional investors with a term of five years which will entitle the
investors to purchase 2,925,001 ADSs at US$2.00 per ADS. We also entered
into a
registration rights agreement pursuant to which we agreed to file a registration
statement covering the resale of the ADSs underlying the notes and the
warrants
as soon as practicable and to have the registration statement declared
effective
on or before January 1, 2007. Failure to have the registration statement
declared effective by April 1, 2007 will result in an event of
default under the notes. We may redeem the notes at any time by
payment of 108% of the face value and may force conversion if the price
of our
ADSs remains above two times the conversion price for a period of 25 days.
The
proceeds of the issuance are expected to be used for general corporate
purposes.
On
October 10, 2006, we announced that the first patient has been implanted
with BrachySil for the treatment of inoperable pancreatic cancer in
London.
On
October 17, 2006, we signed a letter agreement with our investor further
revising the terms of the November 16, 2005 subordinated convertible promissory
note. Pursuant to that agreement, we were released until March 30, 2007 from
the
requirement to maintain a net cash balance in excess of 30% of the outstanding
principal amount of the note, and instead the net cash balance required to
be
held by us through that date was reduced to US$1.5 million (A$2.1 million).
The
investor further waived any default that would otherwise have resulted from
the
unavailability of our resale prospectus until we filed our 2006 audited U.S.
GAAP-reconciled financial statements. We filed those financial statements
on
October 31, 2006, thus satisfying the condition in the agreement. In exchange
for the foregoing, we were required to make a one-time payment to the investor
of US$800,000 (A$1.1 million) on December 28, 2006 for registration rights
penalties through the date of the letter agreement and three payments of
US$150,000 (A$205,000) on January 31, 2007, February 28, 2007 and March 30,
2007. In connection with an amendment agreement dated December 29, 2006,
we and
the investor agreed, among other things, to waive the cash-balance test until
March 30, 2007, defer our scheduled payment of US$800,000 and extend general
forbearance for any prior, existing or future defaults until the earlier
of the
closing of a pending transaction with another party or March 31, 2007 and
to add
US$306,391 (A$388,000) to the principal of the note, which amount represented
the approximate value of the ADSs that we would have issued in order to satisfy
our quarterly interest payment due on January 2, 2007 had we qualified to
pay
with ADSs. Since entering into the December 29, 2006 amendment agreement,
we
believe that we have met the conditions for permanent release from the cash
balance requirement.
On
November 20, 2006, we announced that we had entered into a collaboration
with
another company to evaluate our BioSilicon technology for the development
of
transdermal drug delivery systems. The collaboration is expected to last
for
twelve months, during which time, the parties plan to evaluate a range of
biodegradable porous silicon structures, including microneedles, for the
controlled release of drugs through the skin.
-4-
On
December 20, 2006, we announced that Dr. Roger Aston had been reappointed
to our
board of directors.
On
December 26, 2006, we entered into an exclusive negotiation period with a
major
global pharmaceutical company to acquire a worldwide royalty-bearing license
to
make, use and sell products using our drug delivery technologies. The
pharmaceutical company has agreed to make payments totaling US$990,000 in
exchange for the exclusive right, for a period of three months, to negotiate
a
licensing agreement with us and to fund the cost of a pre-clinical
study.
On
January 9, 2007, we entered into a drug delivery licensing agreement with
a U.S.
research company to develop our proprietary Durasert, Zanisert and CODRUG
drug
delivery technologies for infectious diseases and diseases of the ear. Under
the
terms of the license, the research company received exclusive rights to our
technologies for diseases of the ear and for five specific infectious diseases,
namely malaria, HIV/AIDS, influenza, tuberculosis, and osteomyelitis. All
costs
of development will be borne by the research company and we will be entitled
to
receive royalties and milestones payments.
In
addition, we granted the research company co-exclusive rights to the Durasert,
Zanisert and CODRUG drug delivery technologies for other infectious diseases.
Under this arrangement either company can elect to convert their co-exclusive
rights to exclusive rights for a specific infectious disease indication.
On
January 24, 2007, we announced the retirement of Dr. Roger Brimblecombe as
Executive Chairman and acting Chief Executive Officer. We also announced
the
appointments of Dr. Paul Ashton as our Managing Director and Dr. David J.
Mazzo
as our Chairman of the Board.
On
January 29, 2007, we announced that Retisert had been allocated a
product-specific reimbursement code by the Center for Medicare Services,
or CMS,
in the United States. The new code replaced the prior hospital outpatient
code.
CMS also published a payment rate for the code of US$19,345, or 106% of the
average sales price for the product. The new code and the Medicare payment
rate
are effective as of January 1, 2007. Private insurers may pay at different
rates
than Medicare.
On
February 28, 2007, we filed our half-year financial report for the six
months
ended December 31, 2006 with the Australian Stock Exchange, or ASX, and
the
Australian Securities and Investment Commission, or ASIC. These financial
statements were furnished to the SEC on a Form 6-K on February 28, 2007
which is
incorporated by reference into this prospectus. All of the amounts in
the
succeeding paragraphs of this section are derived from such information
and are
reported in accordance with A-IFRS, unless otherwise noted.
For
the
six months ended December 31, 2006, we incurred a net loss of A$100.7
million (2005: A$10.7 million). Revenues were A$2.1 million (2005:
A$42,000). Our net loss included A$14.5 million (2005: A$9.0 million)
of research and development costs, A$83.4 million (2005: None) of impairment
write-downs of certain intangible assets, A$16.0 million (2005: None)
of losses
on extinguishment of debt related to modifications of the terms of a
convertible
note and A$8.2 million (2005: A$288,000) of interest and finance costs
(which
included A$3.2 million (2005: None) of penalties in connection with registration
rights agreements), partially offset by a deferred tax benefit of A$26.4
million
(2005: A$2.4 million) primarily attributable to the intangible asset
impairment
write-downs.
The
differences between A-IFRS and U.S. GAAP for the fiscal year ended June
30, 2006
are described in Note 29 to the consolidated financial statements included
in
our Annual Report on Form 20-F for the fiscal year ended June 30, 2006,
which
was filed with the SEC on December 8, 2006 and is incorporated by reference
into
this prospectus.
During
the six months ended December 31, 2006, certain additional material differences
arose between A-IFRS and U.S. GAAP other than the types already described
in
Note 29 to the consolidated financial statements for the fiscal year
ended June
30, 2006, including the impairment of intangible assets, allocation of
debt
proceeds, and the treatment of debt issuance costs associated with the
extinguishment of debt. While the A-IFRS financial statements for the
six months
ended December 31, 2006 have been filed with the ASX and ASIC, those
financial
statements, as reconciled to U.S. GAAP, are not required to be filed
with the
SEC until March 31, 2007. Accordingly, our analysis under U.S. GAAP is
not
complete, and remains subject to review by our independent registered
public
accounting firm in accordance with Statement of Auditing Standards No.
100,
which provides guidance on performing reviews of interim financial information.
A description of the additional material differences follows:
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Impairment
of intangible assets - Under A-IFRS and U.S. GAAP, individual
intangible
assets are tested for impairment if there is a specified indication.
Under
A-IFRS, impairment is indicated, and a detailed calculation
must be
performed, if specific events or circumstances occur, a “triggering
event”, that could cause the asset's carrying amount to exceed its
recoverable amount. The impairment loss is based on the excess
of asset
carrying value over recoverable amount. During the six months
ended
December 31, 2006, we recognized an impairment loss under A-IFRS
of A$83.4
million. Under U.S. GAAP, impairment is indicated, and a detailed
calculation must be performed, if the asset's carrying amount
exceeds the
expected future pre-tax cash flows to be derived from the asset
on an
undiscounted basis. The impairment loss is based on the excess
of asset
carrying value over fair value. Our analysis under U.S. GAAP
is not
complete; however, our preliminary view is that no impairment
will be
required under U.S. GAAP.
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Allocation
of debt proceeds - Upon initial recognition, the proceeds received
on the
issue of a convertible note with detachable warrants is allocated
into
liability and equity components. In accordance with A-IFRS,
the liability
component is measured based on the fair value of a similar
liability
(including any embedded non’equity derivative features) that does not have
an associated equity component. The equity component is determined
by
deducting the liability component from the proceeds received
on the issue
of the notes. A portion of the liability component is then
allocated to
any embedded derivatives that require bifurcation, at an amount
equal to
fair value. In accordance with U.S. GAAP, the proceeds received
are first
allocated to the convertible note and the detachable warrants
on a
relative fair value basis. Then, a portion of convertible note
proceeds is
allocated to any embedded derivatives, such as the holder's
conversion
option, that require bifurcation, at an amount equal to fair
value. Our
analysis under U.S. GAAP is not complete; however, we expect
a A$1.5
million higher net loss and an A$573,000 increase
in equity.
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Debt
issuance costs associated with the extinguishment of debt -
Under A-IFRS,
debt issuance costs associated with the extinguishment of debt
are
included in the determination of gain (loss) on extinguishment.
Under U.S.
GAAP, such debt issuance costs are recorded as a deferred asset
and
amortized from the date of issuance to the stated redemption
date(s) of
the modified loan. For the six months ended December 31, 2006,
we estimate
that under U.S. GAAP we will have a A$122,000 lower net
loss.
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Our
Address and Phone Number
Our
principal offices are located at Level 12 BGC Centre, 28 The Esplanade, Perth
WA
6000, Australia, and our telephone number is: +61 (8) 9226 5099. Our website
address is www.psivida.com. We do not incorporate the information on, or
accessible through, our website into this prospectus, and you should not
consider it part of this prospectus.
RISK
FACTORS
In
considering whether to invest in our ADSs, you should carefully read and
consider the risks described below, together with all of the information
we have
included in this prospectus.
Risks
related to our company and our business
Our
ability to obtain additional capital is uncertain, and if we do not obtain
it,
we will not have the funding necessary to conduct our operations and develop
our
products.
We
expect
to require substantial additional capital resources in order to conduct our
operations and develop our products. We had cash and cash equivalents of
A$5.4
million (US$4.2 million) as of December 31, 2006, and we have used A$6.0
million
(US$4.6 million) and A$8.3 million (US$6.3 million) for operating
activities in the three months ended December 31, 2006 and September 30,
2006,
respectively. Therefore,
we will need to raise additional funds in the near term to continue to conduct
our operations as we have been conducting them to date. The timing and degree
of
our future capital requirements will depend on many factors,
including:
-5-
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the
amount of royalty and other revenue that we
earn;
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our
ability to successfully negotiate a license and development funding
agreement with a major global pharmaceutical
company;
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whether
and to what extent our investors exercise redemption rights provided
for
in our outstanding convertible debt
securities;
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continued
scientific progress in our research and development
programs;
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the
magnitude and scope of our research and development
programs;
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our
ability to maintain and establish strategic arrangements for research,
development, clinical testing, manufacturing and
marketing;
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our
progress with pre-clinical and clinical
trials;
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the
time and costs involved in obtaining regulatory approvals;
and
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the
costs involved in preparing, filing, prosecuting, maintaining,
defending
and enforcing patent claims.
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We
will
attempt to acquire additional funding through strategic collaborations, public
or private equity financings, capital lease transactions or other financing
sources that may be available. Additional financing may not be available
on
acceptable terms, or at all. In addition, the terms of our outstanding
convertible notes, including among others, the market price-based conversion
rate adjustments, may reduce the likelihood that we will be able to find
additional capital at a reasonable valuation if at all.
Additional
equity financings could result in significant dilution to stockholders. Further,
in the event that additional funds are obtained through arrangements with
collaborative partners, these arrangements may require us to relinquish rights
to some of our technologies, product candidates or products that we would
otherwise seek to develop and commercialize ourselves.
If
sufficient capital is not available in the near term and in the longer term,
we
may not be able to fund our operations and may be required to suspend, curtail
or terminate our operations or delay, reduce the scope of or eliminate one
or
more of our research and development programs.
We
have a history of losses; we expect to continue to incur losses; and we may
never become profitable.
pSivida
was formed in 2000. As primarily a research and development company, we
have
incurred operating losses in every year of existence. Under A-IFRS (effective
from July 1, 2004), we incurred a net loss of A$16.8 million (US$12.7 million)
for the year ended June 30, 2005, a net loss of A$28.2 million (US$21.1
million)
for the year ended June 30, 2006 and a net loss of A$100.7 million (US$76.9
million) for the half-year ended December 31, 2006. As of December 31,
2006, we
had an accumulated deficit under A-IFRS of A$157.7 million (US$124.5 million).
We have not achieved profitability and expect to continue to incur net
losses
through at least 2010, and we may incur losses beyond that time, particularly
if
we are not successful in having Medidur or BrachySil approved and widely
marketed by that time. Even if Medidur or BrachySil is approved and marketed
at
some point in 2010 or beyond, sales of Medidur or BrachySil, or any of
our other
marketed products, combined with royalty income and any other sources of
revenue, may not be sufficient to result in profitability at that time
or at any
other time. The extent of our future losses and how long it may take for
us to
achieve profitability are uncertain.
On
December 30, 2005, we acquired CDS, which had incurred net losses in each
of its
prior five fiscal years (ended December 31). As a result of the acquisition,
we
have been receiving royalties from sales of Vitrasert, CDS’ first commercial
product. However, sales of Vitrasert have declined in each of the past four
years and we do not expect that Vitrasert royalties will comprise a significant
portion of our future revenue. Following regulatory approval for Retisert
in
April 2005, CDS entered into an advance royalty agreement with Bausch & Lomb
in June 2005 pursuant to which CDS received US$3.0 million (A$3.9 million)
in
lieu of US$6.25 million (A$8.5 million) of Retisert royalties that otherwise
would be payable under the license agreement. Subsequent to December 31,
2006,
of the next US$5.7 million (A$7.2 million) of future royalties otherwise
payable
from the sales of Retisert, US$5.2 million (A$6.6 million) will be retained
by
Bausch & Lomb. We are unable to predict the future sales of Retisert by
Bausch & Lomb and, as a result, we cannot predict when, if ever, Bausch
& Lomb will have retained that amount of royalties and we will begin
receiving full royalty payments from them.
-6-
If
our
funds are insufficient to pay the principal of and interest on our convertible
notes, then our note holders may declare an event of default, foreclose on
the
collateral and require immediate payment of the entire principal of the notes
plus penalties.
On
November 16, 2005, we issued a subordinated convertible promissory note in
the
principal amount of US$15 million (A$19.7 million) to an institutional investor.
On September 14, 2006, in connection with an amendment of the note, we repaid
US$2.5 million (A$3.3 million) of the principal. The convertible note must
be
repaid in full in cash on the third anniversary of its issuance, unless the
principal is earlier paid or converted. In addition, the holder may require
payment in cash of up to US$6.25 million (A$8.3 million) of the principal
on
each of July 31, 2007 and January 31, 2008. The holder of the note has also
been
provided with a security interest in our existing royalty streams from Bausch
& Lomb, which represent a substantial portion of our
current revenue. In connection with the terms of a letter agreement with
the
investor dated October 17, 2006, we agreed to make compensating payments
of
US$800,000 (A$1.1 million) on December 28, 2006 for registration rights
penalties incurred through the date of the letter agreement and US$150,000
(A$205,000) each on January 31, 2007, February 28, 2007 and March 30, 2007.
In
connection with an amendment agreement dated December 29, 2006, we and the
investor agreed, among other things, to defer our scheduled payment of
US$800,000 and extend general forbearance for any prior, existing or future
defaults until the earlier of the closing of a pending transaction with another
party or March 31, 2007 and to add US$306,391 (A$388,000) to the principal
of
the note, which amount represented the approximate value of the ADSs that
we
would have issued in order to satisfy our quarterly interest payment due
on
January 2, 2007 had we qualified to pay with ADSs. If we are unable to pay
interest or principal that becomes due or otherwise are unable to make payments
under the note or related agreements, the holder may foreclose on and collect
those royalties or sell that collateral. The proceeds of any sale would be
applied to satisfy amounts owed to the holder.
On
September 26, 2006, we issued new subordinated convertible promissory notes
in
the principal amount of US$6.5 million (A$8.5 million) to other investors.
These
convertible notes must be repaid in full in cash on the third anniversary
of
their issuance, unless the principal is earlier paid or converted. In addition,
under specified conditions, the holders may require payment in cash of
up to
US$3.25 million (A$4.25 million) of the principal on each of August 14,
2008
(unless the initial note is still outstanding) and February 14, 2009 (or
such
later date that is 91 days after the maturity date of the initial
note).
All
of
our outstanding convertible promissory notes bear interest at the rate of
8% per
annum. We may make quarterly interest payments on the notes
by
issuing our ADSs if certain conditions are met, including the continued
effectiveness of registration statements covering the ADSs, continued listing
of
our shares or ADSs, and timely delivery of conversion ADSs during the period
preceding the payment date, among others. If any of the conditions are not
met,
we will be required to pay the interest due in cash. Given the cash needs
of our
business and our current level of revenue, we cannot predict whether or not
we
will be able to meet any of these cash payment obligations or what impact
these
obligations might have on our business and operations.
If
we do not obtain certain waivers or fail to maintain an effective resale
registration statement for our ADSs, then we may owe further penalties related
to the inability of certain shareholders to sell ADSs. We may not have
sufficient funds to pay such penalties.
In
connection with our acquisition of CDS, we entered into an agreement to register
with the SEC the resale of ADSs issued to CDS stockholders. We were required
to
complete that registration no later than June 28, 2006. Our agreement
to register these ADSs required that we pay cash penalties equal to one percent
of the number of such ADSs multiplied by the deemed value of such ADSs at
the
time of closing, or US$5.087 per ADS, for every 30-day period until the
registration statement became effective and for certain periods during which
the
registration statement could not be used to sell ADSs. The registration
statement was declared effective on September 29, 2006 and we filed additional
information making it usable to effect sales on October 31, 2006. To date,
we
have not paid any of these penalties. Although we are seeking a waiver of
these
payment requirements from the holders of ADSs issued in connection with the
acquisition of CDS, such persons may not grant us such a waiver on reasonable
terms or at all. We may not have sufficient funds to pay these penalties.
If we
are forced to do so, we may be required to suspend, curtail or terminate
our
operations or delay, reduce the scope of or eliminate one or more of our
research and development programs, any of which could have a material adverse
effect on our business.
-7-
In
connection with the amendments to our initial convertible note financing
and our
subsequent new convertible note financing, we have entered into agreements
to
register with the SEC the resale of additional ADSs issuable to the investors.
Our obligation to register ADSs in each of these transactions is subject
to a
deadline, which may be extended in certain situations, and our failure to
meet
this deadline results in monetary penalties against us. With respect to the
amendments to our initial convertible note financing, we were required to
complete the registration of shares issuable pursuant to exercise of the
additional warrant granted no later than December 31, 2006. In connection
with
an amendment agreement, the parties have agreed to extend the filing deadline
until ten days following the earlier of the closing of a pending transaction
with another party or March 31, 2007. If our registration statement registering
those shares is not filed on or prior to the extended filing deadline, we
must
pay penalties of 1.5% of the aggregate purchase price per 30-day period from
that date until the date on which the filing failure is cured. Failure to
comply
with this extended deadline within 60 days may result in an event of default
under the convertible note. Furthermore, if our registration statement is
not
declared effective within sixty days of the extended filing deadline, or
within
ninety days of the extended filing deadline in the event that the SEC institutes
a review of or issues comments with respect to the registration
statement, we must pay the holder an amount equal to US$8,333 in
cash for each day beginning on December 31, 2006 and ending on the date of
such
effectiveness failure as well as 1.5% of the aggregate purchase price per
30-day
period from that date until the date on which the failure is cured. If we
fail to make registration delay payments in a timely manner, such registration
delay payments shall bear interest at the rate of 1.0% per month, prorated
for
partial months, until paid in full. With respect to our new convertible note
financing, we were required to complete the registration no later than January
1, 2007. Our failure to meet this deadline has resulted in our having to
pay a
cash penalty equal to one percent of the convertible note purchase price,
or
US$65,000 (A$85,000) on
January 31, 2007 for the month of January 2007 and on March 1, 2007 for the
month of February 2007 and additional penalties will accrue for each
30-day period, or portion there of, until the registration statement becomes
effective. Further, failure to comply with this effectiveness deadline
by April 1, 2007 may result in an event of default under the new
convertible notes. Each of these registration deadlines is subject to extension
under certain circumstances.
Our
failure or inability to maintain the effectiveness of any of our registrations
or to adequately update information in the related prospectuses may subject
us
to additional penalties. In addition, we expect to have other registration
obligations with similar penalty provisions related to registration deadlines
in
connection with future financing activities.
Most
of our products and planned products are based upon new and unproven
technologies, and if we are unable to develop products from those technologies,
we may not have sufficient revenue to continue our
operations.
We
are
currently developing products based upon our Durasert, BioSilicon and CODRUG
drug delivery systems for multiple applications across many sectors of
healthcare, including controlled drug delivery and diagnostics. The successful
development and market acceptance of our current products and potential product
technologies is subject to many risks. These risks include the potential
for
ineffectiveness, lack of safety, unreliability, failure to receive necessary
regulatory clearances or approvals and the emergence of superior or equivalent
products, as well as the effect of changes in future general economic
conditions. To date, we have developed two marketed products, Vitrasert and
Retisert, which are based on our Durasert technology and have been approved
by
the FDA for treatment of two sight-threatening eye diseases. However, these
technologies may prove useful in other products which would also be subject
to
many risks. Our failure to develop our current and future products could
have a
material adverse effect on our business, financial condition and results
of
operations. Further, BioSilicon is a new and unproven technology for which
we
have received no FDA approvals.
We
rely heavily upon patents and trade secrets to protect our proprietary
technologies. If we fail to protect our intellectual property or infringe
on
others’ technologies, our ability to market our products may
suffer.
Protection
of intellectual property rights is crucial to our business, since that is
how we
keep others from copying the innovations which are central to our existing
and
future products. Our success is dependent on whether we can obtain patents,
defend our existing patents and operate without infringing on the proprietary
rights of third parties. As of December 31, 2006, we had 95 patents and over
317
pending patent applications, including patents and pending applications covering
our Durasert, BioSilicon and CODRUG technologies. We expect to aggressively
patent and protect our proprietary technologies. However, we cannot be sure
that
any additional patents will be issued to us as a result of our pending or
future
patent applications or that any of our patents will withstand challenges
by
others. In addition, we may not have sufficient funds to patent and protect
our
proprietary technologies to the extent that we would desire or at all. If
we
were determined to be infringing any third-party patent, we could be required
to
pay damages, alter our products or processes, obtain licenses, pay royalties
or
cease certain operations. We may not be able to obtain any required licenses
on
commercially favorable terms, if at all. Our failure to obtain a license
for any
technology that we may require to commercialize our products could have a
material adverse effect on our business, financial condition and results
of
operations. In addition, many of the laws of foreign countries in which we
intend to operate may treat the protection of proprietary rights differently
from, and may not protect our proprietary rights to the same extent as, laws
in
Australia, the United States and Patent Co-operation Treaty
countries.
-8-
Prior
art
may reduce the scope or protection of, or invalidate, patents. Previously
conducted research or published discoveries may prevent patents from being
granted, invalidate issued patents or narrow the scope of any protection
obtained. Reduction in scope of protection or invalidation of our licensed
or
owned patents, or our inability to obtain patents, may enable other companies
to
develop products that compete with our products and product candidates on
the
basis of the same or similar technology. As a result, our patents and those
of
our licensors may not provide any or sufficient protection against
competitors.
While
we
have not been and we are not currently involved in any litigation over
intellectual property, such litigation may be necessary to enforce any patents
issued or licensed to us or to determine the scope and validity of third-party
proprietary rights. We may also be sued by one or more third parties alleging
that we infringe its intellectual property rights. Any intellectual property
litigation would be likely to result in substantial costs to us and diversion
of
our efforts. If our competitors claim technology also claimed by us and if
they
prepare and file patent applications in the U.S., we may have to participate
in
interference proceedings declared by the U.S. Patent and Trademark Office
to
determine priority of invention, which could result in substantial cost to
us
and diversion of our efforts. Any such litigation or interference proceedings,
regardless of the outcome, could be expensive and time consuming. Litigation
could subject us to significant liabilities to third parties, requiring disputed
rights to be licensed from third parties or require us to cease using certain
technologies and, consequently, could have a material adverse effect on our
business, financial condition and results of operations.
We
also
rely on trade secrets, know-how and technology that are not protected by
patents
to maintain our competitive position. We try to protect this information
by
entering into confidentiality agreements with parties that have access to
it,
such as our corporate partners, collaborators, employees, and consultants.
Any
of these parties could breach these agreements and disclose our confidential
information, or our competitors might learn of the information in some other
way. If any material trade secret, know-how or other technology not protected
by
a patent were to be disclosed to or independently developed by a competitor,
our
competitive position could be materially harmed.
If
we do not receive the necessary regulatory approvals, we will be unable to
commercialize our products.
Our
current and future activities are and will be subject to regulation by
governmental authorities in the U.S., Europe, Singapore and other countries.
Before we can manufacture, market and sell any of our products, we must first
obtain approval from the FDA and/or foreign regulatory authorities. In order
to
obtain these approvals, pre-clinical studies and clinical trials must
demonstrate that each of our products is safe for human use and effective
for
its targeted disease. Our proposed products are in various stages of
pre-clinical and clinical testing. If clinical trials for any of these products
are not successful, those products cannot be manufactured and sold and will
not
generate revenue from sales. Clinical trials for our product candidates may
fail
or be delayed by many factors, including the following:
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our
lack of sufficient funding to pursue trials rapidly or at
all;
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our
inability to attract clinical investigators for
trials;
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our
inability to recruit patients in sufficient numbers or at the expected
rate;
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adverse
side effects;
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failure
of the trials to demonstrate a product’s safety or
efficacy;
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-9-
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our
failure to meet FDA or other regulatory agency requirements for
clinical
trial design or for demonstrating efficacy for a particular product;
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our
inability to follow patients adequately after
treatment;
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changes
in the design or manufacture of a product;
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our
inability to manufacture sufficient quantities of materials for
use in
clinical trials; and
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governmental
or regulatory delays.
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Results
from pre-clinical testing and early clinical trials often do not accurately
predict results of later clinical trials. Data obtained from pre-clinical
and
clinical activities are susceptible to varying interpretations which may
delay,
limit or prevent regulatory approval. Data from pre-clinical studies, early
clinical trials and interim periods in multi-year trials are preliminary
and may
change, and final data from pivotal trials for such products may differ
significantly. Adverse side effects may develop that delay, limit or prevent
the
regulatory approval of products, or cause their regulatory approvals to be
limited or even rescinded. Additional trials necessary for approval may not
be
undertaken or may ultimately fail to establish the safety and efficacy of
proposed products. The FDA or other regulatory agencies may not approve proposed
products for manufacture and sale.
In
addition to testing, regulatory agencies impose various requirements on
manufacturers and sellers of products under their jurisdiction, such as
labeling, manufacturing practices, record keeping and reporting. Regulatory
agencies may also require post-marketing testing and surveillance programs
to
monitor a product’s effects. Furthermore, changes in existing regulations or the
adoption of new regulations could prevent us from obtaining, or affect the
timing of, future regulatory approvals.
At
present, Vitrasert and Retisert are our only products that have been approved
for sale in the U.S. for specific purposes. BrachySil and other product
candidates utilizing BioSilicon have not been approved and their approval
in the
future remains uncertain. Any product approvals we achieve could also be
withdrawn for failure to comply with regulatory standards or due to unforeseen
problems after the product’s marketing approval.
Fast
track status for Medidur may not actually lead to faster development, regulatory
review or approval, and if approval is delayed, the future growth of our
revenue
that this product is expected to generate will also be
delayed.
The
FDA
has granted fast track designation to Medidur for the treatment of diabetic
macular edema, or DME. Although this designation makes this product eligible
for
expedited approval procedures, it does not ensure faster development, review
or
approval compared to the conventional FDA procedures. Further, the FDA may
withdraw the fast track designation if it determines that the designation
is no
longer supported by emerging data from clinical trials or if it determines
that
the criteria for the designation is no longer satisfied.
We
have a limited ability to develop and market our products ourselves. If we
are
unable to find marketing or commercialization partners, or our marketing
or
commercialization partners do not successfully develop or market our products,
we may be unable to effectively develop and market our products on our
own.
We
presently have no marketing or sales staff. Achieving market acceptance for
the
use of our products will require extensive and substantial efforts by
experienced personnel as well as expenditure of significant funds. We may
not be
able to establish sufficient capabilities necessary to achieve market
penetration.
We
intend
to license and/or sell our products to companies who will be responsible
in
large part for sales, marketing and distribution. The amount and timing of
resources which may be devoted to the performance of their contractual
responsibilities by these licensees are not expected to be within our control.
Further, these partners may not perform their obligations.
Our
business strategy includes entering into collaborative arrangements for the
development and commercialization of our product candidates. The curtailment
or
termination of any of these arrangements could adversely affect our business,
our ability to develop and commercialize our products and proposed products
and
our ability to fund operations.
-10-
The
success of these and future collaborative arrangements will depend heavily
on
the experience, resources, efforts and activities of our collaborators. Our
collaborators have, and are expected to have, significant discretion in making
these decisions. Risks that we face in connection with our collaboration
strategy include the following:
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our
collaborative arrangements are, and are expected to be, subject
to
termination under various circumstances including, in some cases,
on short
notice and without cause;
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we
are required, and expect to be required, under our collaborative
arrangements not to conduct specified types of research and development
in
the field that is the subject of the collaboration, limiting the
areas of
research and development that we can
pursue;
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our
collaborators may develop and commercialize, either alone or with
others,
products that are similar to or competitive with our products;
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our
collaborators, consistent with other pharmaceutical and biotechnology
companies that have historically acted similarly, may for a variety
of
reasons change the focus of their development and commercialization
efforts or decrease or fail to increase spending related to our
products,
limiting the ability of our products to reach their potential;
and
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our
collaborators may lack the funding or experience to develop and
commercialize our products successfully or may otherwise fail to
do
so.
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To
the
extent that we choose not to, or we are unable to, enter into future license
agreements with marketing and sales partners, we may experience increased
capital requirements to develop the ability to market and sell future products.
We may not be able to market or sell our technology or future products
independently in the absence of such agreements.
Our
current licensees may terminate their agreements with us at any time, and
if
they do, we may not be able to effectively develop and sell our
products.
Our
licensees have rights of termination under our agreements with them. Exercise
of
termination rights by those parties may leave us temporarily or permanently
without any marketing or sales resources, which may have an adverse effect
on
our business, financial condition and results of operations. Additionally,
our
interests may not continue to coincide with those of our partners, and our
partners may develop independently or with third parties, products or
technologies that could compete with our products. Further, disagreements
over
rights or technologies or other proprietary interests may occur.
We
have
exclusively licensed our technology with respect to Vitrasert, Retisert and
certain other ophthalmic uses to Bausch & Lomb, and with respect to Medidur
for DME and certain other ophthalmic uses to Alimera Sciences. Bausch & Lomb
is responsible for funding and managing the development and commercialization
of
all licensed products and can terminate its agreement with us at any time
upon
90 days’ written notice. We are jointly funding with Alimera Sciences the
development of products licensed under our agreement with them, and Alimera
Sciences may terminate its agreement with us if we fail to make a development
payment or may terminate the agreement with respect to a particular product
if
we abandon the product. Further, in the event that we fail to make development
payments exceeding US$2.0 million (A$2.7 million) for a product, Alimera
Sciences may complete the development using other funds and substantially
reduce
our economic interest in any sales of the developed product from a share
of
profits to a sales-based royalty. As of December 31, 2006, we have chosen
not to make development payments to Alimera Sciences in an aggregate amount
of
approximately US$1.9 million (A$2.6 million). Alimera Sciences was incorporated
in June 2003 and has limited resources. Either Bausch & Lomb or Alimera
Sciences may decide not to continue with or commercialize any or all of the
licensed products, change strategic focus, pursue alternative technologies,
develop competing products or terminate their agreements with us. While Bausch
& Lomb has significant experience in the ophthalmic field and substantial
resources, there is no assurance as to whether, and to what extent, that
experience and those resources will be devoted to our technologies. Because
we
do not currently have sufficient funding or internal capabilities to develop
and
commercialize these products and proposed products, decisions, actions, breach
or termination of these agreements by Bausch & Lomb or Alimera Sciences
could delay or stop the development or commercialization of Retisert, Medidur
for DME or other of our products licensed to such entities. We have licensed
BrachySil to Beijing Med-Pharm for China, and similar risks exist under the
terms of that license agreement.
-11-
If
our competitors develop more effective products that receive regulatory approval
before our products reach the market, our products could be rendered
obsolete.
We
are,
or plan to be, engaged in the rapidly evolving and competitive fields of
drug
delivery and diagnostics. Our competitors include many major pharmaceutical
companies and other biotechnology, drug delivery, diagnostics and medical
products companies.
Many
of
our potential competitors have substantially greater financial, technological,
research and development, marketing and personnel resources than us. Our
competitors may succeed in developing alternate technologies and products
that:
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are
more effective and easier to use;
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are
more economical than those which we have developed; or
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would
render our technologies and products obsolete and non-competitive
in these
fields.
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These
competitors may also have greater experience in developing products, conducting
clinical trials, obtaining regulatory approvals or clearances and manufacturing
and marketing such products or technologies.
We
believe that pharmaceutical, drug delivery and biotechnology companies, research
organizations, governmental entities, universities, hospitals, other nonprofit
organizations and individual scientists are seeking to develop the drugs,
therapies, products, approaches or methods to treat our targeted diseases
or
their underlying causes. For many of our targeted diseases, competitors have
alternate therapies that are already commercialized or are in various stages
of
development ranging from discovery to advanced clinical trials. Any of these
drugs, therapies, products, approaches or methods may receive government
approval or gain market acceptance more rapidly than our products and proposed
products, may offer therapeutic or cost advantages or may cure our targeted
diseases or their underlying causes completely, which could reduce demand
for
our products and proposed products and could render them noncompetitive or
obsolete. For example, sales of Vitrasert for the treatment of cytomegalovirus,
or CMV, retinitis,
a disease which affects people with late-stage AIDS, have declined
significantly, because of new treatments that delay the onset of late-stage
AIDS.
Our
competitive position is based upon our ability to:
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create
and maintain scientifically-advanced technology and proprietary
products
and processes;
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attract
and retain qualified personnel;
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develop
safe and efficacious products, alone or in collaboration with
others;
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obtain
patent or other protection for our products and
processes;
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obtain
required government approvals on a timely
basis;
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manufacture
products on a cost-effective basis;
and
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successfully
market products.
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If
we are
not successful in meeting these goals, our business could be adversely
affected.
If
we expand our efforts beyond our core area of expertise and experience, then
we
may have to enter into collaboration agreements that limit the extent to
which
we can profit from our own technologies.
We
plan
to expand our focus outside of our initial areas of experience and expertise
in
order to broaden our product pipeline and this will require additional internal
expertise or external collaborations in areas in which we currently do not
have
internal resources and expertise. Such expertise and collaborations may be
difficult to obtain. We are currently focused on targeted controlled drug
delivery specifically for ophthalmic drug delivery, localized oncology and
other
controlled delivery mechanisms. We have started to expand our focus into
diagnostics and the food industry and may plan to expand into other areas
at a
later time. In connection with the foregoing, we may have to enter into
collaboration arrangements with others that may require us to relinquish
rights
to certain of our technologies or products that we would otherwise pursue
independently. We may be unable to acquire the necessary expertise or enter
into
collaboration agreements on acceptable terms.
-12-
Problems
associated with international business operations could affect our ability
to
manufacture and sell our products. If we encounter such problems, our costs
could increase and our development of products could be
delayed.
We
currently maintain offices in Australia, the UK, Singapore and the U.S.
BrachySil is produced for us in Germany and the UK, and BioSilicon is produced
in-house and by third-party contractors in the UK. We are conducting product
trials in Singapore and in Europe, we have research and development facilities
in the UK and the U.S. and we intend to license and/or sell products in most
major world healthcare markets. A number of risks are inherent in our
international strategy. In order for us to license and manufacture our products,
we must obtain country and jurisdiction-specific regulatory approvals or
clearances to comply with regulations regarding safety and quality. We may
not
be able to obtain or maintain regulatory approvals or clearances in such
countries, and we may be required to incur significant costs in obtaining
or
maintaining foreign regulatory approvals or clearances. In addition, our
operations and revenues are subject to a number of risks associated with
foreign
commerce, including the following:
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managing
foreign distributors;
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staffing
and managing foreign operations;
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political
and economic instability;
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foreign
currency exchange fluctuations;
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foreign
tax laws, tariffs and freight rates and
charges;
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timing
and availability of export
licenses;
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inadequate
protection of intellectual property rights in some countries;
and
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obtaining
required governmental approvals.
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If
we encounter problems with product manufacturing, we could experience delays
in
product development and commercialization, which would adversely affect our
future profitability.
Our
ability to conduct timely pre-clinical and clinical research and development
programs, obtain regulatory approvals, commercialize our product candidates
and
fulfill our contract manufacturing obligations to others will depend, in
part,
upon our ability to manufacture our products, either directly or through
third
parties, in accordance with FDA and other regulatory requirements. We currently
have BioSilicon production capability at our facilities in the UK, which
may be
augmented where required by QinetiQ’s UK production facilities for
use
in internal and collaborative research. BrachySil is currently manufactured
under contract, in accordance with applicable current good manufacturing
practices, or cGMP, by Hosokawa Micron Group, Atomising Systems Ltd, HighForce
Ltd and AEA Technology QSA GmbH. We currently manufacture clinical supplies
pursuant to our agreement with Alimera Sciences.
We
could
experience delays in development or commercialization of our proposed products
if we are unable to manufacture BioSilicon, BrachySil or other product
candidates by ourselves, or to acquire BioSilicon, BrachySil or other product
candidates from third parties, such as QinetiQ. We may not be able to
manufacture our proposed products successfully or in a cost-effective manner
at
our own or third-party facilities. If we are unable to develop our own
manufacturing facilities or to obtain or retain third-party manufacturing
on
acceptable terms, we may not be able to conduct certain future pre-clinical
and
clinical testing or to supply commercial quantities of our products.
We
have
licensed to Bausch
& Lomb the exclusive rights to manufacture Vitrasert, Retisert and other
products covered by its license agreement with us. We have licensed to Alimera
Sciences the rights to manufacture Medidur for DME, if approved for marketing,
and other products covered by its license agreement. Our current reliance
on
third-party manufacturers for some of our products entails risks,
including:
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the
possibility that third parties may not comply with the FDA’s cGMP
regulations, other regulatory requirements, and those of similar
foreign
regulatory bodies, and may not employ adequate quality assurance
practices;
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-13-
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supply
disruption, deterioration in product quality or breach of a manufacturing
or license agreement by the third-party because of factors beyond
our
control;
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the
possible termination or non-renewal of a manufacturing or licensing
agreement with a third-party at a time that is costly or inconvenient
to
us; and
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our
inability to identify or qualify an alternative manufacturer in
a timely
manner, even if contractually permitted to do
so.
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If
third-party reimbursement and health care providers do not cover the cost
of our
products, market acceptance could be limited.
In
both
domestic and foreign markets, our ability to commercialize our products will
depend, in part, upon the availability of reimbursement from third-party
payors,
such as government health administration authorities, private health insurers
and other organizations. Third-party payors are increasingly challenging
the
price and cost-effectiveness of medical products. If our products are not
considered cost-effective, third-party payors may limit reimbursement.
Government and other third-party payors are increasingly attempting to contain
healthcare costs by limiting both coverage and the level of reimbursement
for
new therapeutic products and by refusing, in some cases, to provide any coverage
for uses of approved products for disease indications for which they have
not
been granted regulatory approval. If government and third-party payors do
not
provide adequate coverage and reimbursement levels for uses of our products,
the
market acceptance of our products would be limited.
There
have been a number of U.S. federal and state proposals during the last few
years
to subject the pricing of pharmaceuticals to government control and to make
other changes to the health care system of the U.S. It is uncertain what
legislative proposals will be adopted or what actions federal, state or private
payors for health care goods and services may take in response to any health
care reform proposals or legislation. Similar health care reforms may also
be
implemented outside of the U.S. We cannot predict the effect health care
reforms
may have on our business.
If
we fail to retain some or all of our key personnel, then our business could
suffer.
We
are
dependent upon the principal members of our management, administrative and
scientific staff. In addition, we believe that our future success in developing
our products and achieving a competitive position will depend to a large
extent
on whether we can attract and retain additional qualified management and
scientific personnel. There is strong competition for such personnel within
the
industry in which we operate and we may not be able to continue to attract such
personnel either to Malvern in the United Kingdom or to Massachusetts, where
much of our research and development is conducted. Further, the economic
climate
in Perth could make employee retention difficult there. As we do not have
large
numbers of employees and our products are unique and highly specialized,
the
loss of the services of one or more of the senior management or scientific
staff, or the inability to attract and retain additional personnel and develop
expertise as needed, could have a material adverse effect on our results
of
operations and financial condition.
If
we are subject to product liability suits and do not have sufficient insurance
to cover damages, our ability to fund research and development would be
negatively impacted.
The
testing, manufacturing, and future marketing and sale of the products utilizing
our technologies involves risks that product liability claims may be asserted
against us or our licensees. Our current clinical trial insurance may not
be
adequate or continue to be available, and we may be unable to obtain adequate
product liability insurance on reasonable commercial terms, if at all. In
the
event clinical trial insurance is not adequate, our ability to continue with
planned research and development in the relevant area could be negatively
impacted.
-14-
We
have experienced rapid changes in our business, and if we fail to effectively
manage these changes, we may experience increased
expenses.
As
evidenced by our purchase of the remaining shares of pSiMedica in 2004 and
our
acquisition of CDS on December 30, 2005, our business is rapidly changing.
See
“Risks related to our recent acquisitions and financing
transactions”.
We
may be
required to increase the number of our employees, and we may suffer if we
do not
manage and train our new employees effectively. Further, our efforts span
various geographies. Continued operations in multiple locations may place
significant strains on our managerial, financial and other resources. The
rate
of any future expansion, in combination with our complex technologies and
products, may demand a level of managerial effectiveness in anticipating,
planning, coordinating and meeting our operational needs which we may not
be
able to successfully provide.
In
addition, if we make additional acquisitions or divestitures, we could encounter
difficulties that harm our business. We may acquire companies, products or
technologies that we believe to be complementary to our business. If we do
so,
we may have difficulty integrating the acquired personnel, operations, products
or technologies. In addition, acquisitions may distract our management and
employees and increase our expenses, which could harm our business. We may
also
sell businesses or assets as part of our strategy or if we receive offers
from
third parties. If we do so, we may sell an asset or business for less than
its
full value or may lose valuable opportunities attendant to such asset or
business.
If
we fail to comply with environmental laws and regulations, our ability to
manufacture and commercialize products may be adversely
affected.
Medical
and biopharmaceutical research and development involves the controlled use
of
hazardous materials, such as radioactive compounds and chemical solvents.
We are
subject to federal, state and local laws and regulations in the U.S. and
abroad
governing the use, manufacture, storage, handling and disposal of such materials
and waste products. We could be subject to both criminal liability and civil
damages in the event of an improper or unauthorized release of, or exposure
of
individuals to, hazardous materials. In addition, claimants may sue us for
injury or contamination that results from our use or the use by third parties
of
these materials, and our liability may exceed our total assets. Compliance
with
environmental laws and regulations is expensive, and current or future
environmental regulations may impair our research, development or production
efforts or harm our operating results.
Risks
related to our being headquartered and incorporated outside of the United
States
You
may have difficulty in effecting service of legal process and enforcement
of
judgments against us or our management.
We
are a
public company limited by shares, registered and operating under the Australian
Corporations Act 2001. Several of our directors and officers reside outside
the
U.S. Substantially all or a substantial portion of the assets of those persons
are located outside the U.S. As a result, it may not be possible to effect
service on such persons in the U.S. or to enforce, in foreign courts, judgments
against such persons obtained in U.S. courts and predicated on the federal
securities laws of the U.S. Furthermore, a large percentage of our directly
owned assets are located outside the U.S., and, as such, any judgment obtained
in the U.S. against us may not be collectible within the U.S. There is doubt
as
to the enforceability in the Commonwealth of Australia, in original actions
or
in actions for enforcement of judgments of U.S. courts, of civil liabilities
predicated solely upon federal or state securities laws of the U.S., especially
in the case of enforcement of judgments of U.S. courts where the defendant
has
not been properly served in Australia.
As
a foreign private issuer we do not have to provide you with the same information
as an issuer of securities based in the U.S.
Because
we are a foreign private issuer within the meaning of the rules under the
Exchange Act, we are exempt from certain provisions that are applicable to
U.S.
public companies, including:
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the
rules under the Exchange Act requiring the filing with the SEC
of
quarterly reports on Form 10-Q or current reports on Form 8-K;
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-15-
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the
sections of the Exchange Act regulating the solicitation of proxies,
consents or authorizations in respect of a registered security;
and
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the
sections of the Exchange Act requiring insiders to file public
reports of
their stock ownership and trading activities and liability for
insiders
who profit from trades made in a short period of
time.
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Thus,
you
are not afforded the same protections or information which would be made
available to you were you investing in a U.S. public corporation.
In
accordance with the requirements of the Australian Stock Exchange, we disclose
annual and semi-annual results. Until July 1, 2005, our results were presented
in accordance with accounting principles generally accepted in Australia,
or
A-GAAP, and they are now presented in accordance with A-IFRS. Our annual
results
reported in the U.S. with the SEC include a reconciliation to U.S. GAAP.
Our
annual results are audited, and our semi-annual results undergo a limited
review
by our independent auditors. Subject to certain exceptions, we are also required
to immediately disclose to the ASX any information concerning us that a
reasonable person would expect to have a material effect on the price or
value
of our shares. This would include matters such as:
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any
major new developments relating to our business which are not public
knowledge and may lead to a substantial movement in our share price;
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any
changes in our board of directors;
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any
purchase or redemption by us of our own equity securities;
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interests
of directors in our shares or debentures; and
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changes
in our capital structure.
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We
are
required to provide our semi-annual results, and other material information
that
we disclose in Australia or in the U.S. under the cover of Form 6-K.
Nevertheless, this information is not the same and may not be as much
information as would be made available to you were you investing in a U.S.
public corporation.
Risks
related to our stock and our ADSs
If
we are a passive foreign investment company, holders of our shares and ADSs
may
suffer adverse tax consequences.
U.S.
holders of our ADSs may experience unfavorable tax consequences if we are
treated as a passive foreign investment company, or PFIC, under the U.S.
Internal Revenue Code of 1986, as amended, for any year during which the
U.S.
holder owned our ADSs. In general, we are a PFIC for any taxable year if
either
(1) 75% or more of our gross income in the taxable year is passive income,
or (2) 50% or more of the average value of our assets in the taxable year
produces, or is held for the production of, passive income. We were likely
a
PFIC for the fiscal year ended June 30, 2005. For example, if a U.S. holder
disposes of an ADS at a gain, and during any year of its holding period we
were
a PFIC, then such gain would be taxable as ordinary income and not as capital
gain and would be subject to additional taxation based on the length of time
the
U.S. holder held such stock. Most of the tax consequences of our being a
PFIC
may be mitigated if the U.S. holder makes certain elections as described
in Item
10.E of our Annual Report on Form 20-F under “U.S. Federal Income Tax
Considerations”.
Holders
of our ADSs may have limited rights relative to holders of our ordinary shares
in certain circumstances.
The
rights of holders of ADSs with respect to voting of ordinary shares and
receiving certain distributions may be limited in certain respects by the
deposit agreement entered into by us and Citibank, N.A. For example, although
ADS holders are entitled under the deposit agreement, subject to any applicable
provisions of Australian law and of our constitution, to instruct the depositary
as to the exercise of their voting rights pertaining to the ordinary shares
represented by the American Depositary Shares, and the depositary has agreed
that it will vote the ordinary shares so represented in accordance with such
instructions, ADS holders may not receive notices sent by the depositary
in time
to ensure that the depositary will vote the ordinary shares. This means that
holders of ADSs may not be able to exercise their right to vote. In addition,
under the deposit agreement, the depositary has the right to restrict
distributions to holders of the ADSs in the event that it is unlawful or
impractical to make such distributions. We have no obligation to take any
action
to permit distributions to holders of our American Depositary Receipts, or
ADRs.
As a result, holders of ADRs may not receive distributions made by
us.
-16-
Our
stock price is volatile. If our trading volume fluctuates significantly,
based
on events both within and outside our control, you may have difficulty selling
your ADSs when you desire to.
Since
December 2000, the price of our ordinary shares has ranged from A$0.09 to
A$1.44
per share, and since January 27, 2005, the price of our ADSs has ranged from
US$1.36 to US$12.14. The price of our ordinary shares and ADSs may be affected
by developments directly affecting our business and by developments out of
our
control or unrelated to pSivida. The biotechnology sector in particular,
and the
stock market generally, are vulnerable to abrupt changes in investor sentiment.
Prices of securities and trading volume of companies in the biotechnology
industry, including ours, can swing dramatically in ways unrelated to or
that
bear a disproportionate relationship to, operating performance. Our ordinary
share and ADS trading prices and volumes may fluctuate based on a number
of
factors including, but not limited to:
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clinical
trial results and other product and technological developments
and
innovations;
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FDA
and other governmental regulatory actions, receipt and timing of
approvals
of our proposed products, and any denials and withdrawals of approvals;
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competitive
factors including new product ideas and technologies, clinical
trial
results and approvals of competitive products in our markets;
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advancements
with respect to treatment of the diseases targeted by our proposed
products;
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developments
relating to collaborative partners, including execution and termination
of
agreements, achievement of milestones and receipt of payments;
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availability
and cost of capital and our financial and operating results;
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changes
in reimbursement policies or other practices relating to our proposed
products or the pharmaceutical industry generally;
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meeting,
exceeding or failing to meet analysts’ or investors’ expectations, and
changes in evaluations and recommendations by securities analysts;
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economic,
industry and market conditions, changes or trends; and
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other
factors unrelated to us and the biotechnology industry.
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In
addition, low trading volume may increase the price volatility of our ADSs.
Trading volume in our ordinary shares on other markets has not been historically
high, and trading volume of our ADSs on the NASDAQ Global Market has also
been
low. Further, because each of our ADSs represents ten of our ordinary shares,
trading volume in our ADSs may be lower than that for our ordinary shares.
A
thin trading market could cause the price of our ADSs to fluctuate significantly
more than the stock market as a whole. For example, trades involving a
relatively small number of our ADSs may have a greater impact on the trading
price for our ADSs than would be the case if their trading volume were higher.
Accordingly, holders of our ADSs may not be able to liquidate a position
in our
ADSs in the desired time or at the desired price.
The
fact that we do not expect to pay cash dividends may lead to decreased prices
for our stock.
We
have
never paid a cash dividend on our ordinary shares and we do not anticipate
paying any cash dividend. We intend to retain future cash earnings, if any,
for
reinvestment in the development and expansion of our business.
-17-
If
the holders of our outstanding convertible notes, warrants and stock options
convert their notes or exercise their warrants and options, your ownership
may
be diluted and our stock price may decline.
The
issuance of our ordinary shares or ADSs upon conversion of the convertible
notes
and upon exercise of the share purchase warrants and stock options would
result
in dilution to the interests of other holders of our ADSs and ordinary
shares.
As
of
February 28, 2007, we had outstanding convertible securities, including
stock
options and warrants, representing the right to acquire 38,246,464 ADSs
(382,464,642 ordinary shares), or approximately 82.41% of our total outstanding
shares as of February 28, 2007, including:
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US$18.8
million (A$23.8 million) in principal amount of notes that are
convertible, at the option of the note holders, or under certain
circumstances at our election, into 11,589,917 ADSs (115,899,170
ordinary
shares);
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warrants
and investor options to purchase 24,266,784 ADSs (242,667,840 ordinary
shares); and
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stock
options to purchase the equivalent of 2,389,763 ADSs (23,897,632
ordinary
shares).
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Through
February 28, 2007, holders of our convertible notes have exercised their
option
to convert US$530,723 (A$726,918) in principal amount of and US$4,277 (A$5,858)
in interest on the convertible notes for 267,500 ADSs (2,675,000 ordinary
shares).
Under
certain circumstances, the number of shares into which the convertible notes
can
be converted will be increased. These circumstances include:
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in
the event we issue securities at a price lower than the price at
which the
notes may then be converted;
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|
in
the event that 108% of the volume-weighted average trading price
of our
ADSs for the ten trading days prior to April 30, 2007 is lower than
the then current conversion price;
and
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in
the event that we issue a share dividend or otherwise recapitalize
our
shares.
|
The
warrant exercise prices may also be adjusted under certain circumstances,
including, among others, in the event we issue securities in a rights offering
at a lower price than the exercise price, or in the event that we issue a
share
dividend or otherwise recapitalize our shares.
Any
such
downward adjustment of the note conversion price or warrant exercise prices
could result in a higher number of ADSs or ordinary shares being issued,
resulting in further dilution to existing shareholders.
Future
issuances and sales of our stock could dilute your ownership and cause our
stock
price to decline.
We
intend
to continue to finance our operations through the issuance of equity and
convertible securities, if feasible, including by way of the public equity
markets, private financings and debt. If we raise additional capital through
the
issuance of equity or securities convertible into equity, existing holders
of
our securities may experience dilution. Those securities may have rights,
preferences or privileges senior to those of the holders of our ADSs and
ordinary shares. Additional financing may not be available to us on favorable
terms, and financing available at less favorable terms may lead to more
substantial dilution of existing shareholders.
Certain
of our shareholders own a significant percentage of our ordinary shares and
therefore may be able to influence our business in ways that are less beneficial
to you.
Our
current executive officers, directors (including the officers and directors
of
our subsidiaries) and their affiliates beneficially own or control approximately
8.33% of our outstanding ordinary shares (based on the number of our ordinary
shares outstanding on February 28, 2007 and assuming the issuance of shares
upon
the exercise of options vested or vesting within 60 days of February 28,
2007).
As a result, if our executive officers and directors and their affiliates
were
all to vote in the same way, they would have the ability to exert significant
influence over our board of directors and how we operate our business.
The
concentration of ownership may also have the effect of delaying or preventing
a
change in control of our company.
-18-
If
we fail to comply with internal controls evaluations and attestation
requirements our stock price could be adversely
affected.
We
are
subject to United States securities laws, including the Sarbanes-Oxley Act
of
2002 and the rules and regulations adopted by the SEC pursuant to such Act.
Based on our evaluation of the effectiveness of the design and operation
of our
disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule
15d-15(e) of the Securities Exchange Act of 1934, we have concluded that,
as of
June 30, 2006, our disclosure controls and procedures were ineffective in
that
we had insufficient accounting personnel who had sufficient knowledge and
experience in U.S. GAAP and the SEC accounting requirements.
As
a
foreign private issuer, under Section 404 of the Sarbanes-Oxley Act and the
related regulations, we are required to perform an evaluation of our internal
controls over financial reporting, including (1) management’s annual report on
its assessment of the effectiveness of internal controls over financial
reporting for the year ending June 30, 2007 and (2) our independent registered
public accounting firm’s annual audit of management’s assessment beginning in
the year ending June 30, 2008. If our foreign private issuer status were
to
change prior to June 30, 2007, the attestation requirement of our independent
registered public accounting firm would be accelerated to cover the year
ending
June 30, 2007. We are in the early stages of the systems documentation and
evaluation process. Combined with our initial testing of key internal controls
during fiscal 2007 and the subsequent evaluation and testing by our independent
registered public accounting firm commencing in fiscal 2008, we expect
compliance with these requirements to be time-consuming and expensive. If
we
fail to complete the evaluation of our internal controls over financial
reporting in time, if we identify material weaknesses in these internal controls
or if our independent registered public accounting firm does not timely attest
to our evaluation, we could be subject to regulatory scrutiny and decreased
public confidence in our internal controls, which may adversely affect the
market price of our stock.
Risks
related to our recent acquisitions and financing
transactions
The
following risk factors relate to our recent acquisitions of pSiMedica and
CDS,
as well as: (1) our US$15 million (A$20.5 million) convertible note financing,
referred to herein as our initial convertible note financing and (2) our
US$6.5
million (A$8.5 million) convertible note financing referred to herein as
the new
convertible note financing.
A
default under our outstanding convertible notes could seriously harm our
operations.
On
September 14, 2006, we repaid US$2.5 million (A$3.3 million) of our initial
subordinated convertible promissory note issued in November 2005 and agreed
to
convert the unsecured, un-guaranteed debt represented by the note into secured,
guaranteed debt. On September 26, 2006, we issued US$6.5 million (A$8.5
million) of new subordinated convertible promissory notes to other investors.
Each of the notes and their respective related agreements contain numerous
events of default which include:
|
·
|
failure
to register securities or maintain the registration of securities
for
resale after applicable cure
periods;
|
|
·
|
suspension
of our ADSs or ordinary shares from trading for five consecutive
trading
days;
|
|
·
|
failure
to issue shares pursuant to a conversion within the applicable
cure
period;
|
|
·
|
failure
to pay interest, principal payments or other fees when
due;
|
|
·
|
if
any indebtedness exceeding, US$250,000 (A$333,000) is declared
due and
payable prior to its specified
maturity;
|
|
·
|
a
bankruptcy or insolvency proceeding instituted by or against us
or a
material subsidiary which is not dismissed within 30
days;
|
|
·
|
breach
by us of any material covenant or term or condition of the notes
or any
agreements made in connection therewith;
and
|
|
·
|
breach
by us of any material representation or warranty made in the notes
or in
any agreements made in connection
therewith.
|
-19-
If
we
default on the notes, a holder could demand that we redeem the full outstanding
amount. In that event, any cash required to be paid would most likely come
out
of our working capital, which may not be sufficient to repay the amounts
due. In
addition, since we rely on our working capital for our day to day operations,
such a default on the notes could materially adversely affect our business,
operating results or financial condition to such extent that we are forced
to
restructure, file for bankruptcy, sell assets or cease operations. Further,
our
obligations under the initial notes are secured by the royalties on our
currently marketed products and a guaranty by our U.S. subsidiary, pSivida
Inc.
Failure to fulfill our obligations under those notes and related agreements
could lead to loss of these assets and subject pSivida Inc. to direct liability
in the U.S., which would be detrimental to our financial condition and
operations.
We
may fail to integrate our operations successfully with the operations of
CDS. As
a result, pSivida and CDS may not achieve the anticipated benefits of the
merger, which could adversely affect the price of
ADSs.
We
entered into the merger agreement and consummated the merger with the
expectation that the merger would result in benefits to the combined companies,
including the opportunity to combine the two companies’ technologies, products
and product candidates and the opportunity for us to establish a substantial
presence in the U.S. that would facilitate access to U.S. markets. However,
these expected benefits may not be fully realized. Failure of the combined
company to meet the challenges involved with successfully integrating the
personnel, products, technology and research and development operations of
the
two companies following the merger or to realize any of the other anticipated
benefits of the merger, could have a material adverse effect on our business.
Any such adverse effect could impair our financial condition and results
of
operations, or impair those of our subsidiaries, including pSivida Inc. These
integration efforts may be difficult and time consuming, especially considering
the highly technical and complex nature of each company’s products. The
challenges involved in this integration include the following:
|
·
|
coordinating
research and development operations in a rapid and efficient manner;
|
|
·
|
combining
platform technologies of disparate sources;
|
|
·
|
demonstrating
to collaboration partners that the merger will not result in adverse
changes in technology focus or development standards;
|
|
·
|
retaining
key alliances with collaboration partners;
|
|
·
|
absorbing
costs and delays in implementing overlapping systems and procedures,
including financial accounting systems and accounting principles;
|
|
·
|
persuading
employees that our business culture and that of CDS are compatible,
maintaining employee morale and retaining key employees; and
|
|
·
|
overcoming
potential distraction of management attention and resources from
the
business of the combined company.
|
We
may
not successfully integrate our operations and technology with those of CDS
in a
timely manner, or at all. We may not realize the anticipated benefits of
the
merger to the extent, or in the timeframe anticipated which could significantly
harm our business.
Our
operating results could be adversely affected as a result of purchase accounting
treatment, and the corresponding impact of amortization or impairment of
other
intangibles relating to the acquisitions, if the results of the combined
company
do not offset these additional expenses.
Under
A-IFRS (effective from July 1, 2005), we accounted for the merger with
CDS using
the purchase method of accounting. Under purchase accounting, we recorded
the
market value of our ADSs, cash, other consideration issued in connection
with
the merger and direct transaction costs as the total cost of acquiring
the
business of CDS. We allocated that cost to the individual assets acquired
and
liabilities assumed, including identifiable intangible assets, based on
their
respective estimated fair values. The amount we allocated to goodwill was
A$30.4
million, the amount we allocated to patents was A$88.5 million and the
amount we
allocated to in-process research and development, or IPR&D, was A$34.3
million, giving rise to a deferred tax liability of approximately A$32.5
million
net of deferred tax assets. Similarly, in connection with the purchase
accounting for the prior step acquisitions of pSiMedica, we allocated
approximately A$55 million to patents and licenses and approximately A$22
million to goodwill. Goodwill is not subject to amortization, but is subject
to
at least an annual impairment analysis, which may result in an impairment
charge
if the carrying value of the cash-generating unit to which goodwill has
been
allocated exceeds its fair value. The amount allocated to the CDS patents
which
cover Retisert has been amortized to date based upon a 12-year useful life
following completion of the merger, or approximately A$7.4 million per
fiscal
year, and the amount allocated to the pSiMedica patents and licenses has
been
amortized to date based upon a 9-year useful life following the merger,
or
approximately A$6.2 million per fiscal year. Acquired IPR&D is subject to
annual impairment analysis, which may result in a write-down of its carrying
value. At such time, if any, that the project included in acquired IPR&D is
successfully developed and available for commercial use, it will become
subject
to amortization over its then estimated useful life. As a result, purchase
accounting treatment of the merger will increase our net loss or decrease
our
net income in the foreseeable future, which could have a material and adverse
effect on the future market value of our ADSs.
-20-
During
the six months ended December 31, 2006, our market capitalization decreased
to a
level significantly less than the carrying value of our net assets at that
date.
Also, during December 2006, in response to a need to conserve cash, we
implemented certain cost reduction measures. One impact of these measures
was a
delay in the expected time period during which we believe certain BrachySil
product candidates will be approved and begin generating sales. Additionally,
during December 2006, our assessment of the probable level of future sales
of
our Retisert product decreased as a result of both information provided
by a
third party and the actual level of sales achieved during the six month
period.
Under both A-IFRS and U.S. GAAP, these represent triggering events that
required
us to evaluate the recoverability of our intangible assets, including goodwill.
We have recently released our unaudited financial statements for the six
months
ended December 31, 2006 reported in accordance with A-IFRS, which included
asset
impairment charges related to our intangible assets of A$83.4 million.
Our
analysis under U.S. GAAP is not complete; however our current view is that
no
impairment will be recorded under U.S. GAAP.
Subsequent
to the asset impairment described above, annual amortization under A-IFRS
for
the remaining carrying value of Retisert will be approximately A$2.2 million
(based on the December 31, 2006 exchange rate). Amortization of the remaining
carrying value of the pSiMedica patents and licenses will be A$699,000
per
year
based on a revised estimated remaining useful life of eleven years (based
on the
December 31, 2006 exchange rate).
If CDS’ former stockholders sell substantial amounts of ADSs, the market price of ADSs may decline.
The
resale by former CDS stockholders of our ADSs after the merger could cause
the
market price of our ADSs to decline. In connection with the merger, we issued
16,104,779 ADSs. While those ADSs were not initially freely tradable, we
have
registered their resale for stockholders entering into the registration rights
agreement. Those ADSs became freely tradable under U.S. securities laws as
of
October 31, 2006.
We
may have liability under the U.S. securities laws related to the recent changes
to our outstanding convertible note.
On
September 14, 2006, we revised certain terms of the initial subordinated
convertible promissory note that we issued on November 16, 2005. In connection
with the amendments, we repaid US$2.5 million (A$3.3 million) of the outstanding
principal of the existing note and granted the holder an additional warrant
to
purchase 5.7 million ADSs and a security interest in our current royalties.
Because we had earlier filed a registration statement related to the ordinary
shares represented by ADSs underlying the initial note and the warrant issued
with it, the revisions to the note and the issuance of the additional warrant,
and our subsequent filing of an amendment to our registration statement to
include the shares issuable pursuant thereto, may have resulted in a violation
of the federal securities laws.
If
the
investor were to bring an action in court successfully making such an argument,
we could be required to rescind the modified note and warrants for a period
of
one year following the date of the violation. In addition, if it is determined
that we offered securities without properly registering them under federal
or
state law, or securing an exemption from registration, regulators could impose
monetary fines or other sanctions as provided under these laws.
USE
OF PROCEEDS
Unless
we
identify other uses of proceeds in a prospectus supplement, we intend to
use the
net proceeds from the sale of the securities for our general corporate purposes,
which may include repayment of debt, capital expenditures, acquisitions,
and
working capital. Pending use, the net proceeds may also be temporarily invested
in short-term securities.
Depending
on market conditions and our financial needs, we may, from time to time,
undertake additional financings. We cannot at this time estimate the amount
and
timing of such financings, if any.
-21-
FORWARD-LOOKING
STATEMENTS
The
statements incorporated by reference or contained in this prospectus discuss
our
future expectations, contain projections of our results of operations or
financial condition, and include other forward-looking information within
the
meaning of Section 27A of the Securities Act of 1933, as amended. Our actual
results may differ materially from those expressed in forward-looking statements
made or incorporated by reference in this prospectus. Forward-looking statements
that express our beliefs, plans, objectives, assumptions or future events
or
performance may involve estimates, assumptions, risks and uncertainties.
Therefore, our actual results and performance may differ materially from
those
expressed in the forward-looking statements. Forward-looking statements often,
although not always, include words or phrases such as the following: “will
likely result”, “are expected to”, “will continue”, “is anticipated”,
“estimate”, “intends”, “plans”, “projection” and “outlook”.
You
should not unduly rely on forward-looking statements contained or incorporated
by reference in this prospectus. Various factors discussed in this prospectus,
including, but not limited to, all the risks discussed in “Risk Factors” may
cause actual results or outcomes to differ materially from those expressed
in
forward-looking statements. You should read and interpret any forward-looking
statements together with these risks.
Any
forward-looking statement applies only as of the date on which that statement
is
made. We will not update any forward-looking statement to reflect events
or
circumstances that occur after the date on which such statement is
made.
CAPITALIZATION
AND INDEBTEDNESS
The
following table sets forth our capitalization and indebtedness as of December
31, 2006 in accordance with A-IFRS. Significant
post-balance sheet changes to the table are discussed in the footnotes
below.
|
As
of
December
31, 2006
|
||||
|
Unaudited
|
||||
|
(In
Australian Dollars)
|
||||
|
Indebtedness
|
||||
|
Short-term
debt (secured, guaranteed) (1)
|
6,011,000
|
|||
|
Long-term
debt (secured, guaranteed) (1)
|
4,712,000
|
|||
|
Long-term
debt (unsecured, unguaranteed) (2)
|
759,000
|
|||
|
Total
debt
|
11,482,000
|
|||
|
Stockholders’
equity
|
||||
|
Share
capital (3)
|
233,097,000
|
|||
|
Reserves
|
8,393,000
|
|||
|
Deficit
accumulated prior to development stage
|
(3,813,000
|
)
|
||
|
Deficit
accumulated during development stage
|
(153,857,000
|
)
|
||
|
Total
stockholders’ equity
|
83,820,000
|
|||
|
Total
capitalization and indebtedness in accordance with
A-IFRS
|
95,302,000
|
|||
|
(1)
|
The
secured, guaranteed debt is recorded net of A$5,194,000 of unamortized
discount related to the compound embedded derivative and the
freestanding
warrants, which discount has been allocated proportionately between
short-term and long-term debt.
|
| (2) |
The
unsecured, unguaranteed debt is recorded net of A$7,111,000 of
unamortized
discount related to the compound embedded derivative and debt
issue costs.
|
-22-
|
(3)
|
On
February 22, 2007, we issued 50,044,132 ordinary shares to
Australian,
European and U.S. investors at A$0.23 per share (US$1.82 per
ADS
equivalent) for total proceeds of A$11.51 million
(US$9.09 million) before costs. Each ordinary share was purchased
along with options to purchase two additional shares at an
exercise price
of A$0.23 per share which expire four years from
issuance.
|
PLAN
OF DISTRIBUTION
We
may
sell the ordinary shares, warrants, preference shares of units, (together
referred to as "our securities") in any one or more of the following ways
from
time to time:
|
·
|
to
or through underwriters;
|
|
·
|
to
or through dealers;
|
|
·
|
through
agents; or
|
|
·
|
directly
to purchasers, including our
affiliates.
|
The
prospectus supplement with respect to any offering of our securities will
set
forth the terms of the offering, including:
|
·
|
the
name or names and addresses of any underwriters, dealers or
agents;
|
|
·
|
the
purchase price of the securities and the proceeds to us from the
sale;
|
|
·
|
any
underwriting discounts and commissions or agency fees and other
items
constituting underwriters' or agents' compensation;
and
|
|
·
|
any
delayed delivery arrangements.
|
-23-
The
distribution of the securities may be effected 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.
If
securities are sold by means of an underwritten offering, we will execute
an
underwriting agreement with an underwriter or underwriters, and the names
of the
specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including commissions, discounts
and any other compensation of the underwriters and dealers, if any, will
be set
forth in the prospectus supplement which will be used by the underwriters
to
sell the securities. If underwriters are utilized in the sale of the securities,
the securities will be acquired by the underwriters for their own account
and
may be resold from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
determined by the underwriters at the time of sale.
Our
securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by the managing underwriters.
If any underwriter or underwriters are utilized in the sale of the securities,
unless otherwise indicated in the prospectus supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject
to
conditions precedent and that the underwriters with respect to a sale of
securities will be obligated to purchase all of those securities if they
purchase any of those securities.
We
may
grant to the underwriters options to purchase additional securities to cover
over-allotments, if any, at the public offering price with additional
underwriting discounts or commissions. If we grant any over-allotment option,
the terms of any over-allotment option will be set forth in the prospectus
supplement relating to those securities.
If
a
dealer is utilized in the sales of securities in respect of which this
prospectus is delivered, we will sell those securities to the dealer as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by the dealer at the time of resale. Any reselling
dealer may be deemed to be an underwriter, as the term is defined in the
Securities Act of the securities so offered and sold. The name of the dealer
and
the terms of the transaction will be set forth in the related prospectus
supplement.
Offers
to
purchase securities may be solicited by agents designated by us from time
to
time. Any agent involved in the offer or sale of the securities in respect
of
which this prospectus is delivered will be named, and any commissions payable
by
us to the agent will be set forth, in the applicable prospectus supplement.
Unless otherwise indicated in the prospectus supplement, any agent will be
acting on a reasonable best efforts basis for the period of its appointment.
Any
agent may be deemed to be an underwriter, as that term is defined in the
Securities Act of the securities so offered and sold.
Offers
to
purchase securities may be solicited directly by us and the sale of those
securities may be made by us directly to institutional investors or others,
who
may be deemed to be underwriters within the meaning of the Securities Act
with
respect to any resale of those securities. The terms of any sales of this
type
will be described in the related prospectus supplement.
Underwriters,
dealers, agents and remarketing firms may be entitled under relevant agreements
entered into with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, that may arise from any untrue
statement or alleged untrue statement of a material fact or any omission
or
alleged omission to state a material fact in this prospectus, any supplement
or
amendment hereto, or in the registration statement of which this prospectus
forms a part, or to contribution with respect to payments which the agents,
underwriters or dealers may be required to make.
If
so
indicated in the prospectus supplement, we will authorize underwriters or
other
persons acting as our agents to solicit offers by institutions to purchase
securities from us pursuant to contracts providing for payments and delivery
on
a future date. Institutions with which contracts of this type may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others,
but in
all cases those institutions must be approved by us. The obligations of any
purchaser under any contract of this type will be subject to the condition
that
the purchase of the securities shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which the purchaser is subject. The
underwriters and other persons acting as our agents will not have any
responsibility in respect of the validity or performance of those
contracts.
-24-
Disclosure
in the prospectus supplement of our use of delayed delivery contracts will
include the commission that underwriters and agents soliciting purchases
of the
securities under delayed contracts will be entitled to receive in addition
to
the date when we will demand payment and delivery of the securities under
the
delayed delivery contracts. These delayed delivery contracts will be subject
only to the conditions that we describe in the prospectus
supplement.
In
connection with the offering of securities, persons participating in the
offering, such as any underwriters, may purchase and sell securities in the
open
market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of bids or
purchases for the purpose of preventing or retarding a decline in the market
price of the securities, and syndicate short positions involve the sale by
underwriters of a greater number of securities than they are required to
purchase from any issuer in the offering. Underwriters also may impose a
penalty
bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the securities sold in the offering for their
account may be reclaimed by the syndicate if the securities are repurchased
by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the securities,
which may be higher than the price that might prevail in the open market,
and
these activities, if commenced, may be discontinued at any time.
CURRENCY
TRANSLATION
pSivida
Limited publishes its financial statements in Australian dollars. No
representation is made that the Australian dollar or U.S. dollar amounts
shown
in this prospectus could have been or could be converted into U.S. dollars
or
Australian dollars, as the case may be, at any particular rate or at
all.
DESCRIPTION
OF ORDINARY SHARES
As
of
February 28, 2007, 464,086,007 ordinary shares were issued and outstanding.
Our
ordinary shares are represented by American Depositary Receipts or ADRs.
Each
ADR represents ten of our ordinary shares. An ADR is a receipt for the shares
of
a foreign corporation held in the vault of a U.S. bank and entitling the
holder
to all dividends and capital gains. Instead of buying shares of foreign-based
companies in overseas markets, U.S. persons can buy shares in the United
States
in the form of an ADR. An American Depositary Share or ADS is the share issued
under a depositary agreement representing the underlying ordinary share that
trades in the issuer’s home market. Technically, ADS is the instrument that is
actually traded, whereas the ADR is the certificate that represents the number
of ADSs.
Citibank,
N.A. acts as the depositary for our ADSs pursuant to a deposit agreement
which
is an exhibit in the Form F-6 registration statement filed by us on January
20,
2005, Registration No. 333-122158. The depositary’s office is located at 388
Greenwich Street, New York, New York, 10013, U.S.A.
Our
ADSs
are quoted on the NASDAQ Global Market under the symbol “PSDV.”
DESCRIPTION
OF PREFERENCE SHARES
The
material terms of any series of preference shares that we offer through a
prospectus supplement will be described in that prospectus supplement. Our
board
of directors is authorized by our constitution to provide for the issuance
of
preference shares in one or more series with designations as may be stated
in
the resolution or resolutions providing for the issue of such preference
shares.
At the time that any series of our preference shares are authorized, our
board
of directors will fix the dividend rights, any conversion rights, any voting
rights, redemption provisions, liquidation preferences and any other rights,
preferences, privileges and restrictions of that series, as well as the number
of shares constituting that series and their designation. Our board of directors
could, without shareholder approval, cause us to issue preference stock which
has voting, conversion and other rights that could adversely affect the holders
of our ordinary shares or make it more difficult to effect a change in control.
Our preference shares could be used to dilute the share ownership of persons
seeking to obtain control of us and thereby hinder a possible takeover attempt
which, if our shareholders were offered a premium over the market value of
their
shares, might be viewed as being beneficial to our shareholders. In addition,
our preference shares could be issued with voting, conversion and other rights
and preferences which would adversely affect the voting power and other rights
of holders of our ordinary shares.
-25-
DESCRIPTION
OF WARRANTS
pSivida
may issue warrants to purchase ADRs or ordinary shares, or “equity warrants.”
Equity warrants may be issued independently or together with any securities
and
may be attached to or separate from those securities. We will issue equity
warrants under warrant agreements to be entered into either between us and
the
warrant holders directly or between us and a bank or trust company, as warrant
agent.
A
prospectus supplement will describe the terms of equity warrants offered
thereby, the warrant agreement relating to the equity warrants and the equity
warrant certificates representing the equity warrants, including the
following:
|
·
|
the
title of the equity warrants;
|
|
·
|
the
price or prices at which the equity warrants will be
issued;
|
|
·
|
if
applicable, the number of equity warrants issued with ADRs or ordinary
shares;
|
|
·
|
any
date on and after which the equity warrants and such ADRs or ordinary
shares will be separately
transferable;
|
|
·
|
the
date on which the right to exercise the equity warrants will commence,
and
the date on which those rights will
expire;
|
|
·
|
the
maximum or minimum number of equity warrants which may be exercised
at any
time;
|
|
·
|
information
with respect to any book-entry procedures for the registration
and
transfer of equity warrants;
|
|
·
|
a
discussion of any material federal income tax considerations applicable
to
holding, transferring or exercising equity warrants;
and
|
|
·
|
any
other terms of the equity warrants, including terms, procedures
and
limitations relating to the exercise of the equity
warrants.
|
Unless
we
specify otherwise in a prospectus supplement, holders of equity warrants
will
not be entitled, by virtue of being such holders, to vote, consent, receive
dividends, receive notice as shareholders with respect to any meeting of
our
shareholders, or to exercise any rights whatsoever as shareholders.
As
described in a prospectus supplement, the exercise price payable and the
number
of ADRs or ordinary shares purchasable upon the exercise of each equity warrant
will be adjusted in certain events, including the issuance of a stock dividend
to holders of ordinary shares or a stock split, reverse stock split,
combination, subdivision or reclassification of ordinary shares. Instead
of
adjusting the number of ADRs or ordinary shares purchasable upon exercise
of
each equity warrant, we may elect to adjust the number of equity
warrants. No fractional ADRs or ordinary shares will be issued upon
exercise of equity warrants, but we will pay the cash value of any fractional
ADRs or ordinary shares otherwise issuable. Unless we specify otherwise in
a
prospectus supplement, in case of any consolidation, merger, or sale or
conveyance of our property as an entirety or substantially as an entirety,
the
holder of each outstanding equity warrant shall have the right to the kind
and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of ADRs or ordinary shares into which
the
equity warrant was exercisable immediately prior to the particular triggering
event.
Each
equity warrant will entitle the holder to purchase the principal amount or
number of securities at the exercise price as shall in each case be set forth
in, or be determinable as set forth in, the applicable prospectus supplement.
Equity warrants may be exercised at any time up to the close of business
on the
expiration date set forth in the prospectus supplement relating to the warrants
offered thereby. After the close of business on the expiration date, unexercised
warrants will become void.
-26-
We
will
describe the procedures for exercising warrants in a prospectus supplement.
Upon
receipt of payment and the warrant certificate properly completed and duly
executed at the corporate trust office of the warrant agent or any other
office
indicated in the applicable prospectus supplement, we will, as soon as
practicable, forward the securities purchasable upon that exercise. If less
than
all of the warrants represented by a particular warrant certificate are
exercised, a new warrant certificate will be issued for the remaining
warrants.
DESCRIPTION
OF UNITS
As
specified in the applicable prospectus supplement, we may issue units consisting
of one or more warrants, preference shares, ordinary shares or any combination
of such securities. The applicable prospectus supplement will
describe:
|
·
|
the
terms of the units and of the warrants, preference shares and ordinary
shares comprising the units, including whether and under what
circumstances the securities comprising the units may be traded
separately;
|
|
·
|
a
description of the terms of any unit agreement governing the units;
and
|
|
·
|
a
description of the provisions for the payment, settlement, transfer
or
exchange or the units.
|
LEGAL
MATTERS
The
validity of the securities offered by this prospectus will be passed upon
by
Blake Dawson Waldron, Perth, Western Australia.
EXPERTS
The
consolidated financial statements incorporated in this prospectus by reference
from our Annual Report on Form 20-F for the year ended June 30, 2006 have
been
audited by Deloitte Touche Tohmatsu, an independent registered public accounting
firm, as stated in their report, which is incorporated herein by reference,
and
have been so incorporated in reliance upon the report of such firm given
upon
their authority as experts in accounting and auditing.
The
audited historical financial statements of CDS for the three year period
ended
December 31, 2004, included in pSivida Limited’s Form 6-K furnished to the SEC
on December 22, 2005 have been so incorporated in reliance upon the report
of
PricewaterhouseCoopers LLP, independent accountants, given upon the authority
of
said firm as experts in auditing and accounting.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are a
public company incorporated under the laws of Western Australia. Most of
our
directors and executive officers and current employees named in
this prospectus reside outside the United States, and the assets of those
non-resident directors and most of our assets are located outside the United
States. It may be difficult for investors to effect service of process upon
these directors and executive officers. In addition, there may be difficulties
in certain circumstances in using the courts of Australia to enforce judgments
obtained in United States courts in actions against us or our directors,
including judgments based on the civil liability provisions of the federal
securities laws of the United States.
-27-
EXPENSES
The
expenses relating to the registration of the securities registered pursuant
to
the registration statement of which this prospectus is a part are estimated
to
be approximately US$131,842, which include the following categories of
expenses:
|
SEC
Registration Fees
|
US$1,842
|
|
Transfer
Agent Fees
|
US$5,000
|
|
Printing
and Photocopying
|
US$10,000
|
|
Legal
Fees and Expenses
|
US$50,000
|
|
Accounting
Fees and Expenses
|
US$50,000
|
|
Indenture
Trustee Fees
|
US$5,000
|
|
Miscellaneous
(including EDGAR filing costs)
|
US$10,000
|
|
Total
|
US$131,842
|
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
As
required by the Securities Act, we have filed with the SEC a registration
statement on Form F-3, of which this prospectus is a part, with
respect to the securities offered hereby. This prospectus does not contain
all
of the information included in the registration statement. Statements in
this
prospectus concerning the provisions of
any
document
are not necessarily complete. You should refer to the copies of the documents
filed as exhibits to the registration statement or otherwise filed by us
with
the SEC for a more complete understanding of the matter involved. Each statement
concerning these documents is qualified in its entirety by such
reference.
We
are
subject to the information reporting requirements of the Securities and Exchange
Act of 1934, as amended, applicable to foreign private issuers, and we comply
with those requirements by submitting reports to the SEC. Those reports or
other
information may be inspected without charge at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation
of
the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.
Our SEC filings and submissions also are available to the public on the SEC’s
website at www.sec.gov.
As a
foreign private issuer, we are exempt from the rules under the Exchange Act
related to the furnishing and content of proxy statements, and our officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange
Act. In addition, we are not required under the Exchange Act to file quarterly
and current reports with the SEC, unlike United States companies whose
securities are registered under the Exchange Act. However, we are required
to
file with the SEC, within six months after the end of each fiscal year, an
annual report on Form 20-F containing financial statements audited by an
independent registered public accounting firm.
INCORPORATION
BY REFERENCE
The
SEC
allows us to “incorporate by reference” in this prospectus the information that
we file with them. This means that we can disclose important information
to you
in this document by referring you to other filings we have made with the
SEC.
The information incorporated by reference is considered to be part of this
prospectus, and later information we file with the SEC will update and supersede
this information. We incorporate by reference the documents listed
below:
|
·
|
Our
Annual Report on Form 20-F for the fiscal year ended June 30, 2006,
filed
with the SEC on December 8, 2006;
|
|
·
|
The
audited historical financial statements of CDS as of December 31,
2004 and
2003 and for each of the three years in the period December 31,
2004,
included in our report on Form 6-K furnished to the SEC on December
22,
2005;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on December 20,
2006;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on January 3,
2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on January 4, 2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on January 23, 2007;
|
-28-
|
·
|
Our
report on Form 6-K furnished to the SEC on January 30, 2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on January 31, 2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on February 20,
2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on February 22, 2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on February 27, 2007;
|
|
·
|
Our
report on Form 6-K furnished to the SEC on February 28, 2007;
and
|
|
·
|
The
description of our securities contained in our Registration Statement
on
Form 20-F, filed with the SEC on January 20, 2005 and any amendment
or
report filed for the purpose of updating that
description.
|
In
addition, all subsequent annual reports filed on Form 20-F prior to the
termination of this offering are incorporated by reference into this prospectus.
Also, we may incorporate by reference our future reports on Form 6-K by
stating in those Forms that they are being incorporated by reference into
this
prospectus.
This
prospectus may contain information that updates, modifies or is contrary
to
information in one or more of the documents incorporated by reference in
this
prospectus. Reports we file with the SEC after the date of this prospectus
may
also contain information that updates, modifies or is contrary to information
in
this prospectus or in documents
incorporated by reference in this prospectus. Investors should review these
reports as they may disclose a
change
in our business, prospects, financial condition or other affairs after the
date
of this prospectus.
Upon
your
written or oral request, we will provide at no cost to you a copy of any
and all
of the information that is incorporated by reference in this
prospectus.
Requests
for such documents should be directed to:
Lori
Freedman, Esq.
Vice
President, Corporate Affairs, General Counsel and Secretary
pSivida
Limited
400
Pleasant Street
Watertown,
MA 02472
Telephone:
(617) 926-5000
You
may
also access the documents incorporated by reference in this prospectus through
our website www.psivida.com. Except for the specific incorporated documents
listed above, no information available on or through our website shall be
deemed
to be incorporated in this prospectus or the registration statement of which
it
forms a part.
-29-
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
8. Indemnification
of Directors and Officers
Constitution
Our
constitution states that we must, to the extent the person is not otherwise
indemnified, indemnify every officer of pSivida or its wholly-owned
subsidiaries. Whilst our constitution provides that we may indemnify our
auditors against any liabilities to third parties arising from service to
pSivida, except for any liabilities arising out of conduct involving a lack
of
good faith, no actual indemnification has been provided or sought. Further,
we
hereby acknowledge that such indemnifications are deemed to be unenforceable
under U.S. securities laws, and we hereby undertake not to provide such
indemnification in the future.
In
addition, we may advance funds to cover legal costs incurred by any officer
or
auditor in defending against liabilities arising from service to
pSivida.
The
Australian Corporations Act 2001 permits a company to purchase and maintain
insurance on behalf of directors, other officers or auditors of pSivida against
any liability (other than legal costs) except liability arising out of conduct
involving a willful breach of duty, the improper use of information acquired
by
virtue of his or her position, or the improper use of his or her position
to
gain an advantage for himself or herself or any other person, or to cause
detriment to pSivida. Our constitution authorizes us to purchase and maintain
liability insurance, subject to Australian law.
We
confirm that we have not, nor do we have an obligation or arrangement to,
advance funds to our auditors to cover legal costs or purchase or maintain
insurance on behalf of our auditors. We hereby acknowledge that such obligations
or arrangements are deemed unenforceable under U.S. Securities laws and we
hereby undertake not to provide or seek any such obligation or arrangement
in
the future. Our auditors have earlier provided the SEC with similar
assurances.
The
indemnity in favor of officers is a continuing indemnity which applies in
respect of all acts done by a person while an officer of pSivida or one of
its
wholly owned subsidiaries even though the person is not an officer at the
time
the claim is made.
Subject
to Australian law, we may enter into an indemnification agreement with a
person
who is or has been an officer of pSivida or any of its subsidiaries, to give
effect to the indemnification rights provided for in the
Constitution.
Australian
Law
Section
199A(1) of the Corporations Act 2001 (Commonwealth) provides that a company
or a
related body corporate must not exempt a person from a liability to the company
incurred as an officer of the company. Section 199A(2) of the Corporations
Act provides that a company or a related body corporate must not indemnify
a
person against any of the following liabilities incurred as an officer of
the
company:
•
a
liability owed to the company or a related body corporate;
•
a
liability for a pecuniary penalty order or compensation order under specified
provisions of the Corporations Act; or
•
a
liability that is owed to someone other than the company or a related body
corporate that did not arise out of conduct in good faith.
Section
199A(2) does not apply to a liability for legal costs.
Section
199A(3) provides that a company or a related body corporate must not indemnify
a
person against legal costs incurred in defending an action for a liability
incurred as an officer of the company if the costs are incurred:
II-1
•
in
defending or resisting proceedings in which the person is found to have a
liability for which they could not be indemnified under Section 199A(2);
or
•
in
defending or resisting criminal proceedings in which the person is found
guilty;
or
•
in
defending or resisting proceedings brought by the Australian Securities and
Investments Commission (ASIC) or a liquidator for a court order if the grounds
for making the order are found by the court to have been established (this
does
not apply to costs incurred in responding to actions taken by ASIC or a
liquidator as part of an investigation before commencing proceedings for
the
court order); or
•
in
connection with proceedings for relief to the person under the Corporations
Act
in which the court denies the relief.
Section
199B of the Corporations Act provides that a company or a related body corporate
must not pay, or agree to pay, a premium for a contract insuring a person
who is
or has been an officer of the company against a liability (other than one
for
legal costs) arising out of:
•
conduct
involving a willful breach of any duty in relation to the company;
or
•
a
contravention of the officer’s duties under the Corporations Act not to
improperly use their position or make improper use of information obtained
as an
officer.
For
the
purpose of Sections 199A and 199B, an “officer” of a company
includes:
•
a
director or secretary;
•
a
person who makes, or participates in making, decisions that affect the whole,
or
a substantial part, of the business of the company;
•
a
person who has the capacity to significantly affect the company’s financial
standing; and
•
a
person in accordance with whose instructions or wishes the directors of the
company are accustomed to act.
Item
9. Exhibits
|
Exhibit
No.
|
Exhibit
Title
|
|
|
1.1
|
Underwriting
Agreement (for equity securities)**
|
|
|
2.1
|
Merger
Agreement, dated October 3, 2005, among pSivida Limited, pSivida
Inc., and
Control Delivery Systems Inc. (b)
|
|
|
4.1
|
Deposit
Agreement, by and among pSivida Limited, Citibank, N.A. and the
Holders
and Beneficial Owners of American Depositary Shares Evidenced by
American
Depositary Receipts Issued Thereunder (c)
|
|
|
5.1
|
Legal
Opinion of Blake Dawson Waldron, dated February 28,
2007 (a)
|
|
|
23.1
|
Consent
of PricewaterhouseCoopers LLP, dated March
5, 2007 (a)
|
|
|
23.2
|
Consent
of Deloitte Touche Tohmatsu, dated March 2, 2007 (a)
|
|
|
23.3
|
Consent
of Blake Dawson Waldron (contained in the opinion filed as Exhibit
5.1 to
this Registration Statement)
|
|
|
24.1
|
Power
of Attorney (included on the signature page of this Registration
Statement)
|
**To be file either as an amendment or as an exhibit to a report filed pursuant to the Securities Exchange Act of 1934 of the Registrant and incorporated by reference into the Registration Statement.
(a)
Filed
herewith.
(b)
Incorporated by reference to the registrant’s later filing on Form 6-K
(Commission file number 000-51122) filed on October 4, 2005. The agreement
filed
omitted certain schedules containing immaterial information; the registrant
agrees to furnish supplemental copies of any omitted schedules to the Commission
upon request.
(c)
Incorporated by reference to the registrant’s filing on Form F-6 (Commission
file number 333-122158) filed on January 19, 2005.
II-2
Item
10. Undertakings
The
undersigned registrant hereby undertakes:
|
(1)
|
To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
|
| (i) |
To
include any prospectus required in Section 10(a)(3) of the Securities
Act
of 1933;
|
| (ii) |
To
reflect in the prospectus any facts or events arising after the
effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from
the low or high end of the estimated maximum offering range may
be
reflected in the form of prospectus filed with the Commission pursuant
to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering
price
set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
|
| (iii) |
To
include any material information with respect to the “Plan of
Distribution” not previously disclosed in the registration statement or
any material change to such information in the registration
statement;
|
Provided,
however,
that:
|
(A)
|
Paragraphs
(1)(i) and (1)(ii) of this section do not apply if the registration
statement is on Form S-8, and the information required to be included
in a
post- effective amendment by those paragraphs is contained in reports
filed with or furnished to the Commission by the registrant pursuant
to
section 13 or section 15(d) of the Securities Exchange Act of 1934
that
are incorporated by reference in the registration statement;
and
|
|
(B)
|
Paragraphs
(1)(i), (1)(ii) and (1)(iii) of this section do not apply if the
registration statement is on Form S-3 or Form F-3 and the information
required to be included in a post-effective amendment by those
paragraphs
is contained in reports filed with or furnished to the Commission
by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement, or is contained in a form of prospectus
filed
pursuant to Rule 424 (b) that is part of the registration
statement.
|
|
(C)
|
Provided
further,
however,
that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is for an offering of asset-backed securities on Form
S-1 or
Form S-3, and the information required to be included in a post-effective
amendment is provided pursuant to Item 1100(c) of Regulation
AB.
|
|
(2)
|
That,
for the purpose of determining any liability under the Securities
Act of
1933, each such post-effective amendment shall be deemed to be
a new
registration statement relating to the securities offered therein,
and the
offering of such securities at that time shall be deemed to be
the initial
bona
fide offering
thereof;
|
|
(3)
|
To
remove from registration by means of a post-effective amendment
any of the
securities being registered which remain unsold at the termination
of the
offering;
|
|
(4)
|
To
file a post-effective amendment to the registration statement to
include
any financial statements required by Item 8.A of Form 20-F at the
start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3)
of the
Securities Act of 1933 need not be furnished, provided, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph
(4)
and other information necessary to ensure that all other information
in
the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be
filed to
include financial statements and information required by Section
10(a)(3)
of the Securities Act or Rule 3-19 if such financial statements
and
information are contained in periodic reports filed with or furnished
to
the Commission by the registrant pursuant to Section 13 or Section
15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference
in Form F-3;
|
II-3
|
(5)
|
That,
for the purpose of determining liability under the Securities Act
of 1933
to any purchaser:
|
| (i) |
If
the registrant is relying on Rule
430B:
|
|
(A)
|
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall
be
deemed to be part of the registration statement as of the date
the filed
prospectus was deemed part of and included in the registration
statement;
and
|
|
(B)
|
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5),
or
(b)(7) as part of a registration statement in reliance on Rule
430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii),
or (x)
for the purpose of providing the information required by section
10(a) of
the Securities Act of 1933 shall be deemed to be part of and included
in
the registration statement as of the earlier of the date such form
of
prospectus is first used after effectiveness or the date of the
first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of
the issuer
and any person that is at that date an underwriter, such date shall
be
deemed to be a new effective date of the registration statement
relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall
be deemed
to be the initial bona
fide offering
thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement
or made
in a document incorporated or deemed incorporated by reference
into the
registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale
prior to
such effective date, supersede or modify any statement that was
made in
the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such
effective
date; or
|
| (ii) |
If
the registrant is subject to Rule 430C, each prospectus filed pursuant
to
Rule 424(b) as part of a registration statement relating to an
offering,
other than registration statements relying on Rule 430B or other
than
prospectuses filed in reliance on Rule 430A, shall be deemed to
be part of
and included in the registration statement as of the date it is
first used
after effectiveness. Provided, however, that no statement made
in a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated
by
reference into the registration statement or prospectus that is
part of
the registration statement will, as to a purchaser with a time
of contract
of sale prior to such first use, supersede or modify any statement
that
was made in the registration statement or prospectus that was part
of the
registration statement or made in any such document immediately
prior to
such date of first use.
|
|
(6)
|
That,
for purposes of determining any liability under the Securities
Act of
1933, each filing of the registrant’s annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where
applicable, each filing of an employee benefit plan’s annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is
incorporated by reference in the registration statement shall be
deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed
to be the initial bona fide offering
thereof.
|
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 8 above, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being
registered, the registrant will, unless in the opinion of its counsel the
matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form F-3 and has duly caused this registration statement to be
signed
on its behalf by the undersigned, thereunto duly authorized, in the City
of
Perth, Western Australia on March
6, 2007.
|
PSIVIDA
LIMITED
|
||
| |
|
|
| By: | /s/ Paul Ashton | |
|
Name: Paul Ashton |
||
|
Title:
Managing
Director
|
||
| |
|
|
| By: | /s/ Michael J. Soja | |
|
Name: Michael J. Soja |
||
|
Title:
Vice
President, Finance and Chief Financial
Officer
|
||
Each
of
the undersigned hereby constitutes and appoints Paul Ashton and Michael J.
Soja,
in each case acting individually, his true and lawful attorney-in-fact, with
power of substitution and resubstitution, in his name, place and stead, in
any
and all capacities, to sign any or all amendments, including post-effective
amendments, and supplements to this Registration Statement or any related
registration statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same,
with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and
agents, and each of them, full power and authority to do and perform each
and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that each said attorney-in-fact, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the U.S. Securities Act of 1933, as amended, this
Registration Statement has been signed by or on behalf of the following persons
in the capacities indicated as of March
6, 2007.
|
Name
|
Title
|
|
|
/s/Paul
Ashton
Name:
Paul
Ashton
|
Managing
Director, (principal executive officer)
|
|
|
/s/Roger
Aston
Name: Roger Aston |
Director
|
|
|
/s/Stephen
Lake
Name: Stephen Lake |
Director
|
|
|
/s/David
Mazzo
Name: David Mazzo |
Chairman
of the Board of Directors
|
|
|
/s/Michael
W. Rogers
Name: Michael W. Rogers |
Director
|
|
|
/s/
Michael J. Soja
Name: Michael J. Soja |
Vice
President, Finance and Chief Financial Officer, Authorized Representative
in the United States (principal accounting officer)
|
II-5
BLAKE
DAWSON WALDRON
L
A
W Y E R S
|
Level
32
Exchange Plaza 2 The Esplanade Perth WA 6000 www.bdw.com Tel + 61 8 9366 8000 Fax + 61 8 9366 8111 DX 169 Perth PO Box 7438 Cloisters Square Perth WA 6850 Australia |
|
pSivida
Limited
Level
12, BGC Centre
28
The Esplanade
PERTH
WA 6000
Attention:
The Directors
|
Partner
Roger
Davies
Telephone
(08) 9366 8022
Contact Murray
Wheater
Telephone
(08) 9366 8792
Our reference DRD
MRW 09-1412-4432
28
February 2007
|
Dear
Sirs
Registration
Statement on Form F-3 (Shelf)
We
have
acted as Australian legal advisers to pSivida Limited (Company)
in
connection with the Company’s registration statement on Form F-3 (Registration
Statement),
to be
filed with the Securities and Exchange Commission under the U.S. Securities
Act
of 1933 as amended (Securities
Act)
on or
about the date of this opinion.
The
Registration Statement relates to the offer from time to time, in one or
more
series or issuances and at prices and on terms that will determined at the
time
of offering, up to US$60,000,000 in gross proceeds, by the Company of Shares,
Warrants, Preference Shares and/or
Units.
We are furnishing this opinion as exhibit 5.1 to the Registration Statement,
subject to the final paragraph of this opinion.
|
1.
|
DEFINITIONS
|
In
this
opinion:
|
(a)
|
ACN
means Australian Company Number.
|
|
(b)
|
ASIC
means the Australian Securities and Investments
Commission.
|
|
(c)
|
ASX
means
ASX Limited ACN 008 624 691 or the market operated by it, the Australian
Securities Exchange, as the context
requires.
|
|
(d)
|
ASX
Listing Rules
means the Listing Rules of ASX.
|
|
(e)
|
Company
means pSivida Limited, registered in Western Australia, ACN 009
232
026.
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PERTH
SYDNEY
MELBOURNE
BRISBANE
CANBERRA
PORT
MORESBY
JAKARTA
SHANGHAI
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BLAKE
DAWSON WALDRON
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28
February 2007
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pSivida
Limited
Registration
Statement on Form F-3 (Shelf)
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Page
2
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(f)
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Corporations
Act
means the Corporations
Act 2001
(Cth).
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(g)
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Issue
means
each issue of Securities.
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(h)
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Preference
Shares
means the preference shares which may be offered from time to time
by the
Company pursuant to the Registration Statement and described in
the
section headed "Description of Preference Shares" in the Registration
Statement.
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(i)
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Prospectus
means the prospectus contained in the Registration
Statement.
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(j)
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Relevant
Jurisdiction
means the State of Western Australia,
Australia.
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(k)
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Relevant
Laws
means the laws of the Relevant Jurisdiction and the federal laws
of
Australia as they apply in the Relevant
Jurisdiction.
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(l)
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Securities
means the Shares, Warrants, Preference Shares and Units or any
one or more
of them as the context requires.
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(m)
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Shares
means the fully paid ordinary shares which may be offered from
time to
time by the Company pursuant to the Registration Statement and
described
in the section headed "Description of Ordinary
Shares"
in the Registration Statement and any fully paid ordinary shares
arising
from the exercise or conversion of any of the other
Securities.
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(n)
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Units
means the units which may be offered from time to time by the Company
pursuant to the Registration Statement and described in the section
headed
"Description of Units" in the Registration
Statement.
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(o)
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Warrants
means the warrants which
may be offered from time to time by the Company pursuant to the
Registration Statement and described in the section headed "Description
of
Warrants" in the Registration
Statement.
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In
this
opinion, headings are for convenience only and do not affect interpretation
and
references to paragraphs are to paragraphs of this opinion.
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2.
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DOCUMENTS
REVIEWED
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For
the
purposes of giving this opinion, we have examined the following
documents:
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(a)
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a
search of the ASIC database in respect of the Company on 28
February 2007 which shows that the Company is
registered;
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(b)
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the
current constitution of the
Company;
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(c)
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the
draft Prospectus;
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BLAKE
DAWSON WALDRON
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28
February 2007
|
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pSivida
Limited
Registration
Statement on Form F-3 (Shelf)
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Page
3
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(d)
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resolutions
of the board of directors of the Company passed on 12 January 2007
authorising the execution and filing of the Registration Statement,
certified as a true and correct copy by the company secretary of
the
Company;
and
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(e)
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the
draft Registration Statement
dated 26 February 2007.
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3.
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SCOPE
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This
opinion relates only to the Relevant Laws in force at 9 am (Western Australian
time) on the date of this opinion.
This
opinion is given on the basis that it will be construed in accordance with
the
Relevant Laws.
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4.
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OPINION
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Subject
to the assumptions and qualifications set out below and the matters set out
above, we are of the following opinion:
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(a)
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the
Company has been duly incorporated and is registered as a public
company
limited by shares under the Corporations Act;
and
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(b)
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when:
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(i)
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the
Registration Statement has become effective under the Securities
Act and
such effectiveness has not been terminated or
rescinded;
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(ii)
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the
creation, allotment
and issue of
the
Securities has
been resolved upon
by
the Company
in
conformity
with its constitution, the ASX Listing Rules,
the Relevant Laws, all other applicable laws, the provisions of
all
instruments and agreements binding upon the Company and any restriction
imposed by any court or governmental body having jurisdiction over
the
Company or the Securities;
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(iii)
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the
Securities have been duly issued and paid for as contemplated by
the
Registration Statement and the terms of issue of the
Securities,
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then
the
Securities will be validly issued, fully paid and there will be no liability
for
further calls on them to contribute to the liabilities of the Company or
otherwise.
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BLAKE
DAWSON WALDRON
|
28
February 2007
|
|
pSivida
Limited
Registration
Statement on Form F-3 (Shelf)
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Page
4
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5.
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ASSUMPTIONS
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For
the
purposes of this opinion, we have assumed that:
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(a)
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all
signatures, seals and dates on the documents which we have reviewed
are
genuine;
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(b)
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if
we have reviewed a draft of a document rather than a signed or
executed
copy, the document will be executed in the form of that
draft;
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(c)
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each
document which is submitted to us is complete and each copy of
a document
conforms to the original document which continues in full force
and
effect;
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(d)
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any
document that we have reviewed has not been amended, released or
discharged, and no provision in it has been
waived;
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(e)
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the
Registration Statement and Prospectus, when filed with the Securities
and
Exchange Commission, will not differ in any material way from the
drafts
of the Registration Statement and Prospectus which we have examined
for
the purposes of this opinion;
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(f)
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any
factual statement made in any document is
true;
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(g)
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the
creation,
allotment and issue
of
the Securities will be undertaken in accordance with, and the terms
of the
Securities will comply with, the constitution of the Company, the
ASX
Listing Rules,
all Relevant Laws
and all other applicable laws, and the Securities will be issued
as fully
paid.
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(h)
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in
connection with each Issue there will be no
contravention:
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(i)
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of
any Relevant Laws including, without limitation, the Corporations
Act and
the Foreign
Acquisitions and Takeovers Act
1975 (Cth);
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(ii)
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of
the ASX Listing Rules;
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(iii)
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of
the Company's constitution;
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(iv)
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by
the Company of any agreement or instrument binding on
it;
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(v)
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by
the Company of any order, requirement or restriction imposed on
it by a
court or governmental body in the Relevant
Jurisdiction;
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(i)
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each
Issue will be conducted by the Company in good faith and in its
best
interests, for the purpose of carrying on its
business;
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(j)
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the
Company will be solvent at the time of and immediately after each
Issue
and is solvent at the date of this
opinion;
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BLAKE
DAWSON WALDRON
|
28
February 2007
|
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pSivida
Limited
Registration
Statement on Form F-3 (Shelf)
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Page
5
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(k)
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each
meeting of the Company's board of directors and shareholders (if
required)
to approve the issue of Securities is properly convened
and:
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(i)
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the
resolutions are properly passed as valid decisions of the board
of
directors of the Company or the Company's shareholders (as the
case may
be) and have not been and will not be subsequently revoked, cancelled
or
varied; and
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(ii)
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the
directors of the Company have properly performed their duties and
all
provisions relating to the declaration of interest and voting have
been
duly observed; and
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(l)
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where
any obligation in connection with an Issue is to be performed in
any
jurisdiction other than the Relevant Jurisdiction, or is subject
to any
laws other than the Relevant Laws, it will not be illegal, invalid
or
unenforceable under the laws of that jurisdiction or such other
laws.
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We
have
not investigated whether the assumptions in this paragraph 5 are
correct.
None
of
the assumptions is limited by reference to any other assumption.
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6.
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QUALIFICATIONS
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Our
opinion is subject to the following qualifications.
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6.1
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Searches
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We
have
not made any independent investigations or searches, other than requests
to ASIC
for the company search referred to in paragraph 2(a) (the information disclosed
in the search results rely on information lodged by the Company, and the
search
results may not be complete, accurate or up to date).
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6.2
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General
qualifications
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(a)
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We
have relied, as to certain matters of fact, on information provided
by
officers of the Company.
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(b)
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No
allotment of any Securities has (we understand) yet taken place
and no
such allotment may take place.
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(c)
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This
opinion only relates to the laws of the Relevant Jurisdiction.
We express
no opinion on laws other than the Relevant
Laws.
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None
of
the qualifications is limited by reference to any other
qualification.
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7.
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CONSENT
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We
hereby
consent to the use of this opinion in, and the filing of this opinion, as
an
exhibit to the Registration Statement, and to the reference to our firm under
the heading “Legal Matters” and elsewhere in, the Prospectus. In giving such
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act, or the Rules and
Regulations of the Commission under the Securities Act.
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BLAKE
DAWSON WALDRON
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28
February 2007
|
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pSivida
Limited
Registration
Statement on Form F-3 (Shelf)
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Page
6
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8.
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RELIANCE
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This
opinion is addressed solely to the Company.
Other
than as contemplated in paragraph 7, this opinion may not, in whole or in
part,
without our prior written consent be:
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(a)
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relied
upon by any other person;
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(b)
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disclosed
to any other person; or
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(c)
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filed
with any government or other agency or quoted or referred to in
any public
document,
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except
as
required by law.
Yours
faithfully
/s/ Blake Dawson Waldron