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.
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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
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
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Proposed
Maximum Aggregate Offering Price
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Amount
of Registration Fee
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Ordinary
Shares underlying warrants
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24,103,751(2)
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$0.20 (3)
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$48,207,502
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$5,161
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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)
In
accordance with Rule 416(a), the Registrant is also registering hereunder
an
indeterminate number of ordinary shares that may be issued and resold to
prevent
dilution resulting from stock splits, stock dividends or similar
transactions.
(3)
Estimated solely for the purpose of computing the amount of the registration
fee
and computed pursuant to Rule 457(g)(1) and 457(g)(2) under the Securities
Act
of 1933 based upon the higher of the price at which the warrants may be
exercised and the offering price of securities of the same class included
in the
registration statement.
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.
The
selling security holder 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 May 24, 2007.
PSIVIDA
LIMITED
24,103,751
American Depositary Shares
representing
241,037,510 Ordinary Shares
The
selling security holder of pSivida Limited identified on page 23 of
this
prospectus may offer and resell up to 24,103,751 of our American Depositary
Shares, or ADSs, each of which is evidenced by an American Depository Receipt
and represents ten of our ordinary shares. The ADSs being offered by the
selling
security holder hereunder are issuable to the selling security holder upon
exercise of warrants. We will not receive any proceeds from the sale of shares
by the selling security holder. We may receive proceeds from the exercise
of the
warrants held by the selling security holder if the selling security holder
exercises the warrants. We originally issued the warrants to the selling
security holder in private transactions.
This
offering is not being underwritten. The selling security holder may sell
the
ADSs being offered by it from time to time on the NASDAQ Global Market, in
market transactions, in negotiated transactions or otherwise, and at prices
and
at terms that will be determined by the then prevailing market price for
the
ADSs or by a combination of such methods of sale. For additional information
on
the methods of sale, you should refer to the section entitled “Plan of
Distribution”.
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 May 21, 2007
was
US$1.57.
Our
ordinary shares are listed on the Australian Stock Exchange under the symbol
“PSD”. On May 21, 2007, the closing price of our ordinary shares on the
Australian Stock Exchange was A$0.180, equivalent to a price of approximately
US$1.48 per ADS based on the Federal Reserve Bank of New York noon buying
exchange rate on that date of A$1.00 = US$0.82. 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
6
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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Risk
Factors
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6
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Forward-Looking
Statements
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20
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Capitalization
and Indebtedness
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21
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The
Offering
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22
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Use
of Proceeds
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23
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Selling
Security Holder
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23
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Plan
of Distribution
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24
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Description
of Securities
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26
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Legal
Matters
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26
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Experts
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26
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Enforceability
of Civil Liabilities
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26
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Expenses
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27
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Where
You Can Find Additional Information
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27
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Incorporation
by Reference
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27
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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.
-1-
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$” are to
United States dollars. In our financial statements references to “$” 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.
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, Australia
and the United States.
Our
Business
pSivida
is a global, bio-nanotechnology 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.
| · |
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 being
developed in conjunction with Alimera Sciences and is in Phase III
clinical trials for the treatment of diabetic macular edema, or DME.
In
April 2007, we announced an exclusive world-wide collaborative research
and license agreement with Pfizer, Inc. for our controlled drug delivery
technologies, including the portions of our Medidur technology which
had
not previously been licensed to Alimera, in ophthalmic applications.
The
technology may also be evaluated in the future for the delivery of
proprietary therapeutics for 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
material 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 pancreatic cancer. BioSilicon is also being evaluated
for the
delivery of proprietary molecules by 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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-2-
| · |
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:
| · |
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 are
expected to 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
will
be 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.
On
September 14, 2006, we amended the terms of the subordinated convertible
promissory note that we issued on November 16, 2005 to the selling security
holder. The amended note continued to have a three year term, with interest
at
8% payable quarterly, and allowed for future interest payments to be made
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. The conversion price
was
adjusted to US$1.62 as of February 22, 2007. 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 selling security holder’s conditional redemption rights
under the terms of the original 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 selling security holder retains its existing warrants to purchase
633,803 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 selling security
holder to extend the deadline for the registration statement required by
the
registration rights agreement to be declared effective by the Securities
and
Exchange Commission, or 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 selling security holder 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.
-3-
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 was lower than the then current conversion price. The conversion price
was
adjusted to US$1.62 as of February 22, 2007 and was further adjusted to US$1.21
per ADS as of May 15, 2007. 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 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. We filed the registration statement on March
6,
2007 and it was declared effective by the SEC on March 9, 2007. We paid
US$147,000 (A$186,000) of registration rights penalties to the investors
through
the effective date. 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 were used for general corporate purposes. Between November 1, 2006
and
April 4, 2007, the note holders converted US$5.7 million (A$7.0 million)
in
principal amount of and US$6,000 (A$7,000) in interest on the subordinated
convertible notes. On May 15, 2007, we sent the note holders notice of our
irrevocable election to redeem the remaining principal balance of the notes,
pursuant to which, assuming no conversions in the interim, we will pay the
holders US$885,000 (A$1.1 million) on June 14, 2007.
On
October 10, 2006, we announced that the first patient had been implanted
with
BrachySil for the treatment of inoperable pancreatic cancer in
London.
On
October 17, 2006, we signed a letter agreement with the selling security
holder
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 selling security holder 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 selling security holder 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 a second amendment agreement, dated December 29, 2006, we
and
the selling security holder agreed, among other things, and subject to certain
closing conditions, to waive the cash balance test until March 30, 2007,
to
defer our scheduled payment of US$800,000 and to 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. We also issued to the selling security holder an additional warrant
to
purchase 1.5 million ADSs exercisable for five years with an exercise price
of
US$2.00 per ADS and agreed to issue at closing a further warrant to purchase
4.0
million ADSs exercisable for five years with an exercise price of US$2.00
per
ADS. On March 30, 2007, we paid the scheduled US$800,000 that had been deferred
pursuant to the second amendment agreement.
On
May
15, 2007, we and the selling security holder amended the second amendment
agreement and completed the transactions contemplated thereby pursuant to
which
we: (i) redeemed the remaining principal balance and accrued interest of
the
convertible note by a single payment of US$13.7 million (A$16.5 million)
which
also represented an excess payment made in consideration of our ability to
redeem earlier than the terms of the note permitted; (ii) issued the previously
agreed warrants to purchase 4.0 million ADSs with an exercise price of US$2.00
per ADS; and (iii) issued additional warrants to purchase 4.0 million ADSs
with
an exercise price of US$1.57 per ADS, 1.0 million ADSs with an exercise price
of
US$1.95 per ADS and 2,341,347 ADSs with an exercise price of US$1.21 per
ADS, in
each case with a term of five years.
-4-
On
November 20, 2006, we announced that we had entered into an evaluation agreement
with another company to evaluate our BioSilicon technology for the development
of transdermal drug delivery systems. The term of the agreement is 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.
On
December 20, 2006, we announced that Dr. Roger Aston had been reappointed
to the
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 agreed to make payments totaling US$990,000 (A$1.3
million) 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
U.S.-based Faber Research LLC, or Faber, 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, Faber 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 Faber and we will
be
entitled to receive royalties and milestones payments. In addition, we granted
Faber 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
April
4, 2007, following an exclusive negotiation period that commenced on December
26, 2006, we announced an exclusive world-wide collaborative research and
license agreement with Pfizer, Inc. for our controlled drug delivery
technologies, including the Medidur technology, in ophthalmic applications.
Under the terms of the agreement, Pfizer agreed to provide up to US$155 million
(A$191 million) in development and sales related milestones. In addition
to
milestone payments, Pfizer will fund the cost of the joint research program.
We
have granted Pfizer an exclusive license to market all products developed
as
part of this research collaboration in ophthalmic applications, and Pfizer
will
pay us a royalty on net sales of those products. Pfizer may terminate the
agreement on 60 days notice without cause. In connection with the research
and
license agreement, Pfizer also made an equity investment in pSivida by
purchasing ordinary shares for US$5.0 million (A$6.1 million). The proceeds
of
that investment were held in escrow until they were used in the redemption
of
the convertible note issued to the selling security holder as of May 15,
2007.
On
April
13, 2007, we announced the sale of 100% of the stock of our subsidiary, AION
Diagnostics, Inc., to GEM Global Yield Fund, a portfolio management company.
At
the closing of the transaction on April 12, 2007, we received a cash payment
of
US$1.5 million (A$1.8 million) and a promissory note of US$1.5 million (A$1.8
million) due within one year.
On
April
23, 2007, we and Alimera Sciences announced that enrollment in the Phase
III
clinical trial of Medidur for DME had exceeded 50%.
On
May 1,
2007, we announced that Dr. Roger Aston resigned as a director of the Company
to
focus on other activities.
-5-
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$7.4
million (US$6.0 million) as of March 31, 2007, and we have used A$6.7 million
(US$5.3 million) and A$6.0 million (US$4.6 million) for operating activities
in
the three months ended March 31, 2007 and December 31, 2006, respectively.
For
the period from April 1, 2007 thru May 15, 2007 we (i) consummated private
placements of ordinary shares with aggregate net proceeds of approximately
A$16.2 million (US$13.3 million); (ii) received A$1.8 million (US$1.5 million)
of initial cash proceeds from the sale of our AION Diagnostics, Inc. subsidiary;
and (iii) redeemed in full our convertible promissory note to the selling
security holder by a single payment of A$16.5 million (US$13.7 million).
We had
cash and cash equivalents of approximately A$5.8 million (US$4.8 million)
as of
May 15, 2007. 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:
| · |
the
amount of royalty and other revenue that we
earn;
|
| · |
the
success and continued activity under our collaborative research and
licensing agreement with Pfizer;
|
| · |
the
successful completion and timing of satisfaction of development
milestones;
|
| · |
the
magnitude and scope of,
and continued
scientific progress in,
our research and development programs;
|
| · |
our
ability to maintain and establish strategic arrangements for research,
development, clinical testing, manufacturing and
marketing;
|
| · |
our
progress with pre-clinical and clinical
trials;
|
| · |
the
time and costs involved in obtaining regulatory approvals;
and
|
| · |
the
costs involved in preparing, filing, prosecuting, maintaining, defending
and enforcing our patents.
|
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. 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.
-6-
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 six months 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 March 31, 2007,
of
the next US$5.3 million (A$6.5 million) of future royalties otherwise payable
from the sales of Retisert, US$5.0 million (A$6.2 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 Retisert royalty payments.
If
we do not obtain certain waivers or fail to maintain effective resale
registration statements 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, or accrued for, any of these penalties, nor have such penalties
been waived. 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.
In
connection with the amendments to our initial convertible note financing
and our
subsequent convertible note financing, we entered into agreements to register
with the SEC the resale of ADSs issuable to the selling security holder and
the
other investors, respectively. 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 second amendment agreement with the selling
security holder related to our initial convertible note financing, we were
required to file the registration statement of which this prospectus is a
part.
If that registration statement is not declared effective prior to a specified
deadline, we will be obligated to pay substantial penalties. If we fail to
pay
these penalties in a timely manner, such penalties will bear interest at
the
rate of 1.0% per month, prorated for partial months, until paid in full.
With
respect to our subsequent convertible note financing, we were required to
complete the registration no later than January 1, 2007. We filed the
registration statement on March 6, 2007 and it was declared effective by
the SEC
on March 9, 2007. We paid US$147,000 (A$186,000) of registration rights
penalties to the investors through the effective date.
Our
failure or inability to maintain the effectiveness of any of our registration
statements or to adequately update information in the related prospectuses
may
subject us to additional penalties. In addition, we may have other registration
obligations with similar penalty provisions related to registration deadlines
in
connection with future financing activities.
-7-
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 others. As of April 30, 2007, we had 99 patents and over 310 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.
Prior
art
may reduce the scope or protection of, or invalidate, our patents. Previously
conducted research or published discoveries may prevent our patents from
being
granted, invalidate our issued patents or narrow the scope of any protection
we
have 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 their 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.
-8-
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. Generally,
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:
| · |
our
lack of sufficient funding to pursue trials rapidly or at
all;
|
| · |
our
inability to attract clinical investigators for
trials;
|
| · |
our
inability to recruit patients in sufficient numbers or at the expected
rate;
|
| · |
adverse
side effects;
|
| · |
failure
of the trials to demonstrate a product’s safety or
efficacy;
|
| · |
our
failure to meet FDA or other regulatory agency requirements for clinical
trial design or for demonstrating efficacy for a particular product;
|
| · |
our
inability to follow patients adequately after
treatment;
|
| · |
changes
in the design or manufacture of a product;
|
| · |
our
inability to manufacture sufficient quantities of materials for use
in
clinical trials; and
|
| · |
governmental
or regulatory delays.
|
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.
-9-
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.
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:
| · |
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;
|
| · |
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;
|
| · |
our
collaborators may develop and commercialize, either alone or with
others,
products that are similar to or competitive with our products;
|
| · |
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
|
| · |
our
collaborators may lack the funding or experience to develop and
commercialize our products successfully or may otherwise fail to
do
so.
|
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.
-10-
We
have
exclusively licensed our controlled drug delivery technologies that are not
otherwise licensed to third parties to Pfizer for all ophthalmic applications.
Pfizer is funding research and further development and commercialization
of
products licensed under our agreement with them. Pfizer may terminate the
agreement at any time and for any reason upon 60 days written notice. 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 products licensed to them 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 April 30, 2007, we have chosen not
to
make development payments to Alimera Sciences in an aggregate amount of
approximately US$1.9 million (A$2.3 million).
Alimera
Sciences was incorporated in June 2003 and has limited resources. Any of
Pfizer,
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 both Pfizer and Bausch & Lomb have significant
experience in the ophthalmic field and have 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 Pfizer, 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.
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
engaged in the rapidly evolving and competitive field of drug delivery. Our
competitors include many major pharmaceutical companies and other biotechnology,
drug delivery 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:
| · |
are
more effective and easier to use;
|
| · |
are
more economical than those which we have developed; or
|
| · |
would
render our technologies and products obsolete and non-competitive.
|
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.
-11-
Our
competitive position is based upon our ability to:
| · |
create
and maintain scientifically-advanced technology and proprietary products
and processes;
|
| · |
attract
and retain qualified personnel;
|
| · |
develop
safe and efficacious products, alone or in collaboration with
others;
|
| · |
obtain
patent or other protection for our products and
processes;
|
| · |
obtain
required government approvals on a timely
basis;
|
| · |
manufacture
products on a cost-effective basis; and
|
| · |
successfully
market products.
|
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. 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
the
food industry and may plan to expand into other areas at a later time. In
connection with the foregoing, we may 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.
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 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
may
be subject to a number of risks associated with foreign commerce, including
the
following:
| · |
managing
foreign distributors;
|
| · |
staffing
and managing foreign operations;
|
| · |
political
and economic instability;
|
| · |
foreign
currency exchange fluctuations;
|
| · |
foreign
tax laws, tariffs and freight rates and
charges;
|
| · |
timing
and availability of export licenses;
|
-12-
| · |
inadequate
protection of intellectual property rights in some countries;
and
|
| · |
obtaining
required governmental approvals.
|
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 and are obligated to manufacture all clinical
supplies pursuant to our agreement with Pfizer.
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 Pfizer the exclusive rights to manufacture all controlled drug
delivery products covered by its license agreement with us. 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 with us. Our current
reliance on third-party manufacturers for some of our products entails risks,
including:
| · |
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;
|
| · |
supply
disruption, deterioration in product quality or breach of a manufacturing
or license agreement by the third party because of factors beyond
our
control;
|
| · |
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
|
| · |
our
inability to identify or qualify an alternative manufacturer in a
timely
manner, even if contractually permitted to do
so.
|
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.
-13-
If
we fail to retain some or all of our key personnel, 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 UK 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.
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”.
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. See “Risks related to our recent
acquisitions - 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 our ADSs.” 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.
-14-
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 U.S. federal or state securities laws, 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:
| · |
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;
|
| · |
the
sections of the Exchange Act regulating the solicitation of proxies,
consents or authorizations in respect of a registered
security;
and
|
| · |
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.
|
Thus,
you
are not afforded the same protections or information which would be made
available to you were you investing in a U.S. corporation with publicly-traded
securities.
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 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:
| · |
any
major new developments relating to our business which are not public
knowledge and may lead to a substantial movement in our share price;
|
| · |
any
changes in our board of directors;
|
| · |
any
purchase or redemption by us of our own equity securities;
|
| · |
interests
of directors in our shares or debentures; and
|
| · |
changes
in our capital structure.
|
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.
corporation with publicly-traded securities.
-15-
If
we do not appoint two Australia resident directors, we could be fined or
deregistered under Australian law.
As
an
Australian incorporated public company, we are required by Australian law
to
have a minimum of two directors who ordinarily reside in Australia. Currently
we
are not complying with this requirement because we have no directors who
are
ordinarily resident in Australia. Although we are actively seeking to address
the situation by appointing two Australia resident directors, we could be
subject to regulatory action by the Australian corporate regulator, the
Australian Securities and Investments Commission, or ASIC. It is possible
that
ASIC could fine us up to US$2,255 (A$2,750) and issue a compliance notice,
requiring us to appoint two Australia resident directors within 6 months.
If a
compliance notice is issued, and we do not comply with it by the time specified,
then ASIC could seek to have pSivida deregistered under Australian law with
the
consequence that the corporate entity would cease to exist and its property
would be transferred to ASIC. Such a remedy would be unusual, however, in
the
case of a company that, like ours, is actively seeking to appoint the required
number of Australia resident directors.
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 the ordinary
shares underlying their ADSs. 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.
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 on the ASX, and since January 27, 2005, the price of our ADSs has
ranged from US$1.36 to US$12.14 on the Nasdaq Global Market. 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:
-16-
| · |
clinical
trial results and other product and technological developments and
innovations;
|
| · |
FDA
and other governmental regulatory actions, receipt and timing of
approvals
of our proposed products, and any denials and withdrawals of approvals;
|
| · |
competitive
factors including new product ideas and technologies, clinical trial
results and approvals of competitive products in our markets;
|
| · |
advancements
with respect to treatment of the diseases targeted by our proposed
products;
|
| · |
developments
relating to collaborative partners, including execution and termination
of
agreements, achievement of milestones and receipt of payments;
|
| · |
availability
and cost of capital and our financial and operating results;
|
| · |
changes
in reimbursement policies or other practices relating to our proposed
products or the pharmaceutical industry generally;
|
| · |
meeting,
exceeding or failing to meet analysts’ or investors’ expectations, and
changes in evaluations and recommendations by securities analysts;
|
| · |
economic,
industry and market conditions, changes or trends; and
|
| · |
other
factors unrelated to us and the biotechnology industry.
|
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.
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 May
21, 2007, we had outstanding convertible securities, including stock options
and
warrants, representing the right to acquire 40,709,226 ADSs (407,092,265
ordinary shares), or approximately 71.9% of our total outstanding shares
as of
May 21, 2007, including:
| · |
US$806,000
(A$972,000) in principal amount of notes that are convertible, at
the
option of the holders into 666,497 ADSs (6,664,970 ordinary
shares);
|
| · |
warrants
and investor options to purchase 37,652,966 ADSs (376,529,663 ordinary
shares); and
|
| · |
stock
options to purchase the equivalent of 2,389,763 ADSs (23,897,632
ordinary
shares).
|
During
the period from January 1, 2007 through May 21, 2007, holders of our convertible
notes have exercised their options to convert US$6.3 million (A$7.6 million)
in
principal amount of and US$7,000 (A$8,000) in interest on the convertible
notes
for 3,894,477 ADSs (38,944,770 ordinary shares).
-17-
Under
certain circumstances, the number of shares into which the remaining balance
of
the convertible notes can be converted will be increased. These circumstances
include:
| · |
in
the event that we issue securities at a price lower than the price
at
which the notes may then be converted;
and
|
| · |
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.
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, the Securities Exchange Act of 1934 and others and the rules and
regulations adopted by the SEC pursuant to such acts. 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
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
as
at June 30, 2007 and (2) our independent registered public accounting firm’s
annual audit of management’s assessment beginning as at 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
The
following risk factors relate to our acquisition of pSiMedica and our recent
acquisition of CDS.
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 our
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:
-18-
| · |
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. Through December 31, 2006, the amount
allocated to the CDS patents which cover Retisert has been amortized 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 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.
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.
Under A-IFRS, we recorded an asset impairment charge related to our intangible
assets of A$83.4 million, and did not record any impairment under U.S. GAAP
(see
footnotes 4 and 9(a) of U.S. GAAP-reconciled financial statements for the
six
months ended December 31, 2006 included in our report on Form 6-K filed with
the
SEC on April 2, 2007 and incorporated herein by reference). 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 under A-IFRS 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).
-19-
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 selling security 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.
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.
-20-
CAPITALIZATION
AND INDEBTEDNESS
The
following table sets forth our capitalization and indebtedness as of December
31, 2006 in accordance with A-IFRS.
We
have
not included an “As Adjusted” column because we will not receive proceeds from
the sale of ADSs by the selling security holders. 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)(4)(8)
|
6,011,000
|
|||
|
Long-term
debt (secured, guaranteed (1)(4)(8)
|
4,712,000
|
|||
|
Long-term
debt (unsecured, unguaranteed (2)(5)(9)
|
759,000
|
|||
|
Total
debt
|
11,482,000
|
|||
|
Stockholders'
equity
|
||||
|
Share
capital (3)(4)(5)(6)(7)
|
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.
|
|
(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$11.5 million (US$9.1 million)
before
costs. Each ordinary share was sold along with options to purchase
two
additional shares at an exercise price of A$0.23 per share which
expire
four years from issuance.
|
|
(4)
|
In
March and April 2007, the selling security holder exercised its
option to
convert US$897,000 (A$1.1 million) in principal amount of and US$3,000
(A$4,000) in interest on its secured, guaranteed debt for 555,557
ADSs
(5,555,570 ordinary shares).
|
|
(5)
|
In
April 2007, certain holders exercised their options to convert
US$5.4
million (A$6.6 million) in principal amount of and US$4,000 (A$5,000)
in
interest on their unsecured, unguaranteed debt for 3,338,920 ADSs
(33,389,200 ordinary shares).
|
|
(6)
|
On
April 4, 2007, in connection with the consummation of a collaborative
research and license agreement, the licensee purchased 22,483,748
ordinary
shares at A$0.2735 per share for total proceeds of US$5.0 million
(A$6.1
million).
|
|
(7)
|
On
April 4, 2007, we issued 40,896,705 ordinary shares to U.S. and
European
investors at A$0.2695 per share (US$2.19 per ADS equivalent) for
total
proceeds of A$11.0 million (US$9.0 million) before costs. Each
two
ordinary shares were sold along with an option to purchase one
additional
share at an exercise price of A$0.2695 which expire four years
from
issuance. Included in the total ordinary shares issued was 13,630,128
ordinary shares purchased by the selling security holder for A$3.7
million
(US$3.0 million).
|
-21-
|
(8)
|
On
May 15, 2007, we redeemed the remaining principal balance and accrued
interest of the convertible note by a single payment of US$13.7
million
(A$16.5 million) which also represented an excess payment made in
consideration of our ability to redeem earlier than the terms of
the note
permitted.
|
|
(9)
|
On
May 15, 2007, we issued an irrevocable redemption notice to the
holders of
our unsecured, unguaranteed debt pursuant to which we agreed to
redeem on
June 14, 2007 the entire remaining balance of the debt of
US$806,000 (A$970,000) by
making a payment equal to 108% of the sum of the then outstanding
principal balance and accrued and unpaid interest thereon as
of
June 14, 2007.
In
the absence of any interim conversions of such debt, we expect
that
payment to be US$885,000 (A$1.1
million).
|
THE
OFFERING
On
November 16, 2005, we issued a subordinated convertible promissory note in
the
principal amount of US$15.0 million in a private placement to the selling
security holder. At the same time, we issued to the selling security holder
a
warrant to purchase 633,803 of our ADSs. On September 14, 2006, we and the
selling security holder amended the terms of the subordinated convertible
promissory note. In connection with that amendment, we issued to the selling
security holder an additional warrant to purchase up to 5.7 million ADSs
at a
price of US$1.80 per ADS, subject to anti-dilution provisions in the event
of a
rights offering and further subject to adjustment for stock splits, combinations
or similar events. The warrant is currently exercisable and expires five
years
from the date of issuance.
In
connection with a second amendment agreement, dated December 29, 2006, we
issued
to the selling security holder an additional warrant to purchase 1.5 million
ADSs exercisable for five years with an exercise price of US$2.00 per ADS
and
agreed to issue a further warrant to purchase up to 4.0 million ADS under
the
same terms at a later date.
On
May
15, 2007, we and the selling security holder amended the second amendment
agreement and completed the transactions contemplated thereby pursuant to
which
we issued warrants to purchase ADSs with a term of five years as
follows:
| · |
4.0
million ADSs, as previously agreed, with an exercise price of US$2.00
per
ADS;
|
| · |
4.0
million ADSs with an exercise price of US$1.57 per ADS;
|
| · |
1.0
million ADSs with an exercise price of US$1.95 per ADS; and
|
| · |
2,341,347
ADSs with an exercise price of US$1.21 per
ADS.
|
We
intend
to use the proceeds from any exercise of the warrants for working capital
and
general corporate purposes. We will not receive any proceeds from the selling
security holder from the sale of the ADSs pursuant to this
prospectus.
Pursuant
to a second amended and restated registration rights agreement, we have agreed
to register for resale 130% of the number of ADSs issuable upon exercise
of the
warrants issued to
the
selling security holder in
the
amendments of the private placement. Pursuant to that agreement, we have
filed
with the SEC the registration statement, of which this prospectus is a part,
to
register the resale of those ADSs. We will amend the registration statement
from
time to time to register the resale of additional ADSs, if necessary, to
cover
any ADSs in excess of those already registered that we are required to issue
to
the selling security holder.
This
prospectus relates to the offer and sale by the selling security holder during
the period in which the registration statement containing this prospectus
is
effective of up to 24,103,751
ADSs. Such number also includes a number of ADSs that may be issued and resold
to prevent dilution resulting from stock splits, stock dividends or similar
transactions.
The
ADSs
offered under this prospectus may be sold by the selling security holder
on the
NASDAQ Global
Market,
in negotiated transactions with a broker-dealer or market maker as principal
or
agent, or in privately negotiated transactions not involving a broker or
dealer.
Information regarding the selling security holder, the ADSs it is offering
to
sell under this prospectus and the times and manner in which it may offer
and
sell those shares is provided in the sections of this prospectus captioned
“Selling Security Holder,” “Plan of Distribution” and “Description of
Securities”.
-22-
The
registration of ADSs pursuant to this prospectus does not necessarily mean
that
any of those ADSs will ultimately be offered for sale by the selling security
holder.
USE
OF PROCEEDS
The
proceeds from the sale of ADSs offered pursuant to this prospectus are solely
for the account of the selling security holder. Accordingly, we will receive
no
proceeds from the sale of the ADSs. However, we may receive cash consideration
of approximately US$32.3 million in connection with the exercise of the
warrants. We would use such proceeds for general corporate
purposes.
SELLING
SECURITY HOLDER
The
ADSs
being offered by the selling security holder are issuable upon exercise of
warrants. For additional information regarding the warrants, see “The Offering”
above. We are registering the ADSs in order to permit the selling security
holder to offer and sell the ADSs for resale from time to time. Except for
the
purchase and ownership of a subordinated convertible note, as amended, and
warrants and its purchase from us of ordinary shares and options in a subsequent
private placement, the selling security holder has not had any material
relationship with us within the past three years.
The
table
below states the name of the selling security holder and other information
regarding the selling security holder’s beneficial ownership of our ADSs. The
second column lists the number of ADSs beneficially owned by the selling
security holder prior to the offering, based, in part, on its ownership of
warrants to purchase ADSs as of May 21, 2007, assuming complete exercise
of the
warrants held by the selling security holder on that date, without regard
to any
limitations on exercise imposed by those instruments. The third column lists
the
ADSs being offered by this prospectus by the selling security holder. The
fourth
column lists the number of ADS beneficially owned by the selling security
holder
after the offering and assumes the sale of all of the ADSs offered by the
selling security holder pursuant to this prospectus.
In
accordance with the terms of our registration rights agreement with the selling
security holder, this prospectus generally covers the resale of at least
130% of
the maximum number of ADSs issuable upon exercise of the warrants (without
taking into account any limitations on the exercise of the warrants set forth
in
the warrants). Because the exercise price of the warrants may be adjusted,
the
number of ADSs that will actually be issued may be more or less than the
number
of ADSs being offered by this prospectus. We will amend this prospectus and
the
Registration Statement of which it is a part to register ADSs issued to the
selling security holder in excess of those offered hereby, if any.
Under
the
terms of the warrants, the selling security holder may not exercise the
warrants, to the extent such exercise would cause the selling security holder,
together with its affiliates, to beneficially own a number of ordinary shares
(directly or indirectly through ADSs) which would exceed 4.99% of our then
outstanding ordinary shares following such exercise, excluding for purposes
of
such determination ordinary shares or ADSs issuable upon exercise of warrants
that have not been exercised. The number of shares in the second column below
does not reflect this limitation. The selling security holder may sell all,
some
or none of its ADSs in this offering. See “Plan of Distribution.”
The
ADSs
offered by this prospectus may be offered from time to time by the persons
or
entities named below:
|
Name
of Selling Security Holder
|
Number
of ADSs Beneficially Owned Prior to Offering (1)
|
Number
of ADSs to be Sold Pursuant to this Prospectus (2)
|
Number
of ADSs Beneficially Owned After Offering
|
|||||||
|
Castlerigg
Master Investments Ltd. (3)
|
21,275,713
|
18,541,347
|
2,734,366
|
|||||||
(1)
The
number of ADSs beneficially owned is determined in accordance with Rule 13d-3
of
the Exchange Act, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rule, beneficial
ownership includes any shares as to which an individual has sole or shared
voting power or investment power and also any shares which an individual
has the
right to acquire within 60 days of the date of this prospectus through the
exercise of any stock option or other right. The ADSs listed in this column
include ADSs underlying the warrants acquired in November 2005, on
September 14, 2006, on December 29, 2006, and on May 15, 2007, in each case,
which the selling security holder has the right to acquire within 60 days
of
May
21,
2007. The shares listed in this column do not reflect the 4.99% ownership
limitation noted above. Unless otherwise indicated, the selling security
holder
has sole voting and investment power with respect to the ordinary shares
it
holds through its ADSs. The inclusion of any ADSs or ordinary shares in this
table does not constitute an admission of beneficial ownership for the selling
security holder.
-23-
(2)
Assumes the full exercise of the warrants issued to the selling security holder
on September 14, 2006, December 29, 2006 and May 15, 2007. Pursuant to
Rule 416 of the Securities Act, this registration statement also covers any
additional ADSs that become issuable in connection with the ordinary shares
registered for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of
consideration that results in an increase in the number of our outstanding
ordinary shares.
(3)
Sandell Asset Management Corp. (“SAMC”) is the investment manager of Castlerigg
Master Investments Ltd. (“Master”). Thomas Sandell is the controlling person of
SAMC and may be deemed to share beneficial ownership of the shares beneficially
owned by Master. Castlerigg International Ltd. (“Castlerigg International”) is
the controlling shareholder of Castlerigg International Holdings Limited
(“Holdings”). Holdings is the controlling shareholder of Master. Each of
Holdings and Castlerigg International may be deemed to share beneficial
ownership of the shares beneficially owned by Castlerigg Master Investments.
SAMC, Mr. Sandell, Holdings and Castlerigg International each disclaims
beneficial ownership of the securities with respect to which indirect beneficial
ownership is described. Master’s address is c/o SAMC, 40 West 57th
Street,
New York, New York 10019.
PLAN
OF DISTRIBUTION
We
are
registering the ADSs issuable upon exercise of the warrants to permit the resale
of these ADSs by the selling security holder from time to time after the date
of
this prospectus. We will not receive any of the proceeds from the sale by the
selling security holder of the ADSs. We will bear all fees and expenses incident
to our obligation to register the ADSs.
The
selling security holder may sell all or a portion of the ADSs beneficially
owned
by it and offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the ADSs are sold through
underwriters or broker-dealers, the selling security holder will be responsible
for underwriting discounts or commissions or agent’s commissions. The ADSs may
be sold in one or more transactions at fixed prices, at prevailing market prices
at the time of the sale, at varying prices determined at the time of sale,
or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions:
| · |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
| · |
in
the over-the-counter market;
|
| · |
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
| · |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the ADSs as
agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
short
sales;
|
| · |
pursuant
to Rule 144 under the Securities
Act;
|
-24-
| · |
broker-dealers
may agree with the selling security holder to sell a specified number
of
such ADSs at a stipulated price per
ADS;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
If
the
selling security holder effects such transactions by selling ADSs to or through
underwriters, broker-dealers or agents, such underwriters, broker-dealers or
agents may receive commissions in the form of discounts, concessions or
commissions from the selling security holder or commissions from purchasers
of
the ADSs for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters,
broker-dealers or agents may be in excess of those customary in the types of
transactions involved). In connection with sales of the ADSs or otherwise,
the
selling security holder may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the ADSs in the course of hedging
in
positions they assume. The selling security holder may also sell ADSs short
and
deliver ADSs covered by this prospectus to close out short positions. The
selling security holder may also loan or pledge ADSs to broker-dealers that
in
turn may sell such ADSs.
The
selling security holder may pledge or grant a security interest in some or
all
of the warrants or the ADSs owned by it and, if it defaults in the performance
of its secured obligations, the pledgees or secured parties may offer and sell
the ADSs from time to time pursuant to this prospectus or any amendment to
this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933, as amended, amending, if necessary, the list of selling security
holders to include the pledgee, transferee or other successors in interest
as
selling security holder under this prospectus. The selling security holder
also
may transfer and donate the ADSs in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
The
selling security holder and any broker-dealer participating in the distribution
of the ADSs may be deemed to be “underwriters” within the meaning of the
Securities Act, and any commission paid, or any discounts or concessions allowed
to, any such broker-dealer may be deemed to be underwriting commissions or
discounts under the Securities Act. At the time a particular offering of the
ADSs is made, a prospectus supplement, if required, will be distributed which
will set forth the aggregate amount of ADSs being offered and the terms of
the
offering, including the name or names of any broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the
selling security holder and any discounts, commissions or concessions allowed
or
reallowed or paid to broker-dealers.
Under
the
securities laws of some states, the ADSs may be sold in such states only through
registered or licensed brokers or dealers. In addition, in some states the
ADSs
may not be sold unless such ADSs have been registered or qualified for sale
in
such state or an exemption from registration or qualification is available
and
is complied with.
There
can
be no assurance that the selling security holder will sell any or all of the
ADSs registered pursuant to the shelf registration statement, of which this
prospectus forms a part.
The
selling security holder and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the ADSs by the selling security holder and any
other participating person. Regulation M may also restrict the ability of any
person engaged in the distribution of the ADSs to engage in market-making
activities with respect to the ADSs. All of the foregoing may affect the
marketability of the ADSs and the ability of any person or entity to engage
in
market-making activities with respect to the ADSs.
We
will
pay all expenses of the registration of the ADSs pursuant to the registration
rights agreement, estimated to be US$763,274 in total, including, without
limitation, SEC filing fees and expenses of compliance with state securities
or
“blue sky” laws; provided, however, that the selling security holder will pay
all underwriting discounts and selling commissions, if any. We will indemnify
the selling security holder against liabilities, including some liabilities
under the Securities Act, in accordance with the registration rights agreement,
or the selling security holder will be entitled to contribution. We may be
indemnified by the selling security holder against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling security holder specifically for
use
in this prospectus, in accordance with the related registration rights
agreements, or we may be entitled to contribution.
-25-
Once
sold
under the shelf registration statement, of which this prospectus forms a part,
the ADSs will be freely tradable in the hands of persons other than our
affiliates.
DESCRIPTION
OF SECURITIES
For
a
full description of our ADSs and the underlying ordinary shares, please see
the
documents identified in the section “Incorporation by Reference”. As of May 21,
2007, 565,950,830 ordinary shares were issued and outstanding.
LEGAL
MATTERS
The
validity of the ordinary shares underlying the warrants will be passed upon
by
Blake Dawson Waldron, Level 32, Exchange Plaza, 2 The Esplanade, Perth, WA
6000, Australia, our Australian counsel.
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.
EXPENSES
We
will
pay all expenses in connection with the registration and sale of the ADSs by
the
selling security holder. The estimated expenses of issuance and registration
are
set forth below.
|
SEC
Registration Fees
|
US$
|
5,161
|
||
|
Transfer
Agent Fees
|
US$
|
723,113
|
||
|
Legal
Fees and Expenses
|
US$
|
15,000
|
||
|
Accounting
Fees and Expenses
|
US$
|
15,000
|
||
|
Miscellaneous
(including EDGAR filing costs)
|
US$
|
5,000
|
||
|
Total
|
US$
|
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.
-26-
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;
|
| · |
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;
|
| · |
Our
report on Form 6-K filed with the SEC on April 2, 2007;
|
| · |
Our
reports on Form 6-K furnished to the SEC on April 4,
2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on April 5,
2007;
|
| · |
Our
reports on Form 6-K furnished to the SEC on April 13,
2007;
|
-27-
| · |
Our
reports on Form 6-K furnished to the SEC on April 17,
2007;
|
| · |
Our
reports on Form 6-K furnished to the SEC on April 19,
2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on April 23,
2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on April 26, 2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on April 30, 2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on May 1,
2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on May 7,
2007;
|
| · |
Our
reports on Form 6-K furnished to the SEC on May 16,
2007;
|
| · |
Our
report on Form 6-K furnished to the SEC on May 18, 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.
-28-
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
|
|
|
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)
|
|
|
4.2
|
Securities
Purchase Agreement, dated October 5, 2005, between pSivida Limited
and the
investor listed on the Schedule of Buyers attached thereto
(d)
|
|
|
4.3
|
Letter
Agreement, dated October 17, 2006, between pSivida Limited and Castlerigg
Master Investments Ltd. (f)
|
|
|
4.4
|
Amended
and Restated Second Amendment Agreement, dated May 15, 2007, between
pSivida Limited and Castlerigg Master Investments Ltd.
(h)
|
|
|
4.5
|
Series
A Warrant for the purchase of 5,700,000 ADRs, dated September 14,
2006
(e)
|
|
|
4.6
|
Series
C Warrant for the purchase of 1,500,000 ADRs, dated December 29,
2006
(g)
|
|
|
4.7
|
Series
D Warrant for the purchase of 4,000,000 ADRs, dated May 15, 2007
(h)
|
|
|
4.8
|
Series
E Warrant for the purchase of 4,000,000 ADRs, dated May 15, 2007
(h)
|
|
|
4.9
|
Series
F Warrant for the purchase of 1,000,000 ADRs, dated May 15, 2007
(h)
|
|
|
4.10
|
Series
G Warrant for the purchase of 2,341,347 ADRs, dated May 15, 2007
(h)
|
|
|
4.11
|
Second
Amended and Restated Registration Rights Agreement, dated May 15,
2007,
between pSivida Limited and Castlerigg Master Investments Ltd.
(h)
|
|
|
5.1
|
Legal
Opinion of Blake Dawson Waldron, dated May 23, 2007 (a)
|
|
|
23.1
|
Consent
of Blake Dawson Waldron (contained in the opinion filed as Exhibit
5.1 to
this Registration Statement)
|
II-2
|
23.2
|
Consent
of PricewaterhouseCoopers LLP, dated May 23, 2007 (a)
|
|
|
23.3
|
Consent
of Deloitte Touche Tohmatsu, dated May 23, 2007 (a)
|
|
|
24.1
|
Power
of Attorney (included on the signature page of this 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.
(d)
Incorporated by reference to the registrant’s filing on Form 6-K (Commission
file number 000-51122) filed on November 15, 2005.
(e)
Incorporated by reference to the registrant’s filing on Form 6-K (Commission
file number 000-51122) filed on September 15, 2006.
(f)
Incorporated by reference to the registrant’s filing on Form 6-K (Commission
file number 000-51122) filed on October 18, 2006.
(g)
Incorporated by reference to the registrant’s filing on Form 6-K (Commission
file number 000-51122) filed on January 3, 2007.
(h)
Incorporated by reference to the registrant’s filing on Form 6-K (Commission
file number 000-51122) filed on May 16, 2007.
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.
|
II-3
|
(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;
|
|
(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.
II-4
|
(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-5
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 Watertown,
Massachusetts on May 24, 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 May 24, 2007.
|
Name
|
Title
|
|
|
/s/Paul
Ashton
|
Managing
Director, (principal executive officer)
|
|
|
Name: Paul
Ashton
/s/Stephen
Lake
|
Director
|
|
|
Name: Stephen
Lake
/s/David
Mazzo
|
Chairman
of the Board of Directors
|
|
|
Name: David
Mazzo
/s/Michael
W. Rogers
|
Director
|
|
|
Name: Michael
W. Rogers
/s/
Michael J. Soja
|
Vice
President, Finance and Chief Financial Officer,
|
|
|
Name: Michael
J. Soja
|
Authorized Representative in the United States (principal accounting officer) |
II-6
|
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
23
May 2007
|
Dear Sirs
Registration
Statement on Form F-3 (Warrants)
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 sale by the Selling Security Holder (as
defined below) of up to 241,037,510 ordinary shares in the Company represented
by 24,103,751 American
Depositary Shares that may be issued from time to time in connection with the
Warrants
issued by the Company. We are furnishing this opinion as exhibit 5.1 to the
Registration
Statement, subject to the final paragraph of this opinion.
| l. |
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) |
American
Depositary Shares means
American Depositary Shares each representing 10 ordinary, fully paid
shares in the Company.
|
| (f) |
Company
means pSivida Limited, registered in Western Australia,
ACN 009
232 026.
|
PERTH
SYDNEY
MELBOURNE
BRISBANE
CANBERRA
PORT
MORESBY
JAKARTA
SHANGHAI
|
BLAKE
DAWSON WALDRON
|
23
May 2007
|
|
pSivida
Limited
|
Page
2
|
|
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
| (g) |
Corporations
Act means
the Corporations
Act 2001 (Cth).
|
| (h) |
Issue
means
the issue from time to time of up to an aggregate of 241,037,510
ordinary
shares in the Company to be issued on exercise of the
Warrants.
|
| (i) |
Relevant
Jurisdiction means
the State of Western Australia,
Australia.
|
| (j) |
Relevant
Laws means
the laws of the Relevant Jurisdiction and the federal laws of Australia
as
they apply in the Relevant
Jurisdiction.
|
| (k) |
Selling
Security Holder means
the selling security
holder identified in the
Registration Statement.
|
| (1) |
Warrants
means:
|
| (i) |
the
warrant to purchase American Depositary Shares issued by the Company
on 15 November 2005;
|
| (ii) |
the
warrant to purchase American Depositary Shares issued by the Company
on 14 September 2006;
|
| (iii) |
the
warrants to purchase American Depositary Shares issued by the
Company on 15 May 2007,
|
and
described in the section headed "The Offering in the Registration
Statement.
In
this
opinion, headings are for convenience only and do not affect interpretation
and
references to paragraphs are to paragraphs of this opinion.
| 2. |
DOCUMENTS
REVIEWED
|
For
the
purposes of giving this opinion, we have examined the following documents:
| (a) |
a
search of the ASIC database in respect of the Company on 22 May 2007
which
shows that the Company is
registered;
|
| (b) |
the
current constitution of the
Company;
|
| (c) |
copies
of the resolutions passed at the meetings of the board of directors
of
the Company held on 14 November 2005, 24 July 2006 and 7 May 2007,
certified
as
true and correct copies by the company secretary of the Company;
|
| (d) |
a
copy of the resolutions passed at the meetings of the shareholders
of the
Company held on 15 November 2005, and 20 February 2007, as announced
to ASX on 15 November 2005 and 20 February 2007
respectively;
|
|
BLAKE
DAWSON WALDRON
|
23
May 2007
|
|
pSivida
Limited
|
Page
3
|
|
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
| (e) |
correspondence
from the company secretary of the Company confirming that the Company
had
capacity under ASX Listing Rule 7.1, to issue the Warrants
it issued on 14
September
2006 and certain of the Warrants issued
by the Company on 15 May 2007; and
|
| (f) |
the
draft Registration Statement dated 23 May 2007.
|
| 3. |
SCOPE
|
This
opinion relates only to the Relevant Laws in force at 9.00 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.
| 4. |
OPINION
|
Subject
to the assumptions and qualifications set out below, we are of the following
opinion:
| (a) |
the
Company has been duly incorporated and is registered as a public
company
limited by shares under the Corporations
Act;
|
| (b) |
the
ordinary shares underlying the American Depositary Shares that may
be
issued on exercise of the Warrants will be, if allotted, issued and
paid
for as contemplated by the terms of issue of the Warrants, legally
allotted and
issued and fully paid at the time of
issue.
|
| 5. |
ASSUMPTIONS
|
For
the
purposes of this opinion, we have assumed that:
| (a) |
all
signatures, seals and dates on the documents which we have reviewed
are
genuine;
|
| (b) |
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:
|
| (c) |
if
we have reviewed a copy of a document, rather than an original,
the
copy
is a complete, genuine and accurate copy of the
original;
|
| (d) |
the
company secretary's certificates referred to in paragraph 2(c) accurately
reflect the business transacted at the relevant
meetings;
|
|
BLAKE
DAWSON WALDRON
|
23
May 2007
|
|
pSivida
Limited
|
Page
4
|
|
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
| (e) |
the
resolutions referred to in paragraph 2(d) accurately reflect the
business
transacted at the relevant
meetings;
|
| (f) |
the
confirmations referred to in paragraph 2(e) are
accurate;
|
| (g) |
any
document that we have reviewed has not been and will not be amended,
released or discharged, and no provision in it has been or will
be
waived;
|
| (h) |
the
Registration Statement and the prospectus which is included in
when
filed with the Securities and Exchange Commission, will not differ
in any
material way from the draft of the Registration Statement and the
prospectus which is included in it, which we have examined for the
purposes
of this opinion;
|
| (i) |
any
factual statement made in any document which we have reviewed is
true;
|
| (j) |
each
issue of Warrants was conducted, and each Issue will be conducted,
by
the Company in good faith and in its best interests, for the purpose
of
carrying
on its business;
|
| (k) |
in
connection with the issue of the Warrants, and each
Issue:
|
| (i) |
no
party has contravened or will contravene any Relevant Laws including,
without limitation, the Corporations Act and the Foreign
Acquisitions and Takeovers Act 1975
(Cth);
|
|
(ii)
|
no
party has contravened or will contravene the ASX Listing Rules;
|
|
(iii)
|
the
Company has not contravened and will not contravene its constitution;
|
|
(iv)
|
the
Company has not contravened or breached, and will not contravene
or
breach, any agreement or instrument binding on
it;
|
|
(v)
|
the
Company has not contravened and will not contravene any order, requirement
or restriction imposed on it by a court or governmental body in the
Relevant Jurisdiction;
|
| (l) |
the
Company was and will be solvent at the time of and immediately after
the
issue of the Warrants and each Issue, and is solvent at the date
of this
opinion;
|
| (m) |
the
meetings of the Company's board of directors and shareholders to
approve
the issue of the Warrants (and ordinary shares that may be issued
in
connection with the Warrants) were and will be properly convened
and:
|
|
BLAKE
DAWSON WALDRON
|
23
May 2007
|
|
pSivida
Limited
|
Page
5
|
|
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
| (i) |
the
resolutions referred to in paragraphs 2(c) and 2(d) were 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
|
| (ii) |
the
directors of the Company have properly performed their duties and
all provisions relating to the declaration of interest and voting
were
duly observed; and
|
|
(n)
|
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.
|
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.
| 6. |
QUALIFICATIONS
|
Our
opinion is subject to the following qualifications.
| 6.1 |
Searches
|
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).
| 6.2 |
General
qualifications
|
|
(a)
|
We
have relied, as to certain matters of fact, on information provided
by
officers of the Company.
|
|
(b)
|
This
opinion only relates to the laws of the Relevant Jurisdiction. We
express
no opinion on laws other than the Relevant
Laws.
|
None
of
the qualifications is limited
by
reference to any other qualification.
| 7. |
CONSENT
|
We
hereby
consent to e
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 included in the Registration
Statement. 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.
|
BLAKE
DAWSON WALDRON
|
23
May 2007
|
|
pSivida
Limited
|
Page
6
|
|
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
|
8.
|
RELIANCE
|
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:
| (a) |
relied
upon by any other person;
|
| (b) |
disclosed
to any other person; or
|
|
(c)
|
filed
with any government or other agency or quoted or referred to in a
public
document,
|
except
as
required by law.
Yours
faithfully
/s/
BLAKE
DAWSON WALDRON
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby
consent to the incorporation by reference in this Registration Statement on
Form
F-3
of our report dated December 2, 2005 relating to the financial statements
which
appears in pSivida Limited's Form 6-K filed December 22, 2005. We also
consent
to the references to us under the headings "Experts" in such Registration
Statement.
/s/
PricewaterhouseCoopers LLP
PricewaterhouseCoopers
LLP
Boston,
Massachusetts
May
23,
2007
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in this Registration Statement on
Form
F-3 of our report dated October 31, 2006 relating to the financial statements
of
pSivida Limited and subsidiaries (which expresses an unqualified opinion and
includes an explanatory paragraph related to the reconciliation of Australian
equivalents to International Financial Reporting Standards to accounting
principles generally accepted in
the
United States of America (“U.S.
GAAP”)
for net loss and shareholders’ equity and the
application thereof and an explanatory paragraph regarding the substantial
doubt
about
the
Company’s ability to continue as a going concern), appearing in the Annual
Report
on
Form 20-F of pSivida Limited for the year ended June 30, 2006, and to the
reference
to us under the heading “Experts” in the Prospectus, which is part of this
Registration Statement.
/s/
Deloitte Touche Tohmatsu
Deloitte
Touche Tohmatsu
Perth,
Australia
May
23,
2007