Registration
No. 333-______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
F-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
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pSivida
Limited
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(Exact
name of Registrant as specified in its charter)
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Western
Australia,
Commonwealth
of Australia
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2834
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Not
Applicable
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
No.)
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Level
12 BGC Centre
28
The Esplanade
Perth
WA 6000
Australia
61
(8) 9226 5099
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(Address,
including zip code, and telephone number, including area code, of
Registrant’s principal executive offices)
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Lori
H. Freedman, Esq.
Vice
President, Corporate Affairs, General Counsel and
Secretary
pSivida
Limited
400
Pleasant Street
Watertown,
MA 02472
(617)
926-5000
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(Name,
address, including zip code, and telephone number, including area
code, of
agent for service)
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Copies
to:
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Lawrence
Goodman, Esq.
Peter
F. Stewart, Esq.
Curtis,
Mallet-Prevost, Colt & Mosle LLP
101
Park Avenue
New
York, NY 10178
Tel:
(212) 696-6000
Fax:
(212) 697-1559
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Approximate
date of commencement of proposed sale to the public:
From
time to time after the effective date of this registration
statement.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Securities to be Registered (1)
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Amount
to be Registered (2)
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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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|||||||||
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Ordinary
Shares underlying subordinated convertible notes
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61,301,580
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$
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0.1750
(3
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)
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$
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10,727,777
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$
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329
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|||||
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Ordinary
Shares underlying warrants
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44,525,100
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$
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0.2000
(4
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)
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$
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8,905,020
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$
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273
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|||||
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Totals:
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105,826,680
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$
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19,632,797
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$
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603
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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)
Please
refer to the “Selling Security Holders” section of the prospectus that is a part
of this Registration Statement for a description of what comprises the ordinary
shares being registered. 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(c) under the Securities Act of 1933 based
upon
the average of the high and low prices of the Registrant’s ADSs on March
2,
2007 as
reported on the NASDAQ Global Market.
(4)
Estimated solely for the purpose of calculating the registration fee pursuant
to
Rule 457(g) of the Securities Act, based on the higher of (a) the exercise
price
of the warrants or (b) the offering price of securities of the same class
included in this 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 holders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission
is effective. This prospectus is not an offer to sell these securities
and
it is not soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not
permitted.
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Preliminary
Prospectus, subject to completion, dated March 6, 2007
PSIVIDA
LIMITED
10,582,668
American Depositary Shares
representing
105,826,680 Ordinary Shares
The
selling security holders of pSivida Limited identified on pages 23-25 of this
prospectus may offer and resell up to 10,582,668 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 holders hereunder are issuable (or have been
issued) to the selling security holders (i) upon conversion of subordinated
convertible notes, (ii) as interest payable on such subordinated convertible
notes and (iii) upon exercise of warrants. We will not receive any proceeds
from
the sale of shares by the selling security holders. We may receive proceeds
from
the exercise of the warrants held by the selling security holders if the selling
security holders exercise the warrants. We originally issued the notes and
the
warrants to the selling security holders and assignors of the selling security
holders in private transactions.
This
offering is not being underwritten. The selling security holders may sell the
ADSs being offered by them 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 March 2, 2007
was
US$1.75.
Our
ordinary shares are listed on the Australian Stock Exchange under the symbol
“PSD”. On March 2, 2007, the closing price of our ordinary shares on the
Australian Stock Exchange was A$0.22, equivalent to a price of approximately
US$1.72 per ADS based on the Federal Reserve Bank of New York noon buying
exchange rate on that date of A$1.00 = US$0.7834. 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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21
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Capitalization
and Indebtedness
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22
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The
Offering
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23
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Use
of Proceeds
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24
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Selling
Security Holders
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24
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Plan
of Distribution
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26
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Description
of Securities
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28
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Legal
Matters
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28
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Experts
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28
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Enforceability
of Civil Liabilities
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28
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Expenses
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28
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Where
You Can Find Additional Information
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28
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Incorporation
by Reference
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29
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You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information that is different. This
prospectus is not an offer to sell, nor is it seeking an offer to buy, these
securities in any jurisdiction where the offer or sale of these securities
is
not permitted. You should assume that the information contained in this
prospectus is accurate as of the date on the front of this prospectus
only.
-i-
References
in this prospectus to “pSivida”, “the company”, “we”, “us”, “our”, or similar
terms refer to pSivida Limited, except as otherwise indicated. On December
30,
2005, we completed the acquisition of Control Delivery Systems, Inc., which
was
renamed pSivida Inc. We make reference to Control Delivery Systems as “CDS” or
as “pSivida Inc.” generally depending on whether such reference relates to that
company before or after the acquisition. As of July 1, 2006, the NASDAQ National
Market changed its name to the NASDAQ Global Market. References to the NASDAQ
Global Market relating to periods before such date refer to the NASDAQ National
Market.
In
this registration statement we make reference to Australian Equivalents to
International Financial Reporting Standards as “A-IFRS” and accounting
principles generally accepted in the United States of America as “U.S. GAAP.”
References to “A$” are to Australian dollars and references to “US$” and “US
dollars” are to United States dollars. In our financial statements references to
“$” are to Australian dollars and references to “US$” are to United States
dollars. On June 30, 2005, the Federal Reserve Bank of New York Noon Buying
Rate
was US$0.7618 = A$1.00, on June 30, 2006 such exchange rate was US$0.7423 =
A$1.00 and on December 29, 2006 such exchange rate was US$0.7884 =
A$1.00.
THE
COMPANY
pSivida
Limited is an Australian company existing pursuant to the Australian
Corporations Act 2001 whose shares are listed on the Australian Stock Exchange,
the NASDAQ Global Market, the Frankfurt Stock Exchange and London’s OFEX
International Market Service. Our corporate headquarters are located at Level
12
BGC Centre, 28 The Esplanade, Perth WA 6000, Australia, and our phone number
is
+61 (8) 9226 5099. We also operate subsidiaries in the United Kingdom,
Singapore, Australia and the United States.
Our
Business
pSivida
is a global, bio-nanotech company focusing on the development of products
utilizing our proprietary technologies for targeted and controlled drug
delivery. We are developing three key technologies as follows:
| · |
Durasert™
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BioSilicon™
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CODRUG™
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The
following are the key features, attributes and status of our three key
technologies and associated product developments.
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·
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Durasert:
This
technology uses a drug core with one or more surrounding polymer
layers.
The drug permeates through the polymers into the body at a controlled
and
pre-determined rate for periods of up to three years in our approved
products. We believe that this technology may allow delivery periods
of up
to 10 years. Two products based on this technology have been developed
and
approved by the U.S. Food and Drug Administration, or FDA: Vitrasert®, for
AIDS-associated cytomegalovirus infections of the eye, and Retisert®, for
uveitis. These two products are licensed to and marketed by Bausch
&
Lomb. A third product utilizing the technology, Medidur™, is partnered
with Alimera Sciences and is in Phase III clinical trials for the
treatment of diabetic macular edema, or DME. The technology is also
being
evaluated by a number of pharmaceutical companies for the delivery
of
their proprietary therapeutics for both ophthalmic and non-ophthalmic
disease indications. A subcategory of our Durasert technology is
our
biodegradable drug delivery device technology, which we identify
under the
Zanisert™ trademark.
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·
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BioSilicon:
This
technology uses nanostructured elemental silicon. This novel-porous
biomaterial has been shown to be both biodegradable and biocompatible.
For
the delivery of therapeutics it has been shown to enhance dissolution
and
bioavailability of poorly soluble molecules and to provide controlled
release. BrachySil™, our lead BioSilicon application, is a targeted
oncology product, which is presently in Phase II clinical trials
for the
treatment of both primary liver cancer and pancreatic cancer. BioSilicon
is being evaluated for the delivery of proprietary molecules in
partnership with pharmaceutical and biotechnology companies, for
oral and
sub-cutaneous dosage forms. It also has potential applications in
diagnostics, nutraceuticals and food
packaging.
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-2-
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·
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CODRUG:
Our third drug delivery technology, CODRUG, allows for the simultaneous
release of two or more drugs at a controlled rate from the same product.
It involves chemically linking two or more drugs together in such
a manner
that once administered in the body they separate into the original
active
drug. A library of CODRUG compounds has been synthesized and Phase
I
clinical trials have been undertaken in post-surgical pain and two
dermatological indications.
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Our
Strategy
Our
commercialization strategy is to concentrate on internal product development,
the licensing of the Durasert, BioSilicon and CODRUG technology platforms,
and
the generation and potential sale of non-core intellectual
property.
The
generation of value from our drug delivery technologies is being achieved
through two core product development routes:
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·
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Development
of our own products utilizing our proprietary technologies to produce
new
and improved versions of previously approved (generic) drug molecules
and
therapeutic agents, i.e., reformulated generics. These products will
be
licensed out to development and marketing partners at an appropriate
stage
to maximize their value to us.
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·
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Establishment
of drug delivery partnerships with pharmaceutical and biotechnology
companies to develop novel and improved formulations of their proprietary
drug molecules and therapeutics. The objective of these partnerships
is to
generate value by licensing our drug delivery technologies for third
parties’ specific drug molecules and
applications.
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Recent
Developments
On
July
6, 2006, we announced that BioSilicon has
shown
the capability to act as an adjuvant when delivered with an antigen. An adjuvant
is any substance that is capable of enhancing a host response towards an active
agent and is often used in conjunction with antigens to enhance the immune
response of humans and animals. An antigen is any substance capable of eliciting
an immune response. A patent application has been filed in the UK for the use
of
BioSilicon as an adjuvant.
On
July
31, 2006, we announced that Gavin Rezos had resigned for personal and family
reasons as Managing Director and Chief Executive Officer of pSivida and its
subsidiaries. Mr. Rezos agreed to make himself available in Australia as
requested by us to help achieve certain goals pending the appointment of a
permanent replacement.
On
August
28, 2006, we announced that Heather Zampatti resigned as a director of the
Company.
On
September 14, 2006, we amended the terms of the subordinated convertible
promissory note that we issued on November 16, 2005 to an institutional
investor. The note continues to have a three year term and bears 8% interest
payable quarterly. We may make future interest payments in cash or, under
certain circumstances, in the form of our NASDAQ-listed ADSs. The note
conversion price was adjusted to US$2.00 per ADS, subject to further adjustment
based upon certain events or circumstances, including, without limitation,
if
108% of the average market price of our ADSs for the ten trading days ending
prior to April 30, 2007 is lower than the then current conversion price. The
current adjusted conversion price is US$1.62 per ADS. In connection with the
amendment, we repaid US$2.5 million (A$3.3 million) of the outstanding principal
and agreed to pay US$1.0 million (A$1.3 million) in related penalties, which
were paid on September 14, 2006. The investor’s conditional redemption rights
under the terms of the initial note were replaced by unilateral redemption
rights for up to 50% of the amended note principal at July 31, 2007 and January
31, 2008. The investor retains its existing warrants to purchase 633,803
additional ADSs, exercisable for six years at a current exercise price of
US$7.17 per ADS. In connection with the amendments, we agreed with the
institutional investor to extend the deadline for the registration statement
required by the registration rights agreement to be declared effective by the
SEC through October 15, 2006, with increased penalties if that deadline were
missed. Our registration statement was declared effective on September 29,
2006.
We were also released from the restrictions on future fundraising transactions
contained in the original note documentation. We also granted the investor
an
additional warrant to purchase 5.7 million ADSs exercisable for five years
with
an exercise price of US$1.80 per ADS, a security interest in our current
royalties, subject to release of that security upon any disposition by us of
the
royalty stream, and a guaranty by our U.S. subsidiary, pSivida Inc.
On
September 19, 2006, we announced the initiation of a Phase II clinical trial
of
Mifepristone as an eye drop treatment for steroid associated elevated
intraocular pressure. The investigator-sponsored trial will involve up to 45
patients in the United States.
-3-
On
September 26, 2006, we issued three new subordinated convertible
promissory notes in the principal amount of US$6.5 million (A$8.65 million)
to
the selling security holders and assignors of the selling security holders.
The
notes were initially convertible into ADSs at a conversion price of US$2.00
per
ADS (A$0.27 per ordinary share), subject to adjustment based on certain events
or circumstances, including if 108% of the average market price of our ADSs
for
the ten trading days prior to April 30, 2007 is lower than the current
conversion price. The current adjusted conversion price is US$1.62 per ADS.
The
notes bear interest at a rate equal to 8% per annum, and mature three years
from
issuance. Interest is payable quarterly in arrears in cash or, under certain
circumstances, ADSs at an 8% discount to the 10 day volume weighted average
trading price. We also issued warrants to the selling security holders and
assignors of the selling security holders with a term of five years which will
entitle the selling security holders to purchase 2,925,001 ADSs at
US$2.00 per ADS. We also entered into a registration rights agreement pursuant
to which we agreed to file a registration statement covering the resale of
the
ADSs underlying the notes and the warrants as soon as practicable and to have
the registration statement declared effective on or before January 1,
2007. Failure to have the registration statement declared effective by
April 1, 2007 will result in an event of default under the notes. We may
redeem the notes at any time by payment of 108% of the face value and may force
conversion if the price of our ADSs remains above two times the conversion
price
for a period of 25 days. The proceeds of the issuance are expected to be used
for general corporate purposes.
On
October 10, 2006, we announced that the first patient has been implanted
with BrachySil for the treatment of inoperable pancreatic cancer in
London.
On
October 17, 2006, we signed a letter agreement with our investor further
revising the terms of the November 16, 2005 subordinated convertible promissory
note. Pursuant to that agreement, we were released until March 30, 2007 from
the
requirement to maintain a net cash balance in excess of 30% of the outstanding
principal amount of the note, and instead the net cash balance required to
be
held by us through that date was reduced to US$1.5 million (A$2.1 million).
The
investor further waived any default that would otherwise have resulted from
the
unavailability of our resale prospectus until we filed our 2006 audited U.S.
GAAP-reconciled financial statements. We filed those financial statements on
October 31, 2006, thus satisfying the condition in the agreement. In exchange
for the foregoing, we were required to make a one-time payment to the investor
of US$800,000 (A$1.1 million) on December 28, 2006 for registration rights
penalties through the date of the letter agreement and three payments of
US$150,000 (A$205,000) on January 31, 2007, February 28, 2007 and March 30,
2007. In connection with an amendment agreement dated December 29, 2006, we
and
the investor agreed, among other things, to waive the cash-balance test until
March 30, 2007, defer our scheduled payment of US$800,000 and extend general
forbearance for any prior, existing or future defaults until the earlier of
the
closing of a pending transaction with another party or March 31, 2007 and to
add
US$306,391 (A$388,000) to the principal of the note, which amount represented
the approximate value of the ADSs that we would have issued in order to satisfy
our quarterly interest payment due on January 2, 2007 had we qualified to pay
with ADSs. Since entering into the December 29, 2006 amendment agreement, we
believe that we have met the conditions for permanent release from the cash
balance requirement.
On
November 20, 2006, we announced that we had entered into a collaboration with
another company to evaluate our BioSilicon technology for the development of
transdermal drug delivery systems. The collaboration is expected to last for
twelve months, during which time, the parties plan to evaluate a range of
biodegradable porous silicon structures, including microneedles, for the
controlled release of drugs through the skin.
On
December 20, 2006, we announced that Dr. Roger Aston had been reappointed to
our
board of directors.
On
December 26, 2006, we entered into an exclusive negotiation period with a major
global pharmaceutical company to acquire a worldwide royalty-bearing license
to
make, use and sell products using our drug delivery technologies. The
pharmaceutical company has agreed to make payments totaling US$990,000 in
exchange for the exclusive right, for a period of three months, to negotiate
a
licensing agreement with us and to fund the cost of a pre-clinical
study.
On
January 9, 2007, we entered into a drug delivery licensing agreement with a
U.S.
research company to develop our proprietary Durasert, Zanisert and CODRUG drug
delivery technologies for infectious diseases and diseases of the ear. Under
the
terms of the license, the research company received exclusive rights to our
technologies for diseases of the ear and for five specific infectious diseases,
namely malaria, HIV/AIDS, influenza, tuberculosis, and osteomyelitis. All costs
of development will be borne by the research company and we will be entitled
to
receive royalties and milestones payments.
In
addition, we granted the research company co-exclusive rights to the Durasert,
Zanisert and CODRUG drug delivery technologies for other infectious diseases.
Under this arrangement either company can elect to convert their co-exclusive
rights to exclusive rights for a specific infectious disease indication.
On
January 24, 2007, we announced the retirement of Dr. Roger Brimblecombe as
Executive Chairman and acting Chief Executive Officer. We also announced the
appointments of Dr. Paul Ashton as our Managing Director and Dr. David J. Mazzo
as our Chairman of the Board.
-4-
On
January 29, 2007, we announced that Retisert had been allocated a
product-specific reimbursement code by the Center for Medicare Services, or
CMS,
in the United States. The new code replaced the prior hospital outpatient code.
CMS also published a payment rate for the code of US$19,345, or 106% of the
average sales price for the product. The new code and the Medicare payment
rate
are effective as of January 1, 2007. Private insurers may pay at different
rates
than Medicare.
On
February 28, 2007, we filed our half-year financial report for the six months
ended December 31, 2006 with the Australian Stock Exchange, or ASX, and the
Australian Securities and Investment Commission, or ASIC. These financial
statements were furnished to the SEC on a Form 6-K on February 28, 2007 which
is
incorporated by reference into this prospectus. All of the amounts in the
succeeding paragraphs of this section are derived from such information and
are
reported in accordance with A-IFRS, unless otherwise noted.
For
the
six months ended December 31, 2006, we incurred a net loss of A$100.7
million (2005: A$10.7 million). Revenues were A$2.1 million (2005:
A$42,000). Our net loss included A$14.5 million (2005: A$9.0 million)
of research and development costs, A$83.4 million (2005: None) of impairment
write-downs of certain intangible assets, A$16.0 million (2005: None) of
losses
on extinguishment of debt related to modifications of the terms of a convertible
note and A$8.2 million (2005: A$288,000) of interest and finance costs (which
included A$3.2 million (2005: None) of penalties in connection with registration
rights agreements), partially offset by a deferred tax benefit of A$26.4
million
(2005: A$2.4 million) primarily attributable to the intangible asset impairment
write-downs.
The
differences between A-IFRS and U.S. GAAP for the fiscal year ended June 30,
2006
are described in Note 29 to the consolidated financial statements included
in
our Annual Report on Form 20-F for the fiscal year ended June 30, 2006, which
was filed with the SEC on December 8, 2006 and is incorporated by reference
into
this prospectus.
During
the six months ended December 31, 2006, certain additional material differences
arose between A-IFRS and U.S. GAAP other than the types already described
in
Note 29 to the consolidated financial statements for the fiscal year ended
June
30, 2006, including the impairment of intangible assets, allocation of debt
proceeds, and the treatment of debt issuance costs associated with the
extinguishment of debt. While the A-IFRS financial statements for the six
months
ended December 31, 2006 have been filed with the ASX and ASIC, those financial
statements, as reconciled to U.S. GAAP, are not required to be filed with
the
SEC until March 31, 2007. Accordingly, our analysis under U.S. GAAP is not
complete, and remains subject to review by our independent registered public
accounting firm in accordance with Statement of Auditing Standards No. 100,
which provides guidance on performing reviews of interim financial information.
A description of the additional material differences follows:
| · |
Impairment
of intangible assets –
Under
A−IFRS and U.S. GAAP, individual intangible assets are tested for
impairment if there is a specified indication. Under A−IFRS, impairment is
indicated, and a detailed calculation must be performed, if specific
events or circumstances occur, a “triggering event”, that could cause the
asset's carrying amount to exceed its recoverable amount. The
impairment
loss is based on the excess of asset carrying value over recoverable
amount. During the six months ended December 31, 2006, we recognized
an
impairment loss under A-IFRS of A$83.4 million. Under U.S. GAAP,
impairment is indicated, and a detailed calculation must be performed,
if
the asset's carrying amount exceeds the expected future pre-tax
cash flows
to be derived from the asset on an undiscounted basis. The impairment
loss
is based on the excess of asset carrying value over fair value.
Our
analysis under U.S. GAAP is not complete; however, our preliminary
view is
that no impairment will be required under U.S.
GAAP.
|
-5-
| · |
Allocation
of debt proceeds – Upon initial recognition, the proceeds received on
the issue of a convertible note with detachable warrants is allocated
into
liability and equity components. In accordance with A−IFRS, the liability
component is measured based on the fair value of a similar liability
(including any embedded non−equity derivative features) that does not have
an associated equity component. The equity component is determined
by
deducting the liability component from the proceeds received
on the issue
of the notes. A portion of the liability component is then allocated
to
any embedded derivatives that require bifurcation, at an amount
equal to
fair value. In accordance with U.S. GAAP, the proceeds received
are first
allocated to the convertible note and the detachable warrants
on a
relative fair value basis. Then, a portion of convertible note
proceeds is
allocated to any embedded derivatives, such as the holder's conversion
option, that require bifurcation, at an amount equal to fair
value. Our
analysis under U.S. GAAP is not complete; however, we expect
a A$1.5
million higher net loss and an A$573,000 increase in shareholders’ equity.
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Debt
issuance costs associated with the extinguishment of debt –
Under
A-IFRS, debt issuance costs associated with the extinguishment
of debt are
included in the determination of gain (loss) on extinguishment.
Under U.S.
GAAP, such debt issuance costs are recorded as a deferred asset
and
amortized from the date of issuance to the stated redemption date(s)
of
the modified loan. For the six months ended December 31, 2006,
we estimate
that under U.S. GAAP we will have a A$122,000 lower net
loss.
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Our
Address and Phone Number
Our
principal offices are located at Level 12 BGC Centre, 28 The Esplanade, Perth
WA
6000, Australia, and our telephone number is: +61 (8) 9226 5099. Our website
address is www.psivida.com. We do not incorporate the information on, or
accessible through, our website into this prospectus, and you should not
consider it part of this prospectus.
RISK
FACTORS
In
considering whether to invest in our ADSs, you should carefully read and
consider the risks described below, together with all of the information we
have
included in this prospectus.
Risks
related to our company and our business
Our
ability to obtain additional capital is uncertain, and if we do not obtain
it,
we will not have the funding necessary to conduct our operations and develop
our
products.
We
expect
to require substantial additional capital resources in order to conduct our
operations and develop our products. We had cash and cash equivalents of A$5.4
million (US$4.2 million) as of December 31, 2006, and we have used A$6.0 million
(US$4.6 million) and A$8.3 million (US$6.3 million) for operating
activities in the three months ended December 31, 2006 and September 30, 2006,
respectively. Therefore,
we will need to raise additional funds in the near term to continue to conduct
our operations as we have been conducting them to date. The timing and degree
of
our future capital requirements will depend on many factors,
including:
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the
amount of royalty and other revenue that we
earn;
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our
ability to successfully negotiate a license and development funding
agreement with a major global pharmaceutical
company;
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whether
and to what extent our investors exercise redemption rights provided
for
in our outstanding convertible debt
securities;
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continued
scientific progress in our research and development
programs;
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the
magnitude and scope of our research and development
programs;
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our
ability to maintain and establish strategic arrangements for research,
development, clinical testing, manufacturing and
marketing;
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our
progress with pre-clinical and clinical
trials;
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the
time and costs involved in obtaining regulatory approvals;
and
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the
costs involved in preparing, filing, prosecuting, maintaining, defending
and enforcing patent claims.
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-6-
We
will
attempt to acquire additional funding through strategic collaborations, public
or private equity financings, capital lease transactions or other financing
sources that may be available. Additional financing may not be available on
acceptable terms, or at all. In addition, the terms of our outstanding
convertible notes, including among others, the market price-based conversion
rate adjustments, may reduce the likelihood that we will be able to find
additional capital at a reasonable valuation if at all.
Additional
equity financings could result in significant dilution to stockholders. Further,
in the event that additional funds are obtained through arrangements with
collaborative partners, these arrangements may require us to relinquish rights
to some of our technologies, product candidates or products that we would
otherwise seek to develop and commercialize ourselves.
If
sufficient capital is not available in the near term and in the longer term,
we
may not be able to fund our operations and may be required to suspend, curtail
or terminate our operations or delay, reduce the scope of or eliminate one
or
more of our research and development programs.
We
have a history of losses; we expect to continue to incur losses; and we may
never become profitable.
pSivida
was formed in 2000. As primarily a research and development company, we have
incurred operating losses in every year of existence. Under A-IFRS (effective
from July 1, 2004), we incurred a net loss of A$16.8 million (US$12.7
million) for the year ended June 30, 2005, a net loss of A$28.2 million (US$21.1
million) for the year ended June 30, 2006 and a net loss of A$100.7 million
(US$76.9 million) for the half-year ended December 31, 2006. As of December
31, 2006, we had an accumulated deficit under A-IFRS of A$157.7 million
(US$124.5 million). We have not achieved profitability and expect to continue
to
incur net losses through at least 2010, and we may incur losses beyond that
time, particularly if we are not successful in having Medidur or
BrachySil approved and widely marketed by that time. Even if Medidur or
BrachySil is approved and marketed at some point in 2010 or beyond, sales of
Medidur or BrachySil, or any of our other marketed products, combined with
royalty income and any other sources of revenue, may not be sufficient to result
in profitability at that time or at any other time. The extent of our future
losses and how long it may take for us to achieve profitability are
uncertain.
On
December 30, 2005, we acquired CDS, which had incurred net losses in each of
its
prior five fiscal years (ended December 31). As a result of the acquisition,
we
have been receiving royalties from sales of Vitrasert, CDS’ first commercial
product. However, sales of Vitrasert have declined in each of the past four
years and we do not expect that Vitrasert royalties will comprise a significant
portion of our future revenue. Following regulatory approval for Retisert in
April 2005, CDS entered into an advance royalty agreement with Bausch & Lomb
in June 2005 pursuant to which CDS received US$3.0 million (A$3.9 million)
in
lieu of US$6.25 million (A$8.5 million) of Retisert royalties that otherwise
would be payable under the license agreement. Subsequent to December 31, 2006,
of the next US$5.7 million (A$7.2 million) of future royalties otherwise payable
from the sales of Retisert, US$5.2 million (A$6.6 million) will be retained
by
Bausch & Lomb. We are unable to predict the future sales of Retisert by
Bausch & Lomb and, as a result, we cannot predict when, if ever, Bausch
& Lomb will have retained that amount of royalties and we will begin
receiving full royalty payments from them.
If
our funds are insufficient to pay the principal of and interest on our
convertible notes, then our note holders may declare an event of default,
foreclose on the collateral and require immediate payment of the entire
principal of the notes plus penalties.
On
November 16, 2005, we issued a subordinated convertible promissory note in
the
principal amount of US$15 million (A$19.7 million) to an institutional investor.
On September 14, 2006, in connection with an amendment of the note, we repaid
US$2.5 million (A$3.3 million) of the principal. The convertible note must
be
repaid in full in cash on the third anniversary of its issuance, unless the
principal is earlier paid or converted. In addition, the holder may require
payment in cash of up to US$6.25 million (A$8.3 million) of the principal on
each of July 31, 2007 and January 31, 2008. The holder of the note has also
been
provided with a security interest in our existing royalty streams from Bausch
& Lomb, which
represent a substantial portion of our current revenue. In connection with
the
terms of a letter agreement with the investor dated October 17, 2006, we agreed
to make compensating payments of US$800,000 (A$1.1 million) on December 28,
2006
for registration rights penalties incurred through the date of the letter
agreement and US$150,000 (A$205,000) each on January 31, 2007, February 28,
2007
and March 30, 2007. In connection with an amendment agreement dated December
29,
2006, we and the investor agreed, among other things, to defer our scheduled
payment of US$800,000 and extend general forbearance for any prior, existing
or
future defaults until the earlier of the closing of a pending transaction with
another party or March 31, 2007 and to add US$306,391 (A$388,000) to the
principal of the note, which amount represented the approximate value of the
ADSs that we would have issued in order to satisfy our quarterly interest
payment due on January 2, 2007 had we qualified to pay with ADSs. If we are
unable to pay interest or principal that becomes due or otherwise are unable
to
make payments under the note or related agreements, the holder may foreclose
on
and collect those royalties or sell that collateral. The proceeds of any sale
would be applied to satisfy amounts owed to the holder.
-7-
On
September 26, 2006, we issued new subordinated convertible promissory notes
in
the principal amount of US$6.5 million (A$8.5 million) to the selling security
holders and assignors of the selling security holders. These convertible notes
must be repaid in full in cash on the third anniversary of their issuance,
unless the principal is earlier paid or converted. In addition, under specified
conditions, the holders may require payment in cash of up to US$3.25 million
(A$4.25 million) of the principal on each of August 14, 2008 (unless the initial
note is still outstanding) and February 14, 2009 (or such later date that is
91
days after the maturity date of the initial note).
All
of
our outstanding convertible promissory notes bear interest at the rate of 8%
per
annum. We may make quarterly interest payments on the notes
by
issuing our ADSs if certain conditions are met, including the continued
effectiveness of registration statements covering the ADSs, continued listing
of
our shares or ADSs, and timely delivery of conversion ADSs during the period
preceding the payment date, among others. If any of the conditions are not
met,
we will be required to pay the interest due in cash. Given the cash needs of
our
business and our current level of revenue, we cannot predict whether or not
we
will be able to meet any of these cash payment obligations or what impact these
obligations might have on our business and operations.
If
we do not obtain certain waivers or fail to maintain an effective resale
registration statement for our ADSs, then we may owe further penalties related
to the inability of certain shareholders to sell ADSs. We may not have
sufficient funds to pay such penalties.
In
connection with our acquisition of CDS, we entered into an agreement to register
with the SEC the resale of ADSs issued to CDS stockholders. We were required
to
complete that registration no later than June 28, 2006. Our agreement
to register these ADSs required that we pay cash penalties equal to one percent
of the number of such ADSs multiplied by the deemed value of such ADSs at the
time of closing, or US$5.087 per ADS, for every 30-day period until the
registration statement became effective and for certain periods during which
the
registration statement could not be used to sell ADSs. The registration
statement was declared effective on September 29, 2006 and we filed additional
information making it usable to effect sales on October 31, 2006. To date,
we
have not paid any of these penalties. Although we are seeking a waiver of these
payment requirements from the holders of ADSs issued in connection with the
acquisition of CDS, such persons may not grant us such a waiver on reasonable
terms or at all. We may not have sufficient funds to pay these penalties. If
we
are forced to do so, we may be required to suspend, curtail or terminate our
operations or delay, reduce the scope of or eliminate one or more of our
research and development programs, any of which could have a material adverse
effect on our business.
In
connection with the amendments to our initial convertible note financing and
our
subsequent new convertible note financing, we have entered into agreements
to
register with the SEC the resale of additional ADSs issuable to the investors.
Our obligation to register ADSs in each of these transactions is subject to
a
deadline, which may be extended in certain situations, and our failure to meet
this deadline results in monetary penalties against us. With respect to the
amendments to our initial convertible note financing, we were required to
complete the registration of shares issuable pursuant to exercise of the
additional warrant granted no later than December 31, 2006. In connection with
an amendment agreement, the parties have agreed to extend the filing deadline
until ten days following the earlier of the closing of a pending transaction
with another party or March 31, 2007. If our registration statement registering
those shares is not filed on or prior to the extended filing deadline, we must
pay penalties of 1.5% of the aggregate purchase price per 30-day period from
that date until the date on which the filing failure is cured. Failure to comply
with this extended deadline within 60 days may result in an event of default
under the convertible note. Furthermore, if our registration statement is not
declared effective within sixty days of the extended filing deadline, or within
ninety days of the extended filing deadline in the event that the SEC institutes
a review of or issues comments with respect to the registration
statement, we must pay th holder an amount equal to US$8,333 in
cash for each day beginning on December 31, 2006 and ending on the date of
such
effectiveness failure as well as 1.5% of the aggregate purchase price per 30-day
period from that date until the date on which the failure is cured. If we
fail to make registration delay payments in a timely manner, such registration
delay payments shall bear interest at the rate of 1.0% per month, prorated
for
partial months, until paid in full. With respect to our new convertible note
financing, we were required to complete the registration no later than January
1, 2007. Our failure to meet this deadline has resulted in our having to pay
a
cash penalty equal to one percent of the convertible note purchase price, or
US$65,000 (A$85,000) on
January 31, 2007 for the month of January 2007 and on March 1, 2007 for the month
of February 2007 and additional penalties will accrue for each 30-day period,
or portion there of, until the registration statement becomes effective.
Further, failure to comply with this effectiveness deadline by April 1,
2007 may result in an event of default under the new convertible notes.
Each of these registration deadlines is subject to extension under certain
circumstances.
-8-
Our
failure or inability to maintain the effectiveness of any of our registrations
or to adequately update information in the related prospectuses may subject
us
to additional penalties. In addition, we expect to have other registration
obligations with similar penalty provisions related to registration deadlines
in
connection with future financing activities.
Most
of our products and planned products are based upon new and unproven
technologies, and if we are unable to develop products from those technologies,
we may not have sufficient revenue to continue our
operations.
We
are
currently developing products based upon our Durasert, BioSilicon and CODRUG
drug delivery systems for multiple applications across many sectors of
healthcare, including controlled drug delivery and diagnostics. The successful
development and market acceptance of our current products and potential product
technologies is subject to many risks. These risks include the potential for
ineffectiveness, lack of safety, unreliability, failure to receive necessary
regulatory clearances or approvals and the emergence of superior or equivalent
products, as well as the effect of changes in future general economic
conditions. To date, we have developed two marketed products, Vitrasert and
Retisert, which are based on our Durasert technology and have been approved
by
the FDA for treatment of two sight-threatening eye diseases. However, these
technologies may prove useful in other products which would also be subject
to
many risks. Our failure to develop our current and future products could have
a
material adverse effect on our business, financial condition and results of
operations. Further, BioSilicon is a new and unproven technology for which
we
have received no FDA approvals.
We
rely heavily upon patents and trade secrets to protect our proprietary
technologies. If we fail to protect our intellectual property or infringe on
others’ technologies, our ability to market our products may
suffer.
Protection
of intellectual property rights is crucial to our business, since that is how
we
keep others from copying the innovations which are central to our existing
and
future products. Our success is dependent on whether we can obtain patents,
defend our existing patents and operate without infringing on the proprietary
rights of third parties. As of December 31, 2006, we had 95 patents and over
317
pending patent applications, including patents and pending applications covering
our Durasert, BioSilicon and CODRUG technologies. We expect to aggressively
patent and protect our proprietary technologies. However, we cannot be sure
that
any additional patents will be issued to us as a result of our pending or future
patent applications or that any of our patents will withstand challenges by
others. In addition, we may not have sufficient funds to patent and protect
our
proprietary technologies to the extent that we would desire or at all. If we
were determined to be infringing any third party patent, we could be required
to
pay damages, alter our products or processes, obtain licenses, pay royalties
or
cease certain operations. We may not be able to obtain any required licenses
on
commercially favorable terms, if at all. Our failure to obtain a license for
any
technology that we may require to commercialize our products could have a
material adverse effect on our business, financial condition and results of
operations. In addition, many of the laws of foreign countries in which we
intend to operate may treat the protection of proprietary rights differently
from, and may not protect our proprietary rights to the same extent as, laws
in
Australia, the United States and Patent Co-operation Treaty
countries.
Prior
art
may reduce the scope or protection of, or invalidate, patents. Previously
conducted research or published discoveries may prevent patents from being
granted, invalidate issued patents or narrow the scope of any protection
obtained. Reduction in scope of protection or invalidation of our licensed
or
owned patents, or our inability to obtain patents, may enable other companies
to
develop products that compete with our products and product candidates on the
basis of the same or similar technology. As a result, our patents and those
of
our licensors may not provide any or sufficient protection against
competitors.
While
we
have not been and we are not currently involved in any litigation over
intellectual property, such litigation may be necessary to enforce any patents
issued or licensed to us or to determine the scope and validity of third party
proprietary rights. We may also be sued by one or more third parties alleging
that we infringe its intellectual property rights. Any intellectual property
litigation would be likely to result in substantial costs to us and diversion
of
our efforts. If our competitors claim technology also claimed by us and if
they
prepare and file patent applications in the U.S., we may have to participate
in
interference proceedings declared by the U.S. Patent and Trademark Office to
determine priority of invention, which could result in substantial cost to
us
and diversion of our efforts. Any such litigation or interference proceedings,
regardless of the outcome, could be expensive and time consuming. Litigation
could subject us to significant liabilities to third parties, requiring disputed
rights to be licensed from third parties or require us to cease using certain
technologies and, consequently, could have a material adverse effect on our
business, financial condition and results of operations.
-9-
We
also
rely on trade secrets, know-how and technology that are not protected by patents
to maintain our competitive position. We try to protect this information by
entering into confidentiality agreements with parties that have access to it,
such as our corporate partners, collaborators, employees, and consultants.
Any
of these parties could breach these agreements and disclose our confidential
information, or our competitors might learn of the information in some other
way. If any material trade secret, know-how or other technology not protected
by
a patent were to be disclosed to or independently developed by a competitor,
our
competitive position could be materially harmed.
If
we do not receive the necessary regulatory approvals, we will be unable to
commercialize our products.
Our
current and future activities are and will be subject to regulation by
governmental authorities in the U.S., Europe, Singapore and other countries.
Before we can manufacture, market and sell any of our products, we must first
obtain approval from the FDA and/or foreign regulatory authorities. In order
to
obtain these approvals, pre-clinical studies and clinical trials must
demonstrate that each of our products is safe for human use and effective for
its targeted disease. Our proposed products are in various stages of
pre-clinical and clinical testing. If clinical trials for any of these products
are not successful, those products cannot be manufactured and sold and will
not
generate revenue from sales. Clinical trials for our product candidates may
fail
or be delayed by many factors, including the following:
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our
lack of sufficient funding to pursue trials rapidly or at
all;
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our
inability to attract clinical investigators for
trials;
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our
inability to recruit patients in sufficient numbers or at the expected
rate;
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adverse
side effects;
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failure
of the trials to demonstrate a product’s safety or
efficacy;
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our
failure to meet FDA or other regulatory agency requirements for clinical
trial design or for demonstrating efficacy for a particular product;
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our
inability to follow patients adequately after
treatment;
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changes
in the design or manufacture of a product;
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our
inability to manufacture sufficient quantities of materials for use
in
clinical trials; and
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governmental
or regulatory delays.
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Results
from pre-clinical testing and early clinical trials often do not accurately
predict results of later clinical trials. Data obtained from pre-clinical and
clinical activities are susceptible to varying interpretations which may delay,
limit or prevent regulatory approval. Data from pre-clinical studies, early
clinical trials and interim periods in multi-year trials are preliminary and
may
change, and final data from pivotal trials for such products may differ
significantly. Adverse side effects may develop that delay, limit or prevent
the
regulatory approval of products, or cause their regulatory approvals to be
limited or even rescinded. Additional trials necessary for approval may not
be
undertaken or may ultimately fail to establish the safety and efficacy of
proposed products. The FDA or other regulatory agencies may not approve proposed
products for manufacture and sale.
In
addition to testing, regulatory agencies impose various requirements on
manufacturers and sellers of products under their jurisdiction, such as
labeling, manufacturing practices, record keeping and reporting. Regulatory
agencies may also require post-marketing testing and surveillance programs
to
monitor a product’s effects. Furthermore, changes in existing regulations or the
adoption of new regulations could prevent us from obtaining, or affect the
timing of, future regulatory approvals.
At
present, Vitrasert and Retisert are our only products that have been approved
for sale in the U.S. for specific purposes. BrachySil and other product
candidates utilizing BioSilicon have not been approved and their approval in
the
future remains uncertain. Any product approvals we achieve could also be
withdrawn for failure to comply with regulatory standards or due to unforeseen
problems after the product’s marketing approval.
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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:
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our
collaborative arrangements are, and are expected to be, subject to
termination under various circumstances including, in some cases,
on short
notice and without cause;
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we
are required, and expect to be required, under our collaborative
arrangements not to conduct specified types of research and development
in
the field that is the subject of the collaboration, limiting the
areas of
research and development that we can
pursue;
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our
collaborators may develop and commercialize, either alone or with
others,
products that are similar to or competitive with our products;
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our
collaborators, consistent with other pharmaceutical and biotechnology
companies that have historically acted similarly, may for a variety
of
reasons change the focus of their development and commercialization
efforts or decrease or fail to increase spending related to our products,
limiting the ability of our products to reach their potential;
and
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our
collaborators may lack the funding or experience to develop and
commercialize our products successfully or may otherwise fail to
do
so.
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To
the
extent that we choose not to, or we are unable to, enter into future license
agreements with marketing and sales partners, we may experience increased
capital requirements to develop the ability to market and sell future products.
We may not be able to market or sell our technology or future products
independently in the absence of such agreements.
Our
current licensees may terminate their agreements with us at any time, and if
they do, we may not be able to effectively develop and sell our
products.
Our
licensees have rights of termination under our agreements with them. Exercise
of
termination rights by those parties may leave us temporarily or permanently
without any marketing or sales resources, which may have an adverse effect
on
our business, financial condition and results of operations. Additionally,
our
interests may not continue to coincide with those of our partners, and our
partners may develop independently or with third parties, products or
technologies that could compete with our products. Further, disagreements over
rights or technologies or other proprietary interests may occur.
-11-
We
have
exclusively licensed our technology with respect to Vitrasert, Retisert and
certain other ophthalmic uses to Bausch & Lomb, and with respect to Medidur
for DME and certain other ophthalmic uses to Alimera Sciences. Bausch & Lomb
is responsible for funding and managing the development and commercialization
of
all licensed products and can terminate its agreement with us at any time upon
90 days’ written notice. We are jointly funding with Alimera Sciences the
development of products licensed under our agreement with them, and Alimera
Sciences may terminate its agreement with us if we fail to make a development
payment or may terminate the agreement with respect to a particular product
if
we abandon the product. Further, in the event that we fail to make development
payments exceeding US$2.0 million (A$2.7 million) for a product, Alimera
Sciences may complete the development using other funds and substantially reduce
our economic interest in any sales of the developed product from a share of
profits to a sales-based royalty. As of December 31, 2006, we have chosen
not to make development payments to Alimera Sciences in an aggregate amount
of
approximately US$1.9 million (A$2.6 million). Alimera Sciences was incorporated
in June 2003 and has limited resources. Either Bausch & Lomb or Alimera
Sciences may decide not to continue with or commercialize any or all of the
licensed products, change strategic focus, pursue alternative technologies,
develop competing products or terminate their agreements with us. While Bausch
& Lomb has significant experience in the ophthalmic field and substantial
resources, there is no assurance as to whether, and to what extent, that
experience and those resources will be devoted to our technologies. Because
we
do not currently have sufficient funding or internal capabilities to develop
and
commercialize these products and proposed products, decisions, actions, breach
or termination of these agreements by Bausch & Lomb or Alimera Sciences
could delay or stop the development or commercialization of Retisert, Medidur
for DME or other of our products licensed to such entities. We have licensed
BrachySil to Beijing Med-Pharm for China, and similar risks exist under the
terms of that license agreement.
If
our competitors develop more effective products that receive regulatory approval
before our products reach the market, our products could be rendered
obsolete.
We
are,
or plan to be, engaged in the rapidly evolving and competitive fields of drug
delivery and diagnostics. Our competitors include many major pharmaceutical
companies and other biotechnology, drug delivery, diagnostics and medical
products companies.
Many
of
our potential competitors have substantially greater financial, technological,
research and development, marketing and personnel resources than us. Our
competitors may succeed in developing alternate technologies and products
that:
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are
more effective and easier to use;
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are
more economical than those which we have developed; or
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would
render our technologies and products obsolete and non-competitive
in these
fields.
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These
competitors may also have greater experience in developing products, conducting
clinical trials, obtaining regulatory approvals or clearances and manufacturing
and marketing such products or technologies.
We
believe that pharmaceutical, drug delivery and biotechnology companies, research
organizations, governmental entities, universities, hospitals, other nonprofit
organizations and individual scientists are seeking to develop the drugs,
therapies, products, approaches or methods to treat our targeted diseases or
their underlying causes. For many of our targeted diseases, competitors have
alternate therapies that are already commercialized or are in various stages
of
development ranging from discovery to advanced clinical trials. Any of these
drugs, therapies, products, approaches or methods may receive government
approval or gain market acceptance more rapidly than our products and proposed
products, may offer therapeutic or cost advantages or may cure our targeted
diseases or their underlying causes completely, which could reduce demand for
our products and proposed products and could render them noncompetitive or
obsolete. For example, sales of Vitrasert for the treatment of cytomegalovirus,
or CMV, retinitis,
a disease which affects people with late-stage AIDS, have declined
significantly, because of new treatments that delay the onset of late-stage
AIDS.
Our
competitive position is based upon our ability to:
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create
and maintain scientifically-advanced technology and proprietary products
and processes;
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attract
and retain qualified personnel;
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-12-
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develop
safe and efficacious products, alone or in collaboration with
others;
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obtain
patent or other protection for our products and
processes;
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obtain
required government approvals on a timely
basis;
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manufacture
products on a cost-effective basis;
and
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successfully
market products.
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If
we are
not successful in meeting these goals, our business could be adversely
affected.
If
we expand our efforts beyond our core area of expertise and experience, then
we
may have to enter into collaboration agreements that limit the extent to which
we can profit from our own technologies.
We
plan
to expand our focus outside of our initial areas of experience and expertise
in
order to broaden our product pipeline and this will require additional internal
expertise or external collaborations in areas in which we currently do not
have
internal resources and expertise. Such expertise and collaborations may be
difficult to obtain. We are currently focused on targeted controlled drug
delivery specifically for ophthalmic drug delivery, localized oncology and
other
controlled delivery mechanisms. We have started to expand our focus into
diagnostics and the food industry and may plan to expand into other areas at
a
later time. In connection with the foregoing, we may have to enter into
collaboration arrangements with others that may require us to relinquish rights
to certain of our technologies or products that we would otherwise pursue
independently. We may be unable to acquire the necessary expertise or enter
into
collaboration agreements on acceptable terms.
Problems
associated with international business operations could affect our ability
to
manufacture and sell our products. If we encounter such problems, our costs
could increase and our development of products could be
delayed.
We
currently maintain offices in Australia, the UK, Singapore and the U.S.
BrachySil is produced for us in Germany and the UK, and BioSilicon is produced
in-house and by third party contractors in the UK. We are conducting product
trials in Singapore and in Europe, we have research and development facilities
in the UK and the U.S. and we intend to license and/or sell products in most
major world healthcare markets. A number of risks are inherent in our
international strategy. In order for us to license and manufacture our products,
we must obtain country and jurisdiction-specific regulatory approvals or
clearances to comply with regulations regarding safety and quality. We may
not
be able to obtain or maintain regulatory approvals or clearances in such
countries, and we may be required to incur significant costs in obtaining or
maintaining foreign regulatory approvals or clearances. In addition, our
operations and revenues are subject to a number of risks associated with foreign
commerce, including the following:
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managing
foreign distributors;
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staffing
and managing foreign operations;
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political
and economic instability;
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foreign
currency exchange fluctuations;
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foreign
tax laws, tariffs and freight rates and
charges;
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timing
and availability of export
licenses;
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inadequate
protection of intellectual property rights in some countries;
and
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obtaining
required governmental approvals.
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If
we encounter problems with product manufacturing, we could experience delays
in
product development and commercialization, which would adversely affect our
future profitability.
Our
ability to conduct timely pre-clinical and clinical research and development
programs, obtain regulatory approvals, commercialize our product candidates
and
fulfill our contract manufacturing obligations to others will depend, in part,
upon our ability to manufacture our products, either directly or through third
parties, in accordance with FDA and other regulatory requirements. We currently
have BioSilicon production capability at our facilities in the UK, which may
be
augmented where required by QinetiQ’s UK production facilities for
use
in internal and collaborative research. BrachySil is currently manufactured
under contract, in accordance with applicable current good manufacturing
practices, or cGMP, by Hosokawa Micron Group, Atomising Systems Ltd, HighForce
Ltd and AEA Technology QSA GmbH. We currently manufacture clinical supplies
pursuant to our agreement with Alimera Sciences.
-13-
We
could
experience delays in development or commercialization of our proposed products
if we are unable to manufacture BioSilicon, BrachySil or other product
candidates by ourselves, or to acquire BioSilicon, BrachySil or other
product candidates from third parties, such as QinetiQ. We may not be able
to
manufacture our proposed products successfully or in a cost-effective manner
at
our own or third-party facilities. If we are unable to develop our own
manufacturing facilities or to obtain or retain third-party manufacturing on
acceptable terms, we may not be able to conduct certain future pre-clinical
and
clinical testing or to supply commercial quantities of our products.
We
have
licensed to Bausch
& Lomb the exclusive rights to manufacture Vitrasert, Retisert and other
products covered by its license agreement with us. We have licensed to Alimera
Sciences the rights to manufacture Medidur for DME, if approved for marketing,
and other products covered by its license agreement. Our current reliance on
third-party manufacturers for some of our products entails risks,
including:
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the
possibility that third parties may not comply with the FDA’s cGMP
regulations, other regulatory requirements, and those of similar
foreign
regulatory bodies, and may not employ adequate quality assurance
practices;
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supply
disruption, deterioration in product quality or breach of a manufacturing
or license agreement by the third party because of factors beyond
our
control;
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the
possible termination or non-renewal of a manufacturing or licensing
agreement with a third party at a time that is costly or inconvenient
to
us; and
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our
inability to identify or qualify an alternative manufacturer in a
timely
manner, even if contractually permitted to do
so.
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If
third-party reimbursement and health care providers do not cover the cost of
our
products, market acceptance could be limited.
In
both
domestic and foreign markets, our ability to commercialize our products will
depend, in part, upon the availability of reimbursement from third-party payors,
such as government health administration authorities, private health insurers
and other organizations. Third-party payors are increasingly challenging the
price and cost-effectiveness of medical products. If our products are not
considered cost-effective, third-party payors may limit reimbursement.
Government and other third-party payors are increasingly attempting to contain
healthcare costs by limiting both coverage and the level of reimbursement for
new therapeutic products and by refusing, in some cases, to provide any coverage
for uses of approved products for disease indications for which they have not
been granted regulatory approval. If government and third-party payors do not
provide adequate coverage and reimbursement levels for uses of our products,
the
market acceptance of our products would be limited.
There
have been a number of U.S. federal and state proposals during the last few
years
to subject the pricing of pharmaceuticals to government control and to make
other changes to the health care system of the U.S. It is uncertain what
legislative proposals will be adopted or what actions federal, state or private
payors for health care goods and services may take in response to any health
care reform proposals or legislation. Similar health care reforms may also
be
implemented outside of the U.S. We cannot predict the effect health care reforms
may have on our business.
If
we fail to retain some or all of our key personnel, then our business could
suffer.
We
are
dependent upon the principal members of our management, administrative and
scientific staff. In addition, we believe that our future success in developing
our products and achieving a competitive position will depend to a large extent
on whether we can attract and retain additional qualified management and
scientific personnel. There is strong competition for such personnel within
the
industry in which we operate and we may not be able to continue to attract
such
personnel either to Malvern in the United Kingdom or to Massachusetts, where
much of our research and development is conducted. Further, the economic climate
in Perth could make employee retention difficult there. As we do not have large
numbers of employees and our products are unique and highly specialized, the
loss of the services of one or more of the senior management or scientific
staff, or the inability to attract and retain additional personnel and develop
expertise as needed, could have a material adverse effect on our results of
operations and financial condition.
-14-
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 and financing
transactions”.
We
may be
required to increase the number of our employees, and we may suffer if we do
not
manage and train our new employees effectively. Further, our efforts span
various geographies. Continued operations in multiple locations may place
significant strains on our managerial, financial and other resources. The rate
of any future expansion, in combination with our complex technologies and
products, may demand a level of managerial effectiveness in anticipating,
planning, coordinating and meeting our operational needs which we may not be
able to successfully provide.
In
addition, if we make additional acquisitions or divestitures, we could encounter
difficulties that harm our business. We may acquire companies, products or
technologies that we believe to be complementary to our business. If we do
so,
we may have difficulty integrating the acquired personnel, operations, products
or technologies. In addition, acquisitions may distract our management and
employees and increase our expenses, which could harm our business. We may
also
sell businesses or assets as part of our strategy or if we receive offers from
third parties. If we do so, we may sell an asset or business for less than
its
full value or may lose valuable opportunities attendant to such asset or
business.
If
we fail to comply with environmental laws and regulations, our ability to
manufacture and commercialize products may be adversely
affected.
Medical
and biopharmaceutical research and development involves the controlled use
of
hazardous materials, such as radioactive compounds and chemical solvents. We
are
subject to federal, state and local laws and regulations in the U.S. and abroad
governing the use, manufacture, storage, handling and disposal of such materials
and waste products. We could be subject to both criminal liability and civil
damages in the event of an improper or unauthorized release of, or exposure
of
individuals to, hazardous materials. In addition, claimants may sue us for
injury or contamination that results from our use or the use by third parties
of
these materials, and our liability may exceed our total assets. Compliance
with
environmental laws and regulations is expensive, and current or future
environmental regulations may impair our research, development or production
efforts or harm our operating results.
Risks
related to our being headquartered and incorporated outside of the United
States
You
may have difficulty in effecting service of legal process and enforcement of
judgments against us or our management.
We
are a
public company limited by shares, registered and operating under the Australian
Corporations Act 2001. Several of our directors and officers reside outside
the
U.S. Substantially all or a substantial portion of the assets of those persons
are located outside the U.S. As a result, it may not be possible to effect
service on such persons in the U.S. or to enforce, in foreign courts, judgments
against such persons obtained in U.S. courts and predicated on the federal
securities laws of the U.S. Furthermore, a large percentage of our directly
owned assets are located outside the U.S., and, as such, any judgment obtained
in the U.S. against us may not be collectible within the U.S. There is doubt
as
to the enforceability in the Commonwealth of Australia, in original actions
or
in actions for enforcement of judgments of U.S. courts, of civil liabilities
predicated solely upon federal or state securities laws of the U.S., especially
in the case of enforcement of judgments of U.S. courts where the defendant
has
not been properly served in Australia.
-15-
As
a foreign private issuer we do not have to provide you with the same information
as an issuer of securities based in the U.S.
Because
we are a foreign private issuer within the meaning of the rules under the
Exchange Act, we are exempt from certain provisions that are applicable to
U.S.
public companies, including:
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the
rules under the Exchange Act requiring the filing with the SEC of
quarterly reports on Form 10-Q or current reports on Form 8-K;
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the
sections of the Exchange Act regulating the solicitation of proxies,
consents or authorizations in respect of a registered security; and
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the
sections of the Exchange Act requiring insiders to file public reports
of
their stock ownership and trading activities and liability for insiders
who profit from trades made in a short period of
time.
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Thus,
you
are not afforded the same protections or information which would be made
available to you were you investing in a U.S. public corporation.
In
accordance with the requirements of the Australian Stock Exchange, we disclose
annual and semi-annual results. Until July 1, 2005, our results were presented
in accordance with accounting principles generally accepted in Australia, or
A-GAAP, and they are now presented in accordance with A-IFRS. Our annual results
reported in the U.S. with the SEC include a reconciliation to U.S. GAAP. Our
annual results are audited, and our semi-annual results undergo a limited review
by our independent auditors. Subject to certain exceptions, we are also required
to immediately disclose to the ASX any information concerning us that a
reasonable person would expect to have a material effect on the price or value
of our shares. This would include matters such as:
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any
major new developments relating to our business which are not public
knowledge and may lead to a substantial movement in our share price;
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any
changes in our board of directors;
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any
purchase or redemption by us of our own equity securities;
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interests
of directors in our shares or debentures; and
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changes
in our capital structure.
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We
are
required to provide our semi-annual results, and other material information
that
we disclose in Australia or in the U.S., under the cover of Form 6-K.
Nevertheless, this information is not the same and may not be as much
information as would be made available to you were you investing in a U.S.
public corporation.
Risks
related to our stock and our ADSs
If
we are a passive foreign investment company, holders of our shares and ADSs
may
suffer adverse tax consequences.
U.S.
holders of our ADSs may experience unfavorable tax consequences if we are
treated as a passive foreign investment company, or PFIC, under the U.S.
Internal Revenue Code of 1986, as amended, for any year during which the U.S.
holder owned our ADSs. In general, we are a PFIC for any taxable year if either
(1) 75% or more of our gross income in the taxable year is passive income,
or (2) 50% or more of the average value of our assets in the taxable year
produces, or is held for the production of, passive income. We were likely
a
PFIC for the fiscal year ended June 30, 2005. For example, if a U.S. holder
disposes of an ADS at a gain, and during any year of its holding period we
were
a PFIC, then such gain would be taxable as ordinary income and not as capital
gain and would be subject to additional taxation based on the length of time
the
U.S. holder held such stock. Most of the tax consequences of our being a PFIC
may be mitigated if the U.S. holder makes certain elections as described in
Item
10.E of our Annual Report on Form 20-F under “U.S. Federal Income Tax
Considerations”.
-16-
Holders
of our ADSs may have limited rights relative to holders of our ordinary shares
in certain circumstances.
The
rights of holders of ADSs with respect to voting of ordinary shares and
receiving certain distributions may be limited in certain respects by the
deposit agreement entered into by us and Citibank, N.A. For example, although
ADS holders are entitled under the deposit agreement, subject to any applicable
provisions of Australian law and of our constitution, to instruct the depositary
as to the exercise of their voting rights pertaining to the ordinary shares
represented by the American Depositary Shares, and the depositary has agreed
that it will vote the ordinary shares so represented in accordance with such
instructions, ADS holders may not receive notices sent by the depositary in
time
to ensure that the depositary will vote the ordinary shares. This means that
holders of ADSs may not be able to exercise their right to vote. In addition,
under the deposit agreement, the depositary has the right to restrict
distributions to holders of the ADSs in the event that it is unlawful or
impractical to make such distributions. We have no obligation to take any action
to permit distributions to holders of our American Depositary Receipts, or
ADRs.
As a result, holders of ADRs may not receive distributions made by
us.
Our
stock price is volatile. If our trading volume fluctuates significantly, based
on events both within and outside our control, you may have difficulty selling
your ADSs when you desire to.
Since
December 2000, the price of our ordinary shares has ranged from A$0.09 to A$1.44
per share, and since January 27, 2005, the price of our ADSs has ranged from
US$1.36 to US$12.14. The price of our ordinary shares and ADSs may be affected
by developments directly affecting our business and by developments out of
our
control or unrelated to pSivida. The biotechnology sector in particular, and
the
stock market generally, are vulnerable to abrupt changes in investor sentiment.
Prices of securities and trading volume of companies in the biotechnology
industry, including ours, can swing dramatically in ways unrelated to or that
bear a disproportionate relationship to, operating performance. Our ordinary
share and ADS trading prices and volumes may fluctuate based on a number of
factors including, but not limited to:
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clinical
trial results and other product and technological developments and
innovations;
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FDA
and other governmental regulatory actions, receipt and timing of
approvals
of our proposed products, and any denials and withdrawals of approvals;
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competitive
factors including new product ideas and technologies, clinical trial
results and approvals of competitive products in our markets;
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advancements
with respect to treatment of the diseases targeted by our proposed
products;
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developments
relating to collaborative partners, including execution and termination
of
agreements, achievement of milestones and receipt of payments;
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availability
and cost of capital and our financial and operating results;
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changes
in reimbursement policies or other practices relating to our proposed
products or the pharmaceutical industry generally;
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meeting,
exceeding or failing to meet analysts’ or investors’ expectations, and
changes in evaluations and recommendations by securities analysts;
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economic,
industry and market conditions, changes or trends; and
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other
factors unrelated to us and the biotechnology industry.
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In
addition, low trading volume may increase the price volatility of our ADSs.
Trading volume in our ordinary shares on other markets has not been historically
high, and trading volume of our ADSs on the NASDAQ Global Market has also been
low. Further, because each of our ADSs represents ten of our ordinary shares,
trading volume in our ADSs may be lower than that for our ordinary shares.
A
thin trading market could cause the price of our ADSs to fluctuate significantly
more than the stock market as a whole. For example, trades involving a
relatively small number of our ADSs may have a greater impact on the trading
price for our ADSs than would be the case if their trading volume were higher.
Accordingly, holders of our ADSs may not be able to liquidate a position in
our
ADSs in the desired time or at the desired price.
The
fact that we do not expect to pay cash dividends may lead to decreased prices
for our stock.
We
have
never paid a cash dividend on our ordinary shares and we do not anticipate
paying any cash dividend. We intend to retain future cash earnings, if any,
for
reinvestment in the development and expansion of our business.
-17-
If
the holders of our outstanding convertible notes, warrants and stock options
convert their notes or exercise their warrants and options, your ownership
may
be diluted and our stock price may decline.
The
issuance of our ordinary shares or ADSs upon conversion of the convertible
notes
and upon exercise of the share purchase warrants and stock options would result
in dilution to the interests of other holders of our ADSs and ordinary
shares.
As
of
February 28, 2007, we had outstanding convertible securities, including stock
options and warrants, representing the right to acquire 38,246,464 ADSs
(382,464,642 ordinary shares), or approximately 82.41% of our total outstanding
shares as of February 28, 2007, including:
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US$18.8
million (A$23.8 million) in principal amount of notes that are
convertible, at the option of the note holders, or under certain
circumstances at our election, into 11,589,917 ADSs (115,899,170
ordinary
shares);
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warrants
and investor options to purchase 24,266,784 ADSs (242,667,840 ordinary
shares); and
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stock
options to purchase the equivalent of 2,389,763 ADSs (23,897,632
ordinary
shares).
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Through
February 28, 2007, holders of our convertible notes have exercised their option
to convert US$530,723 (A$726,918) in principal amount of and US$4,277 (A$5,858)
in interest on the convertible notes for 267,500 ADSs (2,675,000 ordinary
shares).
Under
certain circumstances, the number of shares into which the convertible notes
can
be converted will be increased. These circumstances include:
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in
the event we issue securities at a price lower than the price at
which the
notes may then be converted;
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in
the event that 108% of the volume-weighted average trading price
of our
ADSs for the ten trading days prior to April 30, 2007 is lower than
the then current conversion price;
and
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in
the event that we issue a share dividend or otherwise recapitalize
our
shares.
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The
warrant exercise prices may also be adjusted under certain circumstances,
including, among others, in the event we issue securities in a rights offering
at a lower price than the exercise price, or in the event that we issue a share
dividend or otherwise recapitalize our shares.
Any
such
downward adjustment of the note conversion price or warrant exercise prices
could result in a higher number of ADSs or ordinary shares being issued,
resulting in further dilution to existing shareholders.
Future
issuances and sales of our stock could dilute your ownership and cause our
stock
price to decline.
We
intend
to continue to finance our operations through the issuance of equity and
convertible securities, if feasible, including by way of the public equity
markets, private financings and debt. If we raise additional capital through
the
issuance of equity or securities convertible into equity, existing holders
of
our securities may experience dilution. Those securities may have rights,
preferences or privileges senior to those of the holders of our ADSs and
ordinary shares. Additional financing may not be available to us on favorable
terms, and financing available at less favorable terms may lead to more
substantial dilution of existing shareholders.
Certain
of our shareholders own a significant percentage of our ordinary shares and
therefore may be able to influence our business in ways that are less beneficial
to you.
Our
current executive officers, directors (including the officers and directors
of
our subsidiaries) and their affiliates beneficially own or control approximately
8.33% of our outstanding ordinary shares (based on the number of our ordinary
shares outstanding on February 28, 2007 and assuming the issuance of shares
upon
the exercise of options vested or vesting within 60 days of February 28, 2007).
As a result, if our executive officers and directors and their affiliates were
all to vote in the same way, they would have the ability to exert significant
influence over our board of directors and how we operate our business. The
concentration of ownership may also have the effect of delaying or preventing
a
change in control of our company.
-18-
If
we fail to comply with internal controls evaluations and attestation
requirements our stock price could be adversely
affected.
We
are
subject to United States securities laws, including the Sarbanes-Oxley Act
of
2002 and the rules and regulations adopted by the SEC pursuant to such Act.
Based on our evaluation of the effectiveness of the design and operation of
our
disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule
15d-15(e) of the Securities Exchange Act of 1934, we have concluded that, as
of
June 30, 2006, our disclosure controls and procedures were ineffective in that
we had insufficient accounting personnel who had sufficient knowledge and
experience in U.S. GAAP and the SEC accounting requirements.
As
a
foreign private issuer, under Section 404 of the Sarbanes-Oxley Act and the
related regulations, we are required to perform an evaluation of our internal
controls over financial reporting, including (1) management’s annual report on
its assessment of the effectiveness of internal controls over financial
reporting for the year ending June 30, 2007 and (2) our independent registered
public accounting firm’s annual audit of management’s assessment beginning in
the year ending June 30, 2008. If our foreign private issuer status were to
change prior to June 30, 2007, the attestation requirement of our independent
registered public accounting firm would be accelerated to cover the year ending
June 30, 2007. We are in the early stages of the systems documentation and
evaluation process. Combined with our initial testing of key internal controls
during fiscal 2007 and the subsequent evaluation and testing by our independent
registered public accounting firm commencing in fiscal 2008, we expect
compliance with these requirements to be time-consuming and expensive. If we
fail to complete the evaluation of our internal controls over financial
reporting in time, if we identify material weaknesses in these internal controls
or if our independent registered public accounting firm does not timely attest
to our evaluation, we could be subject to regulatory scrutiny and decreased
public confidence in our internal controls, which may adversely affect the
market price of our stock.
Risks
related to our recent acquisitions and financing
transactions
The
following risk factors relate to our recent acquisitions of pSiMedica and CDS,
as well as: (1) our US$15 million (A$20.5 million) convertible note
financing, referred to herein as our initial convertible note financing and
(2)
our US$6.5 million (A$8.5 million) convertible note financing referred to herein
as the new convertible note financing.
A
default under our outstanding convertible notes could seriously harm our
operations.
On
September 14, 2006, we repaid US$2.5 million (A$3.3 million) of our initial
subordinated convertible promissory note issued in November 2005 and agreed
to
convert the unsecured, un-guaranteed debt represented by the note into secured,
guaranteed debt. On September 26, 2006, we issued US$6.5 million (A$8.5
million) of new subordinated convertible promissory notes to other investors.
Each of the notes and their respective related agreements contain numerous
events of default which include:
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failure
to register securities or maintain the registration of securities
for
resale after applicable cure
periods;
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suspension
of our ADSs or ordinary shares from trading for five consecutive
trading
days;
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failure
to issue shares pursuant to a conversion within the applicable cure
period;
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failure
to pay interest, principal payments or other fees when
due;
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if
any indebtedness exceeding, US$250,000 (A$333,000) is declared due
and
payable prior to its specified
maturity;
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a
bankruptcy or insolvency proceeding instituted by or against us or
a
material subsidiary which is not dismissed within 30
days;
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breach
by us of any material covenant or term or condition of the notes
or any
agreements made in connection therewith;
and
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breach
by us of any material representation or warranty made in the notes
or in
any agreements made in connection
therewith.
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If
we
default on the notes, a holder could demand that we redeem the full outstanding
amount. In that event, any cash required to be paid would most likely come
out
of our working capital, which may not be sufficient to repay the amounts due.
In
addition, since we rely on our working capital for our day to day operations,
such a default on the notes could materially adversely affect our business,
operating results or financial condition to such extent that we are forced
to
restructure, file for bankruptcy, sell assets or cease operations. Further,
our
obligations under the initial notes are secured by the royalties on our
currently marketed products and a guaranty by our U.S. subsidiary, pSivida
Inc.
Failure to fulfill our obligations under those notes and related agreements
could lead to loss of these assets and subject pSivida Inc. to direct liability
in the U.S., which would be detrimental to our financial condition and
operations.
-19-
We
may fail to integrate our operations successfully with the operations of CDS.
As
a result, pSivida and CDS may not achieve the anticipated benefits of the
merger, which could adversely affect the price of
ADSs.
We
entered into the merger agreement and consummated the merger with the
expectation that the merger would result in benefits to the combined companies,
including the opportunity to combine the two companies’ technologies, products
and product candidates and the opportunity for us to establish a substantial
presence in the U.S. that would facilitate access to U.S. markets. However,
these expected benefits may not be fully realized. Failure of the combined
company to meet the challenges involved with successfully integrating the
personnel, products, technology and research and development operations of
the
two companies following the merger or to realize any of the other anticipated
benefits of the merger, could have a material adverse effect on our business.
Any such adverse effect could impair our financial condition and results of
operations, or impair those of our subsidiaries, including pSivida Inc. These
integration efforts may be difficult and time consuming, especially considering
the highly technical and complex nature of each company’s products. The
challenges involved in this integration include the following:
|
·
|
coordinating
research and development operations in a rapid and efficient manner;
|
|
·
|
combining
platform technologies of disparate sources;
|
|
·
|
demonstrating
to collaboration partners that the merger will not result in adverse
changes in technology focus or development standards;
|
|
·
|
retaining
key alliances with collaboration partners;
|
|
·
|
absorbing
costs and delays in implementing overlapping systems and procedures,
including financial accounting systems and accounting principles;
|
|
·
|
persuading
employees that our business culture and that of CDS are compatible,
maintaining employee morale and retaining key employees; and
|
|
·
|
overcoming
potential distraction of management attention and resources from
the
business of the combined company.
|
We
may
not successfully integrate our operations and technology with those of CDS
in a
timely manner, or at all. We may not realize the anticipated benefits of the
merger to the extent, or in the timeframe anticipated which could significantly
harm our business.
Our
operating results could be adversely affected as a result of purchase accounting
treatment, and the corresponding impact of amortization or impairment of other
intangibles relating to the acquisitions, if the results of the combined company
do not offset these additional expenses.
Under
A-IFRS (effective from July 1, 2005), we accounted for the merger with CDS
using
the purchase method of accounting. Under purchase accounting, we recorded
the market value of our ADSs, cash, other consideration issued in connection
with the merger and direct transaction costs as the total cost of acquiring
the
business of CDS. We allocated that cost to the individual assets acquired
and liabilities assumed, including identifiable intangible assets, based on
their respective estimated fair values. The amount we allocated to
goodwill was A$30.4 million, the amount we allocated to patents was A$88.5
million and the amount we allocated to in-process research and development,
or
IPR&D, was A$34.3 million, giving rise to a deferred tax liability of
approximately A$32.5 million net of deferred tax assets. Similarly, in
connection with the purchase accounting for the prior step acquisitions of
pSiMedica, we allocated approximately A$55 million to patents and licenses
and
approximately A$22 million to goodwill. Goodwill is not subject to amortization,
but is subject to at least an annual impairment analysis, which may result
in an
impairment charge if the carrying value of the cash-generating unit to which
goodwill has been allocated exceeds its fair value. The amount allocated
to the CDS patents which cover Retisert has been amortized to
date based upon a 12-year useful life following completion of the
merger, or approximately A$7.4 million per fiscal year, and the amount allocated
to the pSiMedica patents and licenses has been amortized to date
based upon a 9-year useful life following the merger, or
approximately A$6.2 million per fiscal year. Acquired IPR&D is subject
to annual impairment analysis, which may result in a write-down of its carrying
value. At
such
time, if any, that the project included in acquired IPR&D is successfully
developed and available for commercial use, it will become subject to
amortization over its then estimated useful life. As a result, purchase
accounting treatment of the merger will increase our net loss or decrease our
net income in the foreseeable future, which could have a material and adverse
effect on the future market value of our ADSs.
-20-
During
the six months ended December 31, 2006, our market capitalization decreased
to a level significantly less than the carrying value of our net assets at
that date. Also,
during December 2006, in response to a need to conserve cash, we implemented
certain cost reduction measures. One impact of these measures was a delay
in the
expected time period during which we believe certain BrachySil product
candidates will be approved and begin generating sales. Additionally, during
December 2006, our assessment of the probable level of future sales of our
Retisert product decreased as a result of both information provided by a
third
party and the actual level of sales achieved during the six month period.
Under
both A-IFRS and U.S. GAAP, these represent triggering events that required
us to
evaluate the recoverability of our intangible assets, including goodwill.
We
have recently released our unaudited financial statements for the six months
ended December 31, 2006 reported in accordance with A-IFRS, which
included asset impairment charges related to our intangible assets of A$83.4
million. Our
analysis under U.S. GAAP is not complete; however our current view is that
no
impairment will be recorded under U.S. GAAP.
Subsequent
to the asset impairment described above, annual amortization under A-IFRS
for
the remaining carrying value of Retisert will be approximately A$2.2 million
(based on the December 31, 2006 exchange rate). Amortization of the remaining
carrying value of the pSiMedica patents and licenses will be A$699,000 per
year
based on a revised estimated remaining useful life of eleven years (based
on the
December 31, 2006 exchange rate).
If
CDS’ former stockholders sell substantial amounts of ADSs, the market price of
ADSs may decline.
The
resale by former CDS stockholders of our ADSs after the merger could cause
the
market price of our ADSs to decline. In connection with the merger, we issued
16,104,779 ADSs. While those ADSs were not initially freely tradable, we have
registered their resale for stockholders entering into the registration rights
agreement. Those ADSs became freely tradable under U.S. securities laws as
of
October 31, 2006.
We
may have liability under the U.S. securities laws related to the recent changes
to our outstanding convertible note.
On
September 14, 2006, we revised certain terms of the initial subordinated
convertible promissory note that we issued on November 16, 2005. In connection
with the amendments, we repaid US$2.5 million (A$3.3 million) of the outstanding
principal of the existing note and granted the holder an additional warrant
to
purchase 5.7 million ADSs and a security interest in our current royalties.
Because we had earlier filed a registration statement related to the ordinary
shares represented by ADSs underlying the initial note and the warrant issued
with it, the revisions to the note and the issuance of the additional warrant,
and our subsequent filing of an amendment to our registration statement to
include the shares issuable pursuant thereto, may have resulted in a violation
of the federal securities laws.
If
the
investor were to bring an action in court successfully making such an argument,
we could be required to rescind the modified note and warrants for a period
of
one year following the date of the violation. In addition, if it is determined
that we offered securities without properly registering them under federal
or
state law, or securing an exemption from registration, regulators could impose
monetary fines or other sanctions as provided under these laws.
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.
-21-
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)
|
6,011,000
|
|||
|
Long-term
debt (secured, guaranteed) (1)
|
4,712,000
|
|||
|
Long-term
debt (unsecured, unguaranteed) (2)
|
759,000
|
|||
|
Total
debt
|
11,482,000
|
|||
|
Stockholders’
equity
|
||||
|
Share
capital (3)
|
233,097,000
|
|||
|
Reserves
|
8,393,000
|
|||
|
Deficit
accumulated prior to development stage
|
(3,813,000
|
)
|
||
|
Deficit
accumulated during development stage
|
(153,857,000
|
)
|
||
|
Total
stockholders’ equity
|
83,820,000
|
|||
|
Total
capitalization and indebtedness in accordance with
A-IFRS
|
95,302,000
|
|||
|
(1)
|
The
secured, guaranteed debt is recorded net of A$5,194,000 of unamortized
discount related to the compound embedded derivative and the freestanding
warrants, which discount has been allocated proportionately between
short-term and long-term debt.
|
|
(2)
|
The
unsecured, unguaranteed debt is recorded net of A$7,111,000 of unamortized
discount related to the compound embedded derivative and debt issue
costs.
|
-22-
|
(3)
|
On
February 22, 2007, we issued 50,044,132 ordinary shares to Australian,
European and U.S. investors at A$0.23 per share (US$1.82 per ADS
equivalent) for total proceeds of A$11.51 million
(US$9.09 million) before costs. Each ordinary share was purchased
along with options to purchase two additional shares at an exercise
price
of A$0.23 per share which expire four years from
issuance.
|
THE
OFFERING
On
September 26, 2006, we issued subordinated convertible promissory notes in
the
principal amount of US$6.5 million (A$8.5 million) in a private placement to
the
selling security holders and assignors of the selling security holders. We
also
issued to the selling security holders assignors of the selling security holders
warrants to purchase 2,925,001 of our ADSs. The warrants are currently
exercisable and expire five years from the date of issuance.
The
notes
may be converted into ADSs by the holders at any time prior to September 26,
2009 at a current adjusted conversion price of US$1.62 per ADS, subject to
further adjustment upon specified events, including stock splits, combinations
or similar events. The conversion price will also be adjusted to 108% of the
average of the volume-weighted average market price of the ADSs for the ten
consecutive trading days prior to April 30, 2007, if such adjustment would
result in a conversion price lower than US$1.62 or the then current conversion
price. Further, the conversion price will be adjusted to the per share price
in
any subsequent placement undertaken at a per share price that is lower than
the
then current conversion price. We can automatically convert the notes into
ADSs
at the conversion price, as adjusted, in certain specified circumstances,
including if the ADSs consistently trade at a price that is twice the conversion
price over a specified period. We can also redeem all or any part of the notes
at any time at our option at 108% of the redemption amount plus unpaid interest
and late charges thereon. The notes bear interest at a rate of 8% per year
which
is payable quarterly, and in certain circumstances we may be able to pay the
interest in ADSs instead of cash.
On
November 1, 2006, we received a conversion notice from Australian IT Investments
Limited relating to US$290,000 principal amount of and interest on its
subordinated convertible note. On November 8, 2006, we issued 1,450,000 of
our
ordinary shares to that investor in accordance with the conversion notice.
No
other conversions of the subordinated convertible notes have been requested
as
of the date of this prospectus.
As
part
of the September 26, 2006 private placement, we also issued to the selling
security holders assignors of the selling security holders warrants to purchase
up to 2,925,001 ADSs at a price of US$2.00 per ADS, subject to adjustment upon
specified events, including a price-based weighted average anti-dilution
provision applicable to future pro rata rights offerings, and further subject
to
adjustment for stock splits, combinations or similar events. The warrants became
exercisable immediately after the closing date of the private placement and
expire five years from the date of issuance.
The
selling security holders have the right to redeem up to one-half of the
principal amount of the notes on either of August 14, 2008, and February 14,
2009, but only if our earlier-issued convertible note has been fully paid and
the weighted average price of the ADSs over the ten trading days immediately
preceding those dates is less than the then-applicable conversion price. The
selling security holders also have the option to participate in any subsequent
placement of ours with the purchase price for offered securities being paid
by
surrender of outstanding principal of the notes plus any accrued and unpaid
interest on such principal amount and late charges, if any, on such principal
and interest.
The
gross
proceeds of the private placement to us were US$6.5 million (A$8.5 million),
or
approximately US$12.35 million (A$16.5 million) if the warrants are exercised
in
full. We intend to use the proceeds for working capital and general corporate
purposes. We will not receive any proceeds from the selling security holders
from the sale of the ADSs pursuant to this prospectus.
In
a
separate transaction, we entered into a consulting agreement with a third party.
In connection with that consulting agreement, we agreed to issue warrants to
purchase 500,000 ADSs as partial compensation for consulting services provided
thereunder. Those warrants were later assigned to two of the selling security
holders named in this prospectus. These warrants are currently exercisable
at a
price of US$2.00 per ADS, subject to adjustment upon specified events, including
a price-based weighted average anti-dilution provision applicable to future
pro
rata rights offerings, and further subject to adjustment for stock splits,
combinations or similar events, and expire five years from the date of
issuance.
-23-
Pursuant
to a registration rights agreement dated September 26, 2006, we agreed to
register for resale 130% of the number of ADSs issuable (or issued) upon
conversion of the notes and exercise of the warrants held by the selling
security holders and any ADSs received by the selling security holders in
payment of interest under the notes. Pursuant to that agreement, we have filed
with the Securities and Exchange Commission, or SEC, the registration statement
of which this prospectus is a part to register the resale of those ADSs and
the
maximum number of shares that could be issued in payment of interest under
the
notes based on a recent trading price. 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 holders.
This
prospectus relates to the offer and sale by the selling security holders during
the period in which the registration statement containing this prospectus is
effective of up to 10,582,668 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 holders 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
holders, the ADSs they are offering to sell under this prospectus and the times
and manner in which they may offer and sell those shares is provided in the
sections of this prospectus captioned “Selling Security Holders”, “Plan of
Distribution” and “Description of Securities”.
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
holders.
USE
OF PROCEEDS
The
proceeds from the sale of ADSs offered pursuant to this prospectus are solely
for the account of the selling security holders. Accordingly, we will receive
no
proceeds from the sale of the ADSs. However, we may receive cash consideration
of up to US$6,850,002 in connection with the exercise of the warrants issued
in
the private placement and pursuant to the consulting agreement. The warrants
are
exercisable at any time before September 26, 2011 at a price of US$2.00 per
ADS,
subject to adjustment upon specified events. We would use such proceeds for
general corporate purposes.
SELLING
SECURITY HOLDERS
The
ADSs
being offered by the selling security holders are issuable (or have been issued)
(i) upon conversion of the convertible notes, (ii) as interest on the
convertible notes and (iii) upon exercise of the warrants. For additional
information regarding the notes and warrants, see “The Offering” above. We are
registering the ADSs in order to permit the selling security holders to offer
the ADSs for resale from time to time. Except for the ownership of the notes
and
the warrants, and participation by Australian IT Investments Limited and the
assignee and affiliated entity of Absolute Octane Master Fund Limited in our
private placement in September 2005, the selling security holders have not
had
any material relationship with us within the past three years.
The
table
below lists the selling security holders along with information regarding their
beneficial ownership of our ADSs. The second column lists the number of ADSs
beneficially owned (directly or indirectly through ADSs) by each selling
security holder based, in part, on its ownership of the notes and the warrants
as of March 2, 2007, assuming conversion of the entire unconverted principal
amount of the notes and complete exercise of the warrants held by each selling
security holder on that date, without regard to any limitations on conversions
or exercise imposed by those instruments. The third column lists the ADSs being
offered by this prospectus by each of the selling security holders. The fourth
column assumes the sale of all of the ADSs offered by each selling security
holder pursuant to this prospectus.
In
accordance with the terms of our registration rights agreement with the selling
security holders, this prospectus generally covers the resale of:
| · |
130%
of the maximum number of ADSs issuable (or issued) upon conversion
of the
notes (assuming that the notes are convertible at US$1.62 and without
taking into account any limitations on the conversion of the notes
set
forth in the note);
|
| · |
130%
of the maximum number of ADSs issuable upon exercise of the warrants
(without taking into account any limitations on the exercise of the
warrant set forth in the warrant); and
|
-24-
|
·
|
the
maximum number of ADSs issuable in payment of interest on the note
(assuming that the shares payable as interest are valued at a recent
market price).
|
Because
the conversion price of the notes and 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. In addition, as of
the
date of this prospectus, no ADSs have been issued in payment of interest on
the
convertible notes. The actual number of ADSs issued in payment of interest
on
the convertible notes will vary based on the market price of the ADSs preceding
each such interest payment. We will amend this prospectus and the registration
statement of which it is a part to register ADSs issued to a selling security
holder in excess of those offered hereby, if any.
Under
the
terms of the notes and the warrants, selling security holders may not convert
notes, or exercise warrants, to the extent such conversion or exercise would
cause a 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
conversion or exercise, excluding for purposes of such determination ordinary
shares or ADSs issuable upon conversion of notes which have not been converted
and upon exercise of warrants that have not been exercised. The number of ADSs
in the second column below does not reflect this limitation. The selling
security holders 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)(3)
|
Number
of ADSs Beneficially Owned After Offering
|
|||||||
|
Australian
IT Investments Limited (5)
c/o
Trident Trust Company
11
Bath Street
St.
Helier, Jersey
Channel
Islands
|
1,796,450
|
1,425,699(4
|
)
|
446,250
|
||||||
|
Absolute
Octane Master Fund Limited (6)
c/o
Absolute Capital Management Holdings Limited
One
Cayman House
215
North Church Street
P.O.
Box 10630 APO
Grand
Cayman, 10630
Cayman
Islands
|
4,011,336
|
3,062,101
|
1,303,845
|
|||||||
|
European
Catalyst Fund Limited (7)
c/o
Absolute Capital Management Holdings Limited
One
Cayman House
215
North Church Street
P.O.
Box 10630 APO
Grand
Cayman, 10630
Cayman
Islands
|
3,201,852
|
3,643,450
|
-
|
|||||||
(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 notes and ADSs underlying the warrants acquired
on
September 26, 2006, in each case, which the selling security holders have the
right to acquire within 60 days of February 26, 2007 assuming a conversion
price
under the notes of US$1.62. The ADSs listed in this column do not reflect the
4.99% ownership limitation noted above. Unless otherwise indicated, the selling
security holders have 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 holders.
(2)
Assumes the full conversion of the respective selling security holder’s note at
a conversion price of US$1.62 and interest payments due after February 26,
2007
at a price of US$1.645 (taking into account any prior conversions) and the
full
exercise of the warrant or warrants issued to the selling security holder on
September 26, 2006. 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.
-25-
(3)
The
number of ADSs to be sold by the selling security holders is based on the number
of our ADSs issuable (or issued) to the selling security holders upon conversion
of the notes and upon exercise of the warrants (assuming for purposes of such
calculation, that the notes were converted at a conversion price of US$1.62
per
ADS and the warrants were exercised in full).
(4)
Includes 145,000 ADSs representing 1,450,000 ordinary shares issued on November
8, 2006 upon conversion of US$290,000 in principal amount of and interest on
the
selling security holder’s convertible note.
(5)
Australian IT Investments Limited is advised by Navigator Asset Management
Advisers Limited (“NAMAL”), a company incorporated in England and Wales and
located at 33 Cork Street, London W1S 3NQ, United Kingdom. NAMAL is a majority
owned subsidiary of Navigator Asset Management Limited that is administered
by
Trident Trust Company in Jersey. Nicholas Camilleri is the Chief Investment
Officer of NAMAL. Mr. Camilleri disclaims beneficial ownership of the shares
except to the extent of his proportionate pecuniary interests
therein.
(6)
On
March 2,
2007,
Absolute Octane Fund Limited (“AOF”) transferred, pursuant to a transaction
exempt from registration pursuant to Regulation S under the Securities Act,
the
notes and warrants originally issued to it to Absolute Octane Master Fund
Limited (the "AOMF"), a limited liability company incorporated on July 21,
2006
under the laws of the Cayman Islands. AOMF's registered office is located at
c/o
Ogier Fiduciary Services (Cayman) Limited, Queensgate House, PO Box 1234, George
Town, Grand Cayman KY1-1108, Cayman Islands. At the same time AOF assigned
to
AOMF its rights under the securities purchase agreement and registration rights
agreement to which AOF was an original party. Absolute Capital Management
Holdings Limited (“ACMH”), a Cayman Islands corporation which is registered as
an offshore investment adviser with the Securities and Exchange Commission,
is
the investment manager for AOMF. Florian Homm is ACMH’s chief investment
officer. Florian Homm (Chief Investment Officer), Sean Ewing (Chairman and
CEO)
and Darren Sisk (Finance Director) are control persons of ACMH and may be deemed
to have voting and investment power over the shares held by AOMF. Messrs. Homm,
Ewing and Sisk disclaim beneficial ownership of the shares except to the extent
of their respective proportionate pecuniary interests therein.
(7)
Absolute Capital Management Holdings Limited (“ACMH”), a Cayman Islands
corporation which is registered as an offshore investment adviser with the
Securities and Exchange Commission, is the investment manager for European
Catalyst Fund (“AEC”). Florian Homm is ACMH’s chief investment officer. Florian
Homm (Chief Investment Officer), Sean Ewing (Chairman and CEO) and Darren Sisk
(Finance Director) are control persons of ACMH and may be deemed to have voting
and investment power over the shares held by AEC. Messrs. Homm, Ewing and Sisk
disclaim beneficial ownership of the shares except to the extent of their
respective proportionate pecuniary interests therein.
PLAN
OF DISTRIBUTION
We
are
registering the ADSs issuable (or issued) upon conversion of the notes and
upon
exercise of the warrants and as interest on the convertible notes to permit
the
resale of these ADSs by the selling security holders 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 holders of the ADSs. We will bear all fees and expenses
incident to our obligation to register the ADSs.
The
selling security holders may sell all or a portion of the ADSs beneficially
owned by them 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 holders 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;
|
|
·
|
broker-dealers
may agree with the selling security holders to sell a specified number
of
such ADSs at a stipulated price per
ADS;
|
-26-
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
If
the
selling security holders effect 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 holders 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 holders 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 holders may
also sell ADSs short and deliver ADSs covered by this prospectus to close out
short positions. The selling security holders may also loan or pledge ADSs
to
broker-dealers that in turn may sell such ADSs.
The
selling security holders may pledge or grant a security interest in some or
all
of the notes, warrants or the ADSs owned by them and, if they default in the
performance of their 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 holders under this prospectus. The selling
security holders 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 holders 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 holders 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 any of the selling security holders 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 holders 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 holders 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$353,083 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 holders will pay
all underwriting discounts and selling commissions, if any. We will indemnify
the selling security holders against liabilities, including some liabilities
under the Securities Act, in accordance with the registration rights agreement,
or the selling security holders will be entitled to contribution. We may be
indemnified by the selling security holders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling security holders specifically for
use
in this prospectus, in accordance with the related registration rights
agreements, or we may be entitled to contribution.
-27-
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 February
28, 2007, 464,086,007 ordinary shares were issued and outstanding.
LEGAL
MATTERS
The
validity of the ordinary shares underlying the notes and 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 holders. The estimated expenses of issuance and registration
are set forth below.
|
SEC
Registration Fees
|
US$603
|
|
Transfer
Agent Fees
|
US$317,480
|
|
Legal
Fees and Expenses
|
US$15,000
|
|
Accounting
Fees and Expenses
|
US$15,000
|
|
Miscellaneous
(including EDGAR filing costs)
|
US$5,000
|
|
Total
|
US$353,083
|
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
As
required by the Securities Act, we have filed with the SEC a registration
statement on Form F-3, of which this prospectus is a part, with
respect to the securities offered hereby. This prospectus does not contain
all
of the information included in the registration statement. Statements in this
prospectus concerning the provisions of
any
document
are not necessarily complete. You should refer to the copies of the documents
filed as exhibits to the registration statement or otherwise filed by us with
the SEC for a more complete understanding of the matter involved. Each statement
concerning these documents is qualified in its entirety by such
reference.
We
are
subject to the information reporting requirements of the Securities and Exchange
Act of 1934, as amended, applicable to foreign private issuers, and we comply
with those requirements by submitting reports to the SEC. Those reports or
other
information may be inspected without charge at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation
of
the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.
Our SEC filings and submissions also are available to the public on the SEC’s
website at www.sec.gov.
As a
foreign private issuer, we are exempt from the rules under the Exchange Act
related to the furnishing and content of proxy statements, and our officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange
Act. In addition, we are not required under the Exchange Act to file quarterly
and current reports with the SEC, unlike United States companies whose
securities are registered under the Exchange Act. However, we are required
to
file with the SEC, within six months after the end of each fiscal year, an
annual report on Form 20-F containing financial statements audited by an
independent registered public accounting firm.
-28-
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;
and
|
|
·
|
The
description of our securities contained in our Registration
Statement on
Form 20-F, filed with the SEC on January 20, 2005 and any amendment
or
report filed for the purpose of updating that
description.
|
In
addition, all subsequent annual reports filed on Form 20-F prior to the
termination of this offering are incorporated by reference into this prospectus.
Also, we may incorporate by reference our future reports on Form 6-K by
stating in those Forms that they are being incorporated by reference into this
prospectus.
This
prospectus may contain information that updates, modifies or is contrary to
information in one or more of the documents incorporated by reference in this
prospectus. Reports we file with the SEC after the date of this prospectus
may
also contain information that updates, modifies or is contrary to information
in
this prospectus or in documents
incorporated by reference in this prospectus. Investors should review these
reports as they may disclose a
change
in our business, prospects, financial condition or other affairs after the
date
of this prospectus.
Upon
your
written or oral request, we will provide at no cost to you a copy of any and
all
of the information that is incorporated by reference in this
prospectus.
Requests
for such documents should be directed to:
Lori
Freedman, Esq.
Vice
President, Corporate Affairs, General Counsel and Secretary
pSivida
Limited
400
Pleasant Street
Watertown,
MA 02472
Telephone:
(617) 926-5000
You
may
also access the documents incorporated by reference in this prospectus through
our website www.psivida.com. Except for the specific incorporated documents
listed above, no information available on or through our website shall be deemed
to be incorporated in this prospectus or the registration statement of which
it
forms a part.
-29-
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
8. Indemnification
of Directors and Officers
Constitution
Our
constitution states that we must, to the extent the person is not otherwise
indemnified, indemnify every officer of pSivida or its wholly-owned
subsidiaries. Whilst our constitution provides that we may indemnify our
auditors against any liabilities to third parties arising from service to
pSivida, except for any liabilities arising out of conduct involving a lack
of
good faith, no actual indemnification has been provided or sought. Further,
we
hereby acknowledge that such indemnifications are deemed to be unenforceable
under U.S. securities laws, and we hereby undertake not to provide such
indemnification in the future.
In
addition, we may advance funds to cover legal costs incurred by any officer
or
auditor in defending against liabilities arising from service to
pSivida.
The
Australian Corporations Act 2001 permits a company to purchase and maintain
insurance on behalf of directors, other officers or auditors of pSivida against
any liability (other than legal costs) except liability arising out of conduct
involving a willful breach of duty, the improper use of information acquired
by
virtue of his or her position, or the improper use of his or her position to
gain an advantage for himself or herself or any other person, or to cause
detriment to pSivida. Our constitution authorizes us to purchase and maintain
liability insurance, subject to Australian law.
We
confirm that we have not, nor do we have an obligation or arrangement to,
advance funds to our auditors to cover legal costs or purchase or maintain
insurance on behalf of our auditors. We hereby acknowledge that such obligations
or arrangements are deemed unenforceable under U.S. Securities laws and we
hereby undertake not to provide or seek any such obligation or arrangement
in
the future. Our auditors have earlier provided the SEC with similar
assurances.
The
indemnity in favor of officers is a continuing indemnity which applies in
respect of all acts done by a person while an officer of pSivida or one of
its
wholly owned subsidiaries even though the person is not an officer at the time
the claim is made.
Subject
to Australian law, we may enter into an indemnification agreement with a person
who is or has been an officer of pSivida or any of its subsidiaries, to give
effect to the indemnification rights provided for in the
Constitution.
Australian
Law
Section
199A(1) of the Corporations Act 2001 (Commonwealth) provides that a company
or a
related body corporate must not exempt a person from a liability to the company
incurred as an officer of the company. Section 199A(2) of the Corporations
Act provides that a company or a related body corporate must not indemnify
a
person against any of the following liabilities incurred as an officer of the
company:
•
a
liability owed to the company or a related body corporate;
•
a
liability for a pecuniary penalty order or compensation order under specified
provisions of the Corporations Act; or
•
a
liability that is owed to someone other than the company or a related body
corporate that did not arise out of conduct in good faith.
Section
199A(2) does not apply to a liability for legal costs.
Section
199A(3) provides that a company or a related body corporate must not indemnify
a
person against legal costs incurred in defending an action for a liability
incurred as an officer of the company if the costs are incurred:
II-1
•
in
defending or resisting proceedings in which the person is found to have a
liability for which they could not be indemnified under Section 199A(2);
or
•
in
defending or resisting criminal proceedings in which the person is found guilty;
or
•
in
defending or resisting proceedings brought by the Australian Securities and
Investments Commission (ASIC) or a liquidator for a court order if the grounds
for making the order are found by the court to have been established (this
does
not apply to costs incurred in responding to actions taken by ASIC or a
liquidator as part of an investigation before commencing proceedings for the
court order); or
•
in
connection with proceedings for relief to the person under the Corporations
Act
in which the court denies the relief.
Section
199B of the Corporations Act provides that a company or a related body corporate
must not pay, or agree to pay, a premium for a contract insuring a person who
is
or has been an officer of the company against a liability (other than one for
legal costs) arising out of:
•
conduct
involving a willful breach of any duty in relation to the company;
or
•
a
contravention of the officer’s duties under the Corporations Act not to
improperly use their position or make improper use of information obtained
as an
officer.
For
the
purpose of Sections 199A and 199B, an “officer” of a company
includes:
•
a
director or secretary;
•
a
person who makes, or participates in making, decisions that affect the whole,
or
a substantial part, of the business of the company;
•
a
person who has the capacity to significantly affect the company’s financial
standing; and
•
a
person in accordance with whose instructions or wishes the directors of the
company are accustomed to act.
Item
9. Exhibits
|
Exhibit
No.
|
Exhibit
Title
|
|
|
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 as of September 18, 2006 by and among pSivida
Limited, Australian IT Investments Limited, Absolute Octane Fund
and
European Catalyst Fund (d)
|
|
|
4.3
|
Form
of pSivida Limited Subordinated Convertible Note, dated September
26, 2006
(d) (e)
|
|
|
4.4
|
Form
of pSivida Limited Warrants to Purchase ADRs, dated September 26,
2006 (d)
(e)
|
|
|
4.5
|
Registration
Rights Agreement, dated as of September 26, 2006 by and among pSivida
Limited, Australian IT Investments Limited, Absolute Octane Fund
and
European Catalyst Fund (d)
|
|
|
4.6
|
Amended
and Restated Assignment Agreement by and among Navigator Asset Management
Limited, Absolute Octane Fund, Australian IT Investments Limited
and
pSivida Limited, dated September 18, 2006 (a)
|
|
|
4.7
|
Amendment
No. 1 to Securities Purchase Agreement by and among pSivida Limited,
Absolute Octane Fund and Australian IT Investments Limited, dated
July 27,
2006 (a)
|
|
|
4.8
|
Form
of pSivida Limited N-Series Warrants to Purchase
ADRs(a)(e)
|
|
|
5.1
|
Legal
Opinion of Blake Dawson Waldron, dated February 28, 2007
(a)
|
|
|
23.1
|
Consent
of Blake Dawson Waldron (contained in the opinion filed as Exhibit
5.1 to
this Registration Statement)
|
|
|
23.2
|
Consent
of PricewaterhouseCoopers LLP, dated March 5, 2007
(a)
|
II-2
|
23.3
|
Consent
of Deloitte Touche Tohmatsu, dated March 2, 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 later filing on Form 6-K
(Commission file number 000-51122) filed on September 26, 2006.
(e)
The
final versions have been omitted pursuant to Rule 12b-31. Such final versions
are substantially identical in all material respects to the filed versions
of
such documents provided. The notes are held by Australian IT Investments
Limited, Absolute Octane Master Fund Limited and European Catalyst Fund Limited
and are in the principal amounts of US$802,907, 2,409,050 and 3,000,000,
respectively. The warrants
are held by Australian IT Investments Limited, Absolute Octane Master Fund
and
European Catalyst Fund and
are
exercisable for 490,928, 1,084,073 and 1,350,000 ADSs, respectively. The
N-Series warrants are held by Australian IT Investments Limited and
Absolute Octane Master Fund Limited and are exercisable for 363,650 and 136,350
ADSs, respectively.
Item
10. Undertakings
The
undersigned registrant hereby undertakes:
|
(1)
|
To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
|
| (i) |
To
include any prospectus required in Section 10(a)(3) of the Securities
Act
of 1933;
|
| (ii) |
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering
price
set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
|
| (iii) |
To
include any material information with respect to the “Plan of
Distribution” not previously disclosed in the registration statement or
any material change to such information in the registration
statement;
|
Provided,
however,
that:
|
(A)
|
Paragraphs
(1)(i) and (1)(ii) of this section do not apply if the registration
statement is on Form S-8, and the information required to be included
in a
post- effective amendment by those paragraphs is contained in reports
filed with or furnished to the Commission by the registrant pursuant
to
section 13 or section 15(d) of the Securities Exchange Act of 1934
that
are incorporated by reference in the registration statement;
and
|
|
(B)
|
Paragraphs
(1)(i), (1)(ii) and (1)(iii) of this section do not apply if the
registration statement is on Form S-3 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the Commission
by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424 (b) that is part of the registration
statement.
|
|
(C)
|
Provided
further,
however,
that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is for an offering of asset-backed securities on Form S-1
or
Form S-3, and the information required to be included in a post-effective
amendment is provided pursuant to Item 1100(c) of Regulation
AB.
|
II-3
|
(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.
|
|
(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.
|
II-4
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 the City of
Perth, Western Australia on March 6, 2007.
|
PSIVIDA
LIMITED
|
||
| |
|
|
| By: | /s/ Paul Ashton | |
|
Name: Paul Ashton |
||
|
Title:
Managing
Director
|
||
| |
|
|
| By: | /s/ Michael J. Soja | |
|
Name: Michael J. Soja |
||
| Title: Vice President, Finance and Chief Financial Officer | ||
Each
of
the undersigned hereby constitutes and appoints Paul Ashton and Michael J.
Soja,
in each case acting individually, his true and lawful attorney-in-fact, with
power of substitution and resubstitution, in his name, place and stead, in
any
and all capacities, to sign any or all amendments, including post-effective
amendments, and supplements to this Registration Statement or any related
registration statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same,
with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that each said attorney-in-fact, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the U.S. Securities Act of 1933, as amended, this
Registration Statement has been signed by or on behalf of the following persons
in the capacities indicated as of March 6, 2007.
|
Name
|
Title
|
|
|
/s/Paul
Ashton
Name:
Paul
Ashton
|
Managing
Director, (principal executive officer)
|
|
|
/s/Roger
Aston
Name: Roger Aston |
Director
|
|
|
/s/Stephen
Lake
Name: Stephen Lake |
Director
|
|
|
/s/David
Mazzo
Name: David Mazzo |
Chairman
of the Board of Directors
|
|
|
/s/Michael
W. Rogers
Name: Michael W. Rogers |
Director
|
|
|
/s/
Michael J. Soja
Name: Michael J. Soja |
Vice
President, Finance and Chief Financial Officer, Authorized Representative
in the United States (principal accounting officer)
|
II-6
AMENDED
AND RESTATED ASSIGNMENT AGREEMENT
This
amended and restated assignment agreement (the "Assignment
Agreement") is
entered into
as
of 18 September 2006, among:
(i)
NAVIGATOR
ASSET MANAGEMENT LIMITED, a company incorporated in Nevis,
B.W.I. located at Meridian Trust, Hunkins Waterfront Plaza, Main Street,
Memorial Square, Charlestown, Nevis, British West Indies, and whose executive
offices
are located c/o Trident Trust at I I Bath Street, St. Helier, Jersey JE4
8UT,
Channel
Islands (the "Assignor"),
(ii)
ABSOLUTE
OCTANE FUND advised by Absolute Capital Management (Spain) S.L.,
located at Edificio Reina Constanza, Porto Pi 8 Planta 10 A, 07015 Palma
de
Mallorca.,
and Absolute Octane Fund ("AOF"),
a
company
incorporated in the Cayman Islands, located at 215 North Church Street, PO
Box
10630 APO, Grand Cayman, 10630, Cayman Islands (the "First
Assignee"),
(iii)
AUSTRALIAN
IT INVESTMENTS LIMITED, a company incorporated in Nevis, B.W.I.
located at Meridian Trust, Hunkins Waterfront Plaza, Main Street, Memorial
Square,
Charlestown, Nevis, British West Indies, and whose executive offices are
located
c/o Trident Trust at 11 Bath Street, St. Helier, Jersey JE4 8UT, Channel
Islands
(the "Second
Assignee") and
(iv) PSIVIDA
LIMITED, a company incorporated in Australia located at Level 12 BGC
Centre,
28 The Esplanade, Perth WA 6000, Australia (the "Company").
WHEREAS,
the Assignor and the Company entered into an amended and restated consulting
agreement dated 18 September 2006 (the "Consulting
Agreement") attached
hereto as
Exhibit
A,
whereby
the Assignor provides certain consulting services to the Company for total
compensation,
as follows: (a) an aggregate consulting fee of USD 750,000 (the "Cash
Consulting
Fee") and
(b)
warrants to purchase 500,000 of the Company's American Depository Shares
at an
exercise price of USD 2.00 for a term of five years (the "Warrants").
WHEREAS,
the Assignor and the Company will enter into a securities purchase agreement
(the "Securities
Purchase Agreement") in
the
form attached hereto as Exhibit
B at
such
time
as the Company's shareholders approve ("Shareholder
Approval") the
transactions contemplated
by the term sheet dated July 27, 2006,
WHEREAS,
the Company and certain investors will enter into a registration rights
agreement (the "Registration
Rights Agreement") in
the
form attached hereto as Exhibit
C at
the
time
of Shareholder Approval,
NOW,
THEREFORE, in consideration of the mutual agreements herein set forth, the
Assignor,
the First Assignee and the Second Assignee agree as follows:
|
1.
|
The
Assignor assigns and transfers the Cash Consulting Fee to the First
Assignee and the Second Assignee, and the First Assignee and the
Second
Assignee accept the assignment and transfer of the Cash Consulting
Fee
from the Assignor as per the following ratio: (1.1) 27.27% of the
Cash
Consulting Fee, in the amount of USD 204,525, to be assigned by
the
Assignor to the First Assignee and (1.2) 72.73% of the Cash Consulting
Fee, in the amount of USD 545,475, to be assigned by the Assignor
to the
Second Assignee.
|
|
2.
|
The
Assignor assigns and transfers the Warrants to the First Assignee
and the
Second Assignee, and the First Assignee and the Second Assignee
accept the
assignment and transfer of the Warrants from the Assignor as per
the
following ratio: (1.1) 27.27% of the Warrants equal to 136,350
Warrants,
to be assigned by the Assignor to the First Assignee and (1.2)
72.73% of
the Warrants equal to 363,650 Warrants, to be assigned by the Assignor
to
the Second Assignee.
|
|
3.
|
The
Assignor assigns and transfers its right to enter into the Securities
Purchase Agreement to the First Assignee and the Second Assignee,
and the
First Assignee and the Second Assignee accept the assignment and
transfer
of the Assignor's right to enter into the Securities Purchase Agreement
from the Assignor, and the Company consents to such
assignment.
|
|
4.
|
Pursuant
to the Consulting Agreement, the Company has agreed to include,
in the
term "Registrable Securities" under the Registration Rights Agreement,
the
shares issuable to the First Assignee and the Second Assignee upon
exercise of the Warrants assigned to them
hereunder.
|
|
5.
|
This
Assignment Agreement shall be governed by and construed in accordance
with
the laws of England and Wales and the parties hereby submit to
the
exclusive jurisdiction of the High Court of Justice, Queen's Bench
Division, Royal Courts of Justice, Strand, London WC2A 2LL,
England.
|
|
Agreed
and Assigned
ASSIGNOR:
Navigator
Asset Management Limited
|
FIRST ASSIGNEE:
Absolute
Octane Fund
|
|
|
By:
/s/ Gary
Williams
Name:
Gary
Williams
Its:
Authorized Signatory
|
By:
/s/
illegible
Name:
Its:
Authorized Signatory
|
|
|
Agreed
and Accepted:
SECOND
ASSIGNEE:
Australian
IT Investments Limited
|
Agreed
and Accepted:
COMPANY:
pSivida
Limited
|
|
|
By:
/s/ Gary
Williams
Name:
Gary
Williams
Its:
Authorized Signatory
Agreed
and Accepted:
|
By:
/s/ Michael J.
Soja
Name:
Michael
J. Soja
Its:
Authorized Signatory
|
AMENDMENT
NO. 1 TO
SECURITIES
PURCHASE AGREEMENT
This
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT (the “Amendment”), dated as of
27 July 2006, is between PSIVIDA LIMITED, an Australian company (the “Company”),
and Australian IT Investments Limited (“All”),
a
company
incorporated
in Nevis, with registered offices located at Meridian Trust Company, Hunkins
Waterfront Plaza, Main Street, Memorial Square, Charlestown, Nevis, British
West
Indies and with executive offices located at Trident Trust Company, 11 Bath
Street, St. Helier, Jersey JE4 8UT, Channel Islands and funds advised by
Absolute Capital Management (Spain) S.L.,
located
at
Edificio Reina Constanza, Porto Pi 8 Planta 10 A, 07015 Patina de Mallorca.,
and
Absolute Octane
Fund (“AOF”),
a
company
incorporated in the Cayman Islands, located at 215 North Church
Street, PO Box 10630 APO, Grand Cayman, 10630, Cayman Islands (the
“Buyers”).
WHEREAS,
All purchased, pursuant to the Securities Purchase Agreement, dated August
17, 2005, between the Company and All (the “Original All Agreement”) (i) 400,000
American Depositaiy Shares of the Company (“ADSs”),
each
representing ten (10) ordinary shares
of
the Company (the “All Shares”), for US$6.50 per ADS and (ii) a warrant (the “All
Warrant”)
to purchase 40,000 ADSs (the “All Warrant Shares”) for US$12.50 per
ADS.
WHEREAS,
AOF purchased, pursuant to the Securities Purchase Agreement, dated August
5,
2005, between the Company and AOF (the “Original .AOF Agreement” and
collectively
with the Original All Agreement, the “Original Agreements”) (i) 150,000 ADSs
(the “AOF
Shares” and collectively with the All Shares, the “Shares”) for US$6.50 per ADS,
and (ii) a
warrant
(the “AOF Warrant” and collectively with the All Warrant, the “Warrants”) to
purchase 15,000 ADSs (the “AOF Warrant Shares” and collectively with the All
Warrant Shares,
the “Warrant Shares”) for US$12.50 per ADS.
The
Company and the Buyers wish to amend the Original Agreements as set forth herein
and provide for certain payments to the Buyers and to extend the date by which
the Company is required
to register the Shares and Warrant Shares under the Original
Agreements.
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acluiowledged,
the parties hereto hereby
agree as follows:
1. Registration
Deadline Extension. Section
5(b)(i)
of each of the Original Agreements is hereby amended by deleting such section
and replacing it in its entirety with the following:
“(i) the
Company shall use
reasonable efforts to promptly prepare and file a registration statement on
an
appropriate form covering the sale by all holders of Registrable Securities
of
such
Registrable Securities (the ”Initial Registration Statement“) and cause that
registration statement to become effective as soon as commercially
reasonable;”
2. Payments.
(a) No
Payments Due Under Original Agreements. Section
5(c) of each of the
Original Agreements is hereby amended by deleting such section in its entirety.
The Buyers agree
and
acknowledge that no payment is or shall be due under Section 5(c) of the
Original Agreements.
(b) All
Payment. The
Company shall pay All as final liquidated damages for any and all damages
suffered by each of the Buyers and both of them as a result of the Initial
Registration Statement (as defined in the Original Agreements) not having been
declared effective by the SEC on or prior to the Target Date (as defined in
the
Original Agreements) under
either of the Original Agreements, notwithstanding that such delay may have
been
pursuant to Section 5(c) of the Original Agreements, an amount equal to five
hundred thousand dollars
(US$500,000). Such payment shall be made to All by wire transfer in immediately
available
funds to such account as shall be designated in writing by All. AOF hereby
consents to
and
acknowledges such payment and the value to AOF of such payment being made to
All.
3. Release.
(a) Except
for any rights, remedies, obligations and liabilities arising out of or related
to this Amendment, upon the execution of this Amendment, each of the Buyers
individually and collectively, on behalf of themselves and their predecessors,
successors and assigns,
(the “Releasing
Parties”)
intending to be legally bound hereby, do hereby absolutely fully
and
forever release, relieve, remise and discharge (the “Release”) the
Company, its predecessors
and successors, and past and present assigns, representatives, subsidiaries,
divisions, affiliates, parents, partners, and all of their officers, directors,
agents, employees, insurers,
and attorneys, both past and present (hereinafter “Released
Parties”), of
and
from any and
all
manner of claims, demands, actions, causes of action, suits, damages, promises,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, variances, trespasses,
judgments, extents, executions, compensation, losses, obligations, costs,
expenses and other liabilities of any kind or nature whatsoever, whether
in law or equity, whether known or unknown which against any or all of them
the
Releasing
Parties ever had, now have or hereinafter can, shall or may have, from the
beginning of the world to the date hereof arising from or relating to the
transactions contemplated by the Original
Agreements (“Claims”).
(b) Without
limiting in any way the scope of the Release contained herein, it is expressly
understood by each of the Buyers that the payment provided for in Section 2
of
this Amendment shall fully satisfy any and all obligations of the Released
Parties to the Buyers relating to or in connection with any liability of the
Company under the Original Agreements.
(c) The
Releasing Parties covenant and agree not to institute, maintain, collect
or
proceed against Released Parties on any Claims (“Covenant
Not to Sue”).
(d) The
parties accept and assume the risk that if any fact or circumstance is found,
suspected, or claimed hereafter to be other than or different from the facts
or
circumstances now believed to be true, the Release and Covenant Not to Sue
contained herein shall be and remain in effect notwithstanding any such
difference in any such facts or circumstances.
(e) The
Buyers agree to take all such further action(s) as may reasonably be
necessary
and requested by the Company to carry out and consummate the provisions of
this
Section 3 as soon as reasonably practicable after any such request.
4. Continued
Effectiveness of Original Agreements.
Except
as expressly amended hereby,
the Original Agreements shall remain in full force and effect in accordance
with
their respective terms. In the event of a conflict between the terms of this
Amendment and the terms of the Original Agreements, the terms of this Amendment
shall control. Unless and until All, AOF
and
Absolute European Catalyst Fund invest six million five hundred thousand dollars
(US$6,500,000) as set forth in the term sheet dated as of the date hereof,
this
Amendment shall be
of no
force or effect.
5. Governing
Law; Miscellaneous. The
laws
of the State of New York govern all matters
(including without limitation all tort claims) arising out of this
Amendment.
IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date and
year
first written above.
| PSIVIDA LIMITED | AUSTRALIAN IT INVESTMENTS LEVHTED | |
|
By: /s/
Michael J. Soja
Title:
Authorized
Signatory
|
By:
/s/ J.M. Spittal
Name:
J.M. Spittal
Title:
Director
|
|
| ABSOLUTE OCTANE FUND | ||
|
By:
/s/ illegible
Name:
Title:
Authorized
Signatory
|
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISEABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (B) AN OPINION OF COUNSEL,
IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) IF SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT,
SUCH DOCUMENTS, OPINIONS AND CERTIFICATES AS THE COMPANY MAY REASONABLY REQUIRE.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE
SECURITIES.
PSIVIDA
LIMITED
Warrant
To Purchase ADRS
Warrant
No.: N-__
Number
of
ADRs: __________
Date
of
Issuance: _____________ (“Issuance
Date”)
PSIVIDA
LIMITED, an Australian corporation (the “Company”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned registered holder
hereof or its permitted assigns (the “Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company,
at
the Exercise Price (as defined below) then in effect, upon surrender of this
Warrant to Purchase ADRs (including any Warrants to Purchase ADRs issued in
exchange, transfer or replacement hereof, the “Warrant”),
at
any time or times on or after the Issuance Date, but not after 11:59 p.m.,
New
York Time, on the Expiration Date (as defined below), up to ______________
(___________) fully paid nonassessable ADRs (as defined below) (the
“Warrant
Shares”).
Except as otherwise defined herein, capitalized terms in this Warrant shall
have
the meanings set forth in Section 16. This Warrant is one of the Warrants to
purchase Warrant Shares (the “SPA Warrants”)
issued
pursuant to Section 1 of that certain Securities Purchase Agreement (the
“Securities
Purchase Agreement”),
dated
as of September 26, 2006 (the “Subscription
Date”),
by
and among the Company and Absolute Octane Fund (“AOF”)
and
Australian IT Investments Limited (“AIT”
and,
together with AOF, the “Buyers”).
1. EXERCISE
OF WARRANT .
(a) Mechanics
of Exercise.
Subject
to the terms and conditions hereof (including, without limitation, the
limitations set forth in Section 1(f)), this Warrant may be exercised by the
Holder on any day on or after the Issuance Date, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as
Exhibit
A
(the
”Exercise
Notice”),
of
the Holder's election to exercise this Warrant and (ii) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate
Exercise Price”)
in
cash or wire transfer of immediately available funds. The Holder shall not
be
required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice with respect to less
than all of the Warrant Shares shall have the same effect as cancellation of
the
original Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares. On or before the second (2nd) Business
Day following the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (the “Exercise
Delivery Documents”),
the
Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company's transfer
agent (the “Transfer
Agent”).
Subject to Section 7(b), on or before the fifth (5th) Business Day following
the
date on which the Company has received all of the Exercise Delivery Documents
(the “Share
Delivery Date”),
the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”)
Fast
Automated Securities Transfer Program, upon the request of the Holder, credit
such aggregate number of Warrant Shares to which the Holder is entitled pursuant
to such exercise to the Holder's or its designee's balance account with DTC
through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as specified
in
the Exercise Notice, a certificate, registered in the Company's share register
in the name of the Holder or its designee, for the number of Warrant Shares
to
which the Holder is entitled pursuant to such exercise. Upon delivery of the
Exercise Delivery Documents, the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Ordinary Shares represented
by the ADRs with respect to which this Warrant has been exercised, irrespective
of the date of delivery of the certificates evidencing the ADRs. If this Warrant
is submitted in connection with any exercise pursuant to this Section 1(a)
and
the number of Warrant Shares represented by this Warrant submitted for exercise
is greater than the number of Warrant Shares being acquired upon an exercise,
then the Company shall as soon as practicable and in no event later than three
(3) Business Days after any exercise and at its own expense, issue a new Warrant
(in accordance with Section 6(d)) representing the right to purchase the number
of Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant
is
exercised. No fractional Warrant Shares are to be issued upon the exercise
of
this Warrant, but, at the option of the Company, (i) the number of Warrant
Shares to be issued shall be rounded up to the nearest whole number or (ii)
in
lieu of any fractional Warrant Shares to which the Holder would otherwise be
entitled, the Company shall make a cash payment to the Holder equal to the
Closing Sale Price on the date of exercise multiplied by such fraction. Upon
exercise of this Warrant, the Company shall deposit the corresponding number
of
Ordinary Shares representing the American Depositary Shares (“ADSs”)
underlying the ADRs and pay by wire transfer to the Depositary’s account the ADS
issuance fee of $0.04 per ADS to be issued, together with all applicable taxes
and expenses otherwise payable under the terms of the Deposit Agreement for
the
deposit of Ordinary Shares and issuance of ADSs (including, without limitation,
confirmation that any Australian stock transfer taxes in respect of such deposit
(if any) have been paid by the Company), and the Company shall otherwise comply
with and cause any other necessary party to comply with all the terms of the
Deposit Agreement. The Company shall pay any and all taxes (excluding any taxes
on the income of the Holder) which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant. Appropriate and
equitable adjustment to the terms and provisions of this Warrant shall be made
in the event of any change to the ratio of Warrant Shares to Ordinary Shares
represented thereby.
-
2 -
In
the
event that the Company’s Board of Directors should determine that the Company
shall transform itself (whether by re-incorporation in the United States or
otherwise) from a foreign private issuer (as defined under the Securities Act
of
1933, as amended) all references to ADRs or ADSs shall be deemed references
to
whatever shares are then issued by the re-domiciled Company and all other
provisions of this Agreement shall be equitably adjusted by the parties hereto
to the extent necessary or appropriate to reflect such new country of
incorporation.
(b) Exercise
Price.
For
purposes of this Warrant, “Exercise
Price”
means
US$ 2.00, subject to adjustment as provided herein.
(c) Company's
Failure to Timely Deliver Securities.
If the
Company shall fail to issue to the Holder, the number of Warrant Shares to
which
the Holder is entitled upon the Holder's exercise of this Warrant and register
such Warrant Shares on the Company's share register or to credit the Holder's
balance account with DTC for such number of Warrant Shares to which the Holder
is entitled upon the Holder's exercise of this Warrant on or prior to the date
which is three (3) Business Days after receipt of the Exercise Delivery
Documents (an “Exercise
Failure”),
then
the Company shall pay damages in cash to the Holder for each date of such
Exercise Failure in an amount equal to an interest rate equal to 10% per annum
applied to the product of (X) the sum of the number of Warrant Shares not issued
to the Holder on or prior to the Share Delivery Date and to which the Holder
is
entitled and (Y) the Closing Sale Price of the Warrant Shares on the Share
Delivery Date. In addition to the foregoing, if within three (3) Trading Days
after the Company's receipt of the facsimile copy of a Exercise Notice the
Company shall fail to issue and deliver to the Holder and register such Warrant
Shares on the Company's share register or credit the Holder's balance account
with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder's exercise hereunder, and if on or after such Trading Day the Holder
purchases (in an open market transaction or otherwise) ADRs to deliver in
satisfaction of a sale by the Holder of ADRs issuable upon such exercise that
the Holder anticipated receiving from the Company (a “Buy-In”),
then
the Company shall, within three (3) Business Days after the Holder's request
and
in the Holder's discretion, either (i) pay cash to the Holder in an amount
equal
to the Holder's total purchase price (including brokerage commissions, if any)
for the ADRs so purchased (the “Buy-In
Price”),
at
which point the Company's obligation to deliver and issue such ADRs shall be
deemed to have been satisfied and shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates representing
such ADRs and pay cash to the Holder in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of ADRs, times (B)
the
Closing Bid Price on the date of exercise.
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3 -
(d) Registration
Rights.
Notwithstanding
anything contained herein to the contrary, the Holder may elect to exercise
this
Warrant for Warrant Shares in the form of ADRs or (subject to Section 7(b))
in
the form of the Ordinary Shares underlying the ADRs. Notwithstanding the
foregoing, from after the second anniversary of the Issuance Date, in the event
that the aggregate number of Ordinary Shares that trades on the ASX is less
than
either (i) an average of 50,000 Common Shares on each Trading Day during any
two
month period or (ii) a weighted average trading price of at least US$50,000
on
average during each Trading Day during any two month period, then at the request
of the Holder the Company as of the date of such request once again (each of
(i)
and (ii), a “Registration
Event”)
shall
be subject to the terms of the Registration Rights Agreement as to the Warrant
Shares; provided, that the Holder makes such request within thirty (30) days
of
a Registration Event.
(e) Disputes.
In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall issue to the
Holder the number of Warrant Shares that are not disputed and resolve such
dispute in accordance with Section 13.
(f) Limitations
on Exercises.
(i) Beneficial
Ownership.
The
Company shall not effect the exercise of this Warrant, and the Holder shall
not
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, the Holder (together with affiliates) would beneficially
own
(directly or indirectly through Warrant Shares or otherwise) in excess of 4.99%
(the “Maximum
Percentage”)
of the
Ordinary Shares outstanding immediately after giving effect to such exercise.
For purposes of the foregoing sentence, the number of Ordinary Shares
beneficially owned (directly or indirectly through Warrant Shares or otherwise)
by the Holder and its affiliates shall include the number of Ordinary Shares
underlying the Warrant Shares issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude the number of Ordinary Shares underlying Warrant Shares which would
be
issuable upon (i) exercise of the remaining, unexercised portion of this
Warrant beneficially owned by the Holder and its affiliates and (ii) exercise
or
conversion of the unexercised or unconverted portion of any other securities
of
the Company beneficially owned by such Person and its affiliates (including,
without limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence,
for
purposes of this section, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended. For
purposes of this Warrant, in determining the number of outstanding Ordinary
Shares, the Holder may rely on the number of outstanding Ordinary Shares as
reflected in (1) the Company's most recent Form 20-F, Form 6-K or other public
filing with the Securities and Exchange Commission, as the case may be, (2)
a
more recent public announcement by the Company or (3) any other notice by the
Company or the Transfer Agent setting forth the number of Ordinary Shares
outstanding. For any reason at any time, upon the written or oral request of
the
Holder, the Company shall within two (2) Business Days confirm orally and in
writing to the Holder the number of Ordinary Shares then outstanding. In any
case, the number of outstanding Ordinary Shares shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
the
SPA Securities and the SPA Warrants, by the Holder and its affiliates since
the
date as of which such number of outstanding Ordinary Shares was reported. By
written notice to the Company, the Holder may increase or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% specified in such
notice; provided that (i) any such increase will not be effective until the
sixty-first (61st)
day
after such notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to the Holder and not to any other holder of SPA
Warrants.
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4 -
(ii) Principal
Market Regulation.
The
Company shall not be obligated to issue any ADRs (or Ordinary Shares) upon
exercise of this Warrant, and the Holder shall not have the right to receive
upon exercise of this Warrant, any ADRs (or Ordinary Shares), if the issuance
of
such ADRs (or Ordinary Shares) would exceed that number of ADRs (or Ordinary
Shares) which the Company may issue upon exercise of this Warrant (including,
as
applicable, any ADRs (or Ordinary Shares) issued upon conversion of the SPA
Securities) without breaching the Company's obligations under the rules or
regulations of the Principal Market (or such other Eligible Market on which
the
ADRs or Ordinary Shares are listed) or the ASX (the “Exchange
Cap”),
except that such limitation shall not apply in the event that the Company
obtains the approval of its stockholders as required by the applicable rules
of
the Principal Market and the ASX listing rules for issuances of ADRs (or
Ordinary Shares) in excess of such amount. Until such approval is obtained,
no
Buyer shall be issued, in the aggregate, upon exercise or conversion, as
applicable, of any SPA Warrants or SPA Securities, any ADRs (or Ordinary Shares)
in an amount greater than the product of the Exchange Cap multiplied by a
fraction, the numerator of which is the total number of ADRs (or Ordinary
Shares) underlying the SPA Warrants issued to such Buyer pursuant to the
Securities Purchase Agreement and the denominator of which is the aggregate
number of ADRs (or Ordinary Shares) underlying all the Convertible Securities
issued to the Buyers pursuant to the Securities Purchase Agreement and the
Other
Stock Purchase Agreement (with respect to each Buyer, the “Exchange
Cap Allocation”).
In
the event that any Buyer shall sell or otherwise transfer any of such Buyer's
SPA Warrants, the transferee shall be allocated a pro rata portion of such
Buyer's Exchange Cap Allocation, and the restrictions of the prior sentence
shall apply to such transferee with respect to the portion of the Exchange
Cap
Allocation allocated to such transferee. In the event that any holder of SPA
Warrants shall exercise all of such holder's SPA Warrants into a number of
ADRs
(or Ordinary Shares) which, in the aggregate, is less than such holder's
Exchange Cap Allocation, then the difference between such holder's Exchange
Cap
Allocation and the number of ADRs (or Ordinary Shares) actually issued to such
holder shall be allocated to the respective Exchange Cap Allocations of the
remaining holders of SPA Warrants on a pro rata basis in proportion to the
ADRs
(or Ordinary Shares) underlying the SPA Warrants then held by each such
holder.
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5 -
2. ADJUSTMENT
OF EXERCISE PRICE.
(a) If
the
Company issues or gives the holders of Ordinary Shares in the Company
the right, pro rata with existing holdings of Ordinary Shares, to subscribe
for additional securities (“Pro
Rata Issue”),
the
Exercise Price in respect of one underlying Ordinary Share shall be reduced
in
accordance with the following formula:
|
O'
= O -
|
E
[P - (S + D)]
|
|
N
+
1
|
Where:
O'
=
the
new
Exercise Price in respect of an underlying Ordinary Share.
O = the
original Exercise Price in respect of an underlying Ordinary Share.
E = the
number of underlying Ordinary Shares to be issued on exercise of each
Warrant.
P = the
average market price per Ordinary Share (weighted by reference to volume) of
the
Ordinary Shares during the 5 trading days ending before the ex rights date
or ex
entitlements date.
S = the
subscription price for an Ordinary Share under the Pro Rata Issue.
D = the
dividend due but not paid on the existing Ordinary Shares (excluding those
to be
issued under the Pro Rata Issue).
N = the
number of Ordinary Shares which must be held to receive one new Share in the
Pro
Rata Issue.
(b) Adjustment
upon pro rata bonus issue of Ordinary Shares.
If
the
Company makes a pro rata bonus issue of Ordinary Shares to its shareholders
prior to the Warrant being exercised, and the Warrant is not exercised prior
to
the record date for the issue, the Warrant will, when exercised, entitle the
Holder to the number of Warrant Shares that would ordinarily be received under
Section 1, plus the number of bonus Ordinary Shares which would have been issued
to the Holder if the Warrant had been exercised prior to the record
date.
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6 -
(c) Adjustment
upon Subdivision or Combination of Ordinary Shares.
If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of
its
outstanding ADRs (or Ordinary Shares underlying such ADRs) into a greater number
of ADRs (or Ordinary Shares), the Exercise Price in effect immediately prior
to
such subdivision will be proportionately reduced and the number of Warrant
Shares (or Ordinary Shares underlying such Warrant Shares) will be
proportionately increased. If the Company at any time on or after the
Subscription Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding ADRs (or Ordinary Shares underlying
such
ADRs) into a smaller number of ADRs (or Ordinary Shares underlying such ADRs),
the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares (or Ordinary Shares
underlying such Warrant Shares) will be proportionately decreased. Any
adjustment under this Section 2(c) shall be subject to (and will be
correspondingly reorganized in a manner which is permissible under, or necessary
to comply with) the ASX Listing Rules or the rules of any recognized exchange
in
force at the relevant time and shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(d) Other
Events.
If any
event occurs of the type contemplated by the provisions of this Section 2 but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of Warrant Shares
so
as to protect the rights of the Holder; provided that such adjustment is made
in
accordance with the ASX Listing Rules. No such adjustment pursuant to this
Section 2(d) will increase the Exercise Price or decrease the number of Warrant
Shares as otherwise determined pursuant to this Section 2, unless in accordance
with any ASX Listing Rule.
(e) Other
Capital Reorganizations.
Notwithstanding any other provision contained in this Warrant, the rights of
the
Holder will be changed to the extent necessary to comply with the listing rules
applying to a reorganization of capital at the time of reorganization. Subject
to the above, if there is a reorganization of the capital of the Company, the
number of Warrant Shares applicable to the Warrant and/or Exercise Price of
the
Warrant will be reorganized as follows: (i) if the Company returns capital
on
its Ordinary Shares, the number of Warrant Shares applicable to the Warrant
will
remain the same, and the Exercise Price of each Warrant will be reduced by
the
same amount as the amount returned in relation to each Ordinary Share; (ii)
if
the Company returns capital on its Ordinary Shares by a cancellation of capital
that is lost or not represented by available assets, the number of Warrant
Shares applicable to the Warrant and the Exercise Price is unaltered; (iii)
if
the Company reduces its issued Ordinary Shares on a pro rata basis, the number
of Warrant Shares applicable to the Warrant will be reduced in the same ratio
as
the Ordinary Shares and the Exercise Price will be amended in inverse proportion
to that ratio; and (iv) if the Company reorganizes its issued Ordinary Shares
in
any way not otherwise contemplated by the preceding paragraphs, the number
of
Warrant Shares applicable to the Warrant or the Exercise Price or both will
be
reorganized so that the Warrant Holder will not receive a benefit that holders
of Ordinary Shares do not receive. The Company shall give notice to Warrant
Holders of any adjustments to the number of Warrant Shares applicable to the
Warrant or the number of Ordinary Shares which are to be issued on exercise
of a
Warrant or to the Exercise Price. Before a Warrant is exercised, all adjustment
calculations are to be carried out including all fractions (in relation to
each
of the number of Warrant Shares applicable to the Warrant, the number of
Ordinary Shares and the Exercise Price), but on exercise the number of Warrant
Shares or Ordinary Shares issued is rounded down to the next lower whole number
and the Exercise Price rounded up to the next higher cent.
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7 -
3. FUNDAMENTAL
TRANSACTIONS.
The
Company shall not enter into or be party to a Fundamental Transaction unless,
and shall use its best endeavors to procure that, (i) the Successor Entity
(if other than the Company) assumes in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section 3 pursuant to written agreements in form
and
substance reasonably satisfactory to the Required Holders and approved by the
Required Holders prior to such Fundamental Transaction, including agreements
to
deliver to each holder of Warrants in exchange for such Warrants a security
of
such Successor Entity evidenced by a written instrument substantially similar
in
form and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the Ordinary Shares reflected by the
terms
of such Fundamental Transaction, and exercisable for a corresponding number
of
shares of capital stock equivalent to the Ordinary Shares underlying the Warrant
Shares acquirable and receivable upon exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and reasonably satisfactory to the Required Holders and
(ii) such Successor Entity is a publicly traded corporation whose common
shares (or whose American Depositary Shares) are quoted on or listed for trading
on an Eligible Market. Upon the occurrence of any Fundamental Transaction,
such
Successor Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of this Warrant
referring to the “Company” shall refer instead to such Successor Entity), and
may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein. Upon consummation of
the
Fundamental Transaction, such Successor Entity shall deliver to the Holder
confirmation that there shall be issued upon exercise of this Warrant at any
time after the consummation of the Fundamental Transaction, in lieu of the
Warrant Shares (or other securities, cash, assets or other property) purchasable
upon the exercise of the Warrant prior to such Fundamental Transaction, such
shares of the publicly traded common stock (or their equivalent) of the
Successor Entity (including its Parent Entity), as adjusted in accordance with
the provisions of this Warrant. In addition to and not in substitution for
any
other rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of Ordinary Shares (directly or indirectly through
Warrant Shares or otherwise) are entitled to receive securities or other assets
with respect to or in exchange for Ordinary Shares (a “Corporate
Event”),
the
Company shall make appropriate provision, to the extent not prohibited by
applicable law, to insure that the Holder will thereafter have the right to
receive upon an exercise of this Warrant at any time after the consummation
of
the Fundamental Transaction but prior to the Expiration Date, in lieu of the
Warrant Shares purchasable upon the exercise of the Warrant prior to such
Fundamental Transaction, such, securities or other, assets which the Holder
would have been entitled to receive upon the happening of such Fundamental
Transaction had the Warrant been exercised immediately prior to such Fundamental
Transaction. The provisions of this Section shall apply similarly and equally
to
successive Fundamental Transactions and Corporate Events and shall be applied
without regard to any limitations on the exercise of this Warrant.
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8 -
4. NONCIRCUMVENTION.
The
Company hereby covenants and agrees that the Company will not, by amendment
of
its Constitution or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith carry out all the provisions of this Warrant and take all action
as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par
value of any Ordinary Shares underlying the Warrant Shares receivable upon
the
exercise of this Warrant above the Exercise Price then in effect and
(ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant.
5. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER.
Except
as otherwise specifically provided herein, the Holder, solely in such Person's
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
any of the rights of a shareholder of the Company or any right to vote, give
or
withhold consent to any corporate action (whether any reorganization, issue
of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed
as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a shareholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 5, the Company shall provide the Holder with copies
of the same notices and other information given to the shareholders of the
Company generally, contemporaneously with the giving thereof to the
shareholders.
6. REISSUANCE
OF WARRANTS.
(a) Transfer
of Warrant.
If this
Warrant is to be transferred, the Holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new Warrant (in accordance with Section 6(d)), registered as
the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 6(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
(b) Lost,
Stolen or Mutilated Warrant.
Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of this Warrant, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the Holder
to
the Company in customary form and, in the case of mutilation, upon surrender
and
cancellation of this Warrant, the Company shall execute and deliver to the
Holder a new Warrant (in accordance with Section 6(d)) representing the right
to
purchase the Warrant Shares then underlying this Warrant.
-
9 -
(c) Exchangeable
for Multiple Warrants.
This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 6(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as
is
designated by the Holder at the time of such surrender; provided, however,
that
no Warrants for fractional Warrant Shares shall be given.
(d) Issuance
of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms
of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right
to
purchase the Warrant Shares then underlying this Warrant (or in the case of
a
new Warrant being issued pursuant to Section 6(a) or Section 6(c), the Warrant
Shares designated by the Holder which, when added to the number of Warrant
Shares underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issuance Date, and (iv) shall have the
same
rights and conditions as this Warrant.
7. TRADING
OF ORDINARY SHARES.
(a) Omnibus
Disclosure Document.
(i) The
Company shall, as soon as practicable after the Issuance Date, use its
reasonable efforts to obtain a modification of the Corporations Act from the
ASIC with respect to the use of the Initial Registration Statement (as defined
in the Registration Rights Agreement) as a disclosure document for the purposes
of Chapter 6D of the Corporations Act (the “Omnibus
Disclosure Document”)
and a
separate modification from the ASIC to the effect that, once the Omnibus
Disclosure Document and any “wrap” required by ASIC has been issued, all further
Warrant Shares which may be issued can be sold without the need for a Cleansing
Notice (as defined below) or Disclosure Document (as defined below). At the
Company’s request, the Holder shall reasonably assist the Company in obtaining
such modifications.
(ii) In
the
event that such modifications referred to in Section 7(a)(i) are granted,
the Company shall, as soon as practicable after the Effective Date (as defined
in the Registration Rights Agreement) of the Initial Registration Statement
but
in no event later than five (5) Business Days after the Effective Date of the
Initial Registration Statement, prepare and lodge with the ASIC the Omnibus
Disclosure Document covering the issuance of the full number of Warrant Shares
or other Ordinary Shares issuable in accordance with the terms of this Warrant
(each such issuance, a “Triggering
Issuance”)
such
that the issue of the Omnibus Disclosure Document will have the effect of
permitting the holders of Ordinary Shares issued in a Triggering Issuance to
make offers for sale of those Ordinary Shares in accordance with Australian
law
without the need for the issue by the Company of either a Cleansing Notice
or a
Disclosure Document.
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10 -
(b) Cleansing
Notice and/or Disclosure Document.
(i) If
the
required ASIC modifications have not been obtained or an Omnibus Disclosure
Document has not been lodged with the ASIC, then no later than five (5) Business
Days after the issuance of any Warrant Shares hereunder, the Company shall
issue, if permitted by applicable law, a notice complying with section 708A(6)
of the Corporations Act (the “Cleansing
Notice”)
and
shall notify the Holder that it has issued such Cleansing Notice.
(ii) Notwithstanding
Section 7(b)(i), if the issue of any Cleansing Notice would require the Company
to disclose information in accordance with Section 708A(6)(e) of the
Corporations Act, the
Company may delay the issue of such Cleansing Notice (and the issuance of any
Warrant Shares corresponding to such Cleansing Notice) for a period (a
“Delay
Period”)
not
exceeding fifteen (15) consecutive days after receipt by the Company of the
Exercise Notice for such Warrant Shares, provided that during any 365 day period
such Delay Periods shall not exceed an aggregate of forty-five (45)
days.
(iii)
If
the
Company is required to issue a Cleansing Notice pursuant to
Section 7(b)(ii) but either (x) the Company is not permitted to issue
such Cleansing Notice under applicable law or (y) the issuance of such
Cleansing Notice would not result in the Warrant Shares covered by such
Cleansing Notice being eligible to be traded on the ASX, the Company shall
as
soon as practicable, but in no event later than twenty (20) Business
Days after
receipt by the Company of the Exercise Notice for such Warrant Shares, lodge
with the ASIC a disclosure document for the purposes of Chapter 6D of the
Corporations Act (a “Disclosure
Document”)
covering the Warrant Shares that would have been covered by such Cleansing
Notice. Notwithstanding the foregoing sentence, the Company (1) shall not
be required to issue any such Disclosure Document or any Warrant Shares
corresponding to such Disclosure Document during any Delay Period, and (2)
shall
not be required to lodge more than one Disclosure Document during any ninety
(90) day period, including all Disclosure Documents required to be issued
pursuant to the Registration Rights Agreement, the SPA Warrants and the SPA
Securities.
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11 -
(iv) Subject
to the provisions of Section 7(b)(v), the Company will (1) within two (2)
Business Days following the issuance of any Warrant Shares, apply to the ASX
for
unconditional admission to trading for such shares, and (2) take all
reasonable measures to ensure that, from the time of issue of any Warrant
Shares, such shares are eligible to be traded on the ASX.
(v) In
the
event that the Company elects to delay the issuance of any Warrant Shares
pursuant to Sections 7(b)(ii) or 7(b)(iii) for any Delay Period, the Company
shall notify the Holder of such Delay Period and the length of the applicable
Delay Period. The Holder may, no later than two (2) Business Days after the
date
of the notification from the Company, notify the Company in writing of the
Holder’s consent to such Delay, whereupon the Company shall issue the applicable
Ordinary Shares in conjunction with the Cleansing Notice or Disclosure Document,
as the case may be, at the conclusion of the Delay Period. In the absence of
any
such consent by the Holder, the Company shall issue such Ordinary Shares to
such
Holder in accordance with Section 1, it being understood that any Ordinary
Shares thus issued will not be covered by a Cleansing Notice or Disclosure
Document and consequently may not, for a period of twelve (12) months from
the
date of their issuance, be sold or transferred, or have any interest in, or
option over, them granted, issued or transferred.
(vi) Anything
to the contrary notwithstanding, but without prejudice to any rights of the
Holder accrued prior to such time, all obligations of the Company under this
Section 7 shall terminate, and this Section 7 shall have no further force or
effect, on the date that the Ordinary Shares cease to be listed for trading
on
the ASX in the event that the Company is redomiciled (whether through merger
or
otherwise) into the United States or a successor to the Company replaces the
Company as a foreign private issuer under United States securities laws and,
in
either case, the securities of such successor are listed on an Eligible Market.
8. NOTICES;
CURRENCY .
(a) Notices.
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f)
of
the Securities Purchase Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including
in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Ordinary Shares or Warrant Shares, (B) with respect to
any
grants, issuances or sales of any Options, Convertible Securities or rights
to
purchase stock, warrants, securities or other property to holders of Ordinary
Shares or Warrant Shares or (C) for determining rights to vote with respect
to
any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.
(b) Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Warrant are in
United States Dollars.
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12 -
9. AMENDMENT
AND WAIVER .
The
provisions of this Warrant may be amended by the Company and the Company may
take any action herein prohibited, or omit to perform any act herein required
to
be performed by it, only if the Company has obtained the written consent of
the
Required Holders and approval from the holders of Ordinary Shares at a
shareholders meeting held in accordance with the ASX Listing Rules and the
Corporations Act or if otherwise permitted by the ASX Listing Rules.
Notwithstanding any provision of this Warrant, a term of this Warrant which
has
the effect of reducing the exercise price, increasing the period for exercise
or
increasing the number of Warrant Shares or Ordinary Shares received on exercise
is prohibited if it would result in a breach of the ASX Listing Rules.
Notwithstanding the above, no change may increase the exercise price of any
SPA
Warrant or decrease the number of Warrant Shares or class of stock obtainable
upon exercise of any SPA Warrant without the written consent of the Holder,
unless otherwise provided in the ASX Listing Rules. A change which has the
effect of reducing the purchase price, increasing the period for exercise or
increasing the number of securities received cannot be made. In addition,
subject to the ASX Listing Rules, no such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants
then
outstanding.
10. SEVERABILITY .
If any
provision of this Warrant or the application thereof becomes or is declared
by a
court of competent jurisdiction to be illegal, void or unenforceable, the
remainder of the terms of this Warrant will continue in full force and
effect.
11. GOVERNING
LAW .
This
Warrant shall be governed by and construed and enforced in accordance with,
and
all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the
State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than
the
State of New York.
12. CONSTRUCTION;
HEADINGS .
This
Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
and shall not be construed against any person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.
13. DISPUTE
RESOLUTION .
In the
case of a dispute as to the determination of the Exercise Price or the
calculation of the Warrant Shares, the Company shall submit the disputed
determinations or arithmetic calculations via facsimile within two (2) Business
Days of receipt of the Exercise Notice giving rise to such dispute, as the
case
may be, to the Holder. If the Holder and the Company are unable to agree upon
such determination or calculation within three (3) Business Days of such
disputed determination or arithmetic calculation being submitted to the Holder,
then the Company shall, within two Business Days submit via facsimile (a) the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company's
independent, outside accountant. The Company at the Company's expense, shall
cause the investment bank or the accountant, as the case may be, to perform
the
determinations or calculations and notify the Company and the Holder of the
results no later than ten Business Days from the time it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
-
13 -
14. REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF .
The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder
right
to pursue actual damages for any failure by the Company to comply with the
terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at
law
for any such breach may be inadequate. The Company therefore agrees that, in
the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
15. TRANSFER. This
Warrant may be offered for sale, sold, transferred or assigned without the
consent of the Company, except as may otherwise be required by Section 2(f)
of
the Securities Purchase Agreement.
16. CERTAIN
DEFINITIONS.
For
purposes of this Warrant, the following terms shall have the following
meanings:
(a) “ADRs”
means
the American Depositary Receipts of the Company evidencing the American
Depositary Shares of the Company which each represent ten (10) Ordinary Shares.
(b) “ASIC”
means
the Australian Securities and Investment Commission.
(c) “ASX”
means
the Australian Stock Exchange.
(d) “Bloomberg”
means
Bloomberg Financial Markets.
(e) “Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York, State of New York, U.S.A. or Perth, Australia are
authorized or required by law to remain closed.
(f) “Closing
Bid Price”
and
“Closing
Sale Price”
means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or
last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or
last
trade price, respectively, of such security in the over-the-counter market
on
the electronic bulletin board for such security as reported by Bloomberg, or,
if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant
to
Section 13. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during
the
applicable calculation period.
-
14 -
(g) “Convertible
Securities”
means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for ADRs or Ordinary Shares.
(h) “Corporations
Act”
means
the Australian Corporations Act 2001 (Cwth).
(i)
“Deposit
Agreement”
means
that certain Deposit Agreement, dated as of January 24, 2005 by and among the
Company, the Depositary and the holders and beneficial owners from time to
time
of ADSs evidenced by ADRs issued pursuant to such agreement.
(j)
“Depositary”
means
Citibank, N.A., acting in such capacity under the Deposit
Agreement.
(k) “Eligible
Market”
means
the Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange or The Nasdaq Capital Market.
(l) “Expiration
Date”
means
the date that is sixty months after the Issuance Date or, if such date falls
on
a day other than a Business Day or on which trading does not take place on
the
Principal Market (a “Holiday”),
the
next date that is not a Holiday.
(m) “Fundamental
Transaction”
means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person, or (ii) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or
assets of the Company to another Person, or (iii) allow another Person to make
a
purchase, tender or exchange offer that is accepted by the holders of more
than
the 50% of either the outstanding Ordinary Shares (not including any Ordinary
Shares held by the Person or Persons making or party to, or associated or
affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than the 50% of the outstanding Ordinary Shares (not including
any
Ordinary Shares held by the other Person or other Persons making or party to,
or
associated or affiliated with the other Persons making or party to, such stock
purchase agreement or other business combination), or (v) reorganize,
recapitalize or reclassify its Ordinary Shares.
-
15 -
(n) “Options”
means
any rights, warrants or options to subscribe for or purchase ADRs, Ordinary
Shares or Convertible Securities.
(o) “Ordinary
Shares”
means
(i) the Company's ordinary shares of common stock, no par value per share,
and (ii) any share capital into which such Ordinary Shares shall have been
changed or any share capital resulting from a reclassification of such Ordinary
Shares.
(p) “Other
Securities Purchase Agreement”
means
that certain Securities Purchase Agreement, dated the date hereof, by and among
the Company, the Buyers and Absolute European Catalyst Fund.
(q) “Parent
Entity”
of
a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed
on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.
(r) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization, any other entity and
a
government or any department or agency thereof.
(s) “Principal
Market”
means
the Nasdaq Global Market.
(t) “Registration
Rights Agreement”
means
that certain registration rights agreement, dated the date hereof, by and among
the Company, the Buyers and Absolute European Catalyst Fund.
(u) “Required
Holders”
means
the holders of the SPA Warrants representing at least a majority of Warrant
Shares underlying the SPA Warrants then outstanding.
(v) “SPA
Securities”
means
the Convertible Securities issued pursuant to the Other Securities Purchase
Agreement.
(w) “Successor
Entity”
means
the Person, which may be the Company, formed by, resulting from or surviving
any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made, provided that if such Person is not a publicly traded
entity whose common stock or equivalent equity security is quoted or listed
for
trading on an Eligible Market, Successor Entity shall mean such Person's Parent
Entity.
-
16 -
(x) “Trading
Day”
means
any day on which the ADRs are traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the ADRs, then on
the
principal securities exchange or securities market on which the ADRs are then
traded; provided that “Trading Day” shall not include any day on which the ADRs
are scheduled to trade on such exchange or market for less than 4.5 hours or
any
day that the ADRs are suspended from trading during the final hour of trading
on
such exchange or market (or if such exchange or market does not designate in
advance the closing time of trading on such exchange or market, then during
the
hour ending at 4:00:00 p.m., New York Time).
(y) “Transaction
Documents”
has
the
meaning set forth in the Securities Purchase Agreement.
[Signature
Page Follows]
-
17 -
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to Purchase ADRs to be duly executed as of
the
Issuance Date set out above.
| PSIVIDA LIMITED | ||
| |
|
|
| By: | ||
|
Name:
Title
|
|
|
Attested
by Holder:
____________________________
By:
Name:
Title:
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE ADRS
PSIVIDA
LIMITED
The
undersigned holder hereby exercises the right to purchase _________________
of
the ADRs, each of which representing ten (10) shares of the ordinary shares
of
common stock, no par value per share (“Ordinary
Shares”)
of
pSivida Limited, an Australian corporation (the “Company”),
evidenced by the attached Warrant to Purchase ADRs (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1. Payment
of Exercise Price.
The
undersigned holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.
2. Delivery
of ADRs.
The
Company shall deliver to the holder __________ ADRs in accordance with the
terms
of the Warrant.
Date:
_______________ __, ______
Name
of
Registered Holder
By:
Name:
Title:
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs Citibank,
N.A. to issue the above indicated number of Ordinary Shares in accordance with
the Transfer Agent Instructions dated September 26, 2006 from the Company
and acknowledged and agreed to by Citibank, N.A.
| PSIVIDA LIMITED | ||
| |
|
|
| By: | ||
|
|
Name:
Title
|
|
BLAKE
DAWSON WALDRON
L
A
W Y E R S
|
Level
32
Exchange Plaza 2 The Esplanade Perth WA 6000 www.bdw.com Tel + 61 8 9366 8000 Fax + 61 8 9366 8111 DX 169 Perth PO Box 7438 Cloisters Square Perth WA 6850 Australia |
|
pSivida
Limited
Level
12, BGC Centre
28
The Esplanade
PERTH
WA 6000
Attention:
The Directors
|
Partner
Roger
Davies
Telephone
(08) 9366 8022
Contact Murray
Wheater
Telephone
(08) 9366 8792
Our reference DRD
MRW 09-1412-4432
28
February 2007
|
Dear
Sirs
Registration
Statement on Form F-3 (Convertible Notes and 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 holders
named
in it of up to 105,932,360
ordinary
shares in the Company represented by 105,932,360
American
Depositary Shares that may be issued from time to time in connection with
the
Convertible Notes and 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.
|
1.
|
DEFINITIONS
|
In
this
opinion:
|
(a)
|
ACN
means Australian Company Number.
|
|
(b)
|
ASIC
means the Australian Securities and Investments
Commission.
|
|
(c)
|
ASX
means
ASX Limited ACN 008 624 691 or the market operated by it, the Australian
Securities Exchange, as the context
requires.
|
|
(d)
|
ASX
Listing Rules
means the Listing Rules of ASX.
|
|
(e)
|
American
Depositary Shares
means American Depositary Shares representing 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
|
28
February 2007
|
|
pSivida
Limited
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
Page 2
|
|
(g)
|
Convertible
Notes means
the subordinated convertible promissory notes issued by the
Company on 26
September 2006 and described in the section headed "The Offering"
in the
Registration Statement.
|
|
(h)
|
Corporations
Act
means the Corporations
Act 2001
(Cth).
|
|
(i)
|
Issue
means
the issue from time to time of up to an aggregate of 105,932,360
ordinary shares in the Company to be
issued:
|
|
(i)
|
on
conversion of the Convertible
Notes;
|
|
(ii)
|
as
interest on the Convertible Notes;
and
|
|
(iii)
|
on
exercise of the Warrants,
|
including
the issue of 1,450,000 ordinary shares on 8 November 2006 to Australian
IT
Investments Limited on conversion of US$290,000.00 (comprising principal
and
interest) of its Convertible Note.
|
(j)
|
Relevant
Jurisdiction
means the State of Western Australia,
Australia.
|
|
(k)
|
Relevant
Laws
means the laws of the Relevant Jurisdiction and the federal
laws of
Australia as they apply in the Relevant
Jurisdiction.
|
|
(l)
|
Selling
security holders
has the same meaning as in the Registration
Statement.
|
|
(m)
|
Warrants
means the warrants to purchase American Depositary Shares
issued by the
Company on 26 September 2006 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
28
February 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 10 August 2006 and 20 September 2006, certified
as true
and correct copies by the company secretary of the
Company;
|
|
(d)
|
a
copy of the resolutions passed at the meeting of the shareholders
of the
Company held on 19 September 2006, as
announced to ASX on 19 September 2006;
and
|
|
BLAKE
DAWSON WALDRON
|
28
February 2007
|
|
pSivida
Limited
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
Page 3
|
|
(e)
|
the
draft
Registration
Statement
|
|
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 have been
or may be issued:
|
|
(i)
|
on
conversion of the Convertible
Notes;
|
|
(ii)
|
as
interest on the Convertible Notes;
and
|
|
(iii)
|
on
exercise of the Warrants,
|
were
or
will be (as the case may be), if allotted, issued and paid for as contemplated
by the terms of issue of the Convertible Notes or the Warrants (as
the case may
be), 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 paragraphs
2(c)
accurately reflect the business transacted at the relevant
meetings;
|
|
BLAKE
DAWSON WALDRON
|
28
February 2007
|
|
pSivida
Limited
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
Page 4
|
|
(e)
|
the
resolutions referred to in paragraphs 2(c) and 2(d) accurately
reflect the
business transacted at the relevant
meetings;
|
|
(f)
|
any
document that we have reviewed has not been amended, released
or
discharged, and no provision in it has been
waived;
|
|
(g)
|
the
Registration Statement and the prospectus which is included
in it, 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;
|
|
(h)
|
any
factual statement made in any document which we have reviewed
is
true;
|
|
(i)
|
each
issue of Convertible Notes and 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;
|
|
(j)
|
in
connection with the issue of the Convertible Notes and 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;
|
|
(k)
|
the
Company was and will be solvent at the time of and immediately
after the
issue of the Convertible Notes and Warrants and each Issue,
and is solvent
at the date of this opinion;
|
|
(l)
|
the
meetings of the Company's board of directors and shareholders
to approve
the issue of the Convertible Notes and the Warrants (and
ordinary shares
that may be issued in connection with the Convertible Notes
and Warrants)
were properly convened and:
|
|
(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
|
|
BLAKE
DAWSON WALDRON
|
28
February 2007
|
|
pSivida
Limited
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
Page 5
|
|
(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
|
|
(m)
|
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 the use of this opinion in, and the filing
of this
opinion, as an exhibit to the Registration Statement, and
to the reference
to our firm under the heading “Legal Matters” and elsewhere in, the
prospectus 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
|
28
February 2007
|
|
pSivida
Limited
Registration
Statement of Form F-3 (Convertible Notes and Warrants)
|
Page 6
|
|
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 any 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
March
5,
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 report expresses an unqualified opinion
and includes 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
March
2, 2007