Filed Pursuant to Rule 424(b)(3)
Registration No. 333-199175
PROSPECTUS
23,418,172 Shares
COMMON STOCK
This prospectus relates
to the sale of up to 23,418,172 shares of our common stock by Aspire Capital Fund, LLC. Aspire Capital is also referred to in this
prospectus as the selling stockholder. The prices at which the selling stockholder may sell the shares will be determined by the
prevailing market price for the shares or in negotiated transactions. We will not receive proceeds from the sale of the shares
by the selling stockholder. However, we may receive proceeds of up to $10.0 million from the sale of our common stock to the selling
stockholder, pursuant to a common stock purchase agreement entered into with the selling stockholder on August 25, 2014, once the
registration statement, of which this prospectus is a part, is declared effective.
The selling stockholder
is an “underwriter” within the meaning of the Securities Act of 1933, as amended. We will pay the expenses of registering
these shares, but all selling and other expenses incurred by the selling stockholder will be paid by the selling stockholder.
Our common stock is
listed on NYSE MKT under the ticker symbol “IBIO”. On October 17, 2014, the last reported sale price per share of
our common stock was $3.21 per share.
You should read this
prospectus and any prospectus supplement, together with additional information described under the heading “Where You Can
Find More Information,” carefully before you invest in any of our securities.
Investing in our
securities involves a high degree of risk. See “Risk Factors” on page 4 of this prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is October
20, 2014.
TABLE OF CONTENTS
Page
You should rely only on the information
contained in or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information.
We are not making an offer of these securities in any state where the offer is not permitted. You should assume that information
contained in this prospectus, or in any document incorporated by reference, is accurate only as of any date on the front cover
of the applicable document.
SUMMARY
PROSPECTUS
This summary highlights certain information
about us, this offering and selected information contained in the prospectus. This summary is not complete and does not contain
all of the information that you should consider before deciding whether to invest in our common stock. For a more complete understanding
of our company and this offering, we encourage you to read and consider the more detailed information in the prospectus and the
documents incorporated by reference herein, including “Risk Factors” and the financial statements and related notes.
Unless we specify otherwise, all references in this prospectus to “iBio,” “we,” “our,” “us”
and “our company” refer to iBio Inc.
Our Company
We are a biotechnology company focused
on commercializing our proprietary platform technologies, iBioLaunch™ and iBioModulator™, and developing select product
candidates derived from these platforms. iBioLaunch is a proprietary, transformative platform technology for development and production
of biologics using transient gene expression in hydroponically grown, unmodified green plants. iBioModulator is a proprietary technology
platform that is designed to improve the potency and duration of effect of both prophylactic and therapeutic vaccines produced
with any recombinant expression technology including iBioLaunch.
Stated simply, iBioLaunch harnesses the
natural protein production capability that plants use to sustain their own growth, and directs it instead to produce proteins that
comprise the active pharmaceutical ingredients in vaccines and biopharmaceuticals. The platform’s ability to produce a wide
array of biologics is evidenced by, among other things, our validated pipeline of iBioLaunch-produced product candidates. The iBio
pipeline includes vaccines, enzyme replacements, monoclonal antibodies, and recombinant versions of marketed products that are
currently derived from human blood plasma.
In addition to the broad array of biological
products that can be produced with iBioLaunch, we believe this technology offers other advantages that are not available with conventional
manufacturing systems. These anticipated advantages may include reduced production time and lower capital and operating costs.
In May 2013, the speed of iBioLaunch production was demonstrated when a third party laboratory using the iBioLaunch platform was
able, in a 21 day period from receipt of antigen sequence information to purification of recombinant protein, to successfully produce
a vaccine candidate for the newly emerged H7N9 influenza virus. We believe the successful production of this vaccine candidate
demonstrates, among other things, that it is possible to utilize the iBioLaunch platform to produce vaccine doses for emergency
use against pandemic and bioterrorism threats in weeks rather than the months necessary with the use of engineered or attenuated
virus strains. Further, we believe that the capital investment required to construct facilities that will manufacture proteins
on the iBioLaunch platform will be substantially less than the capital investment which would be required for the construction
of similar capacity facilities utilizing conventional manufacturing methods dependent upon animal cells, bacterial fermenters and
chicken eggs. Additionally, operating costs in a manufacturing facility using the iBioLaunch platform are expected to be reduced
significantly in comparison to conventional manufacturing processes due to the rapid nature of the iBioLaunch production cycle
and the elimination of the expenses associated with the operation and maintenance of bioreactors, fermenters, sterile liquid handling
systems and other expensive equipment which is not required in connection with the use of the iBioLaunch platform.
The ability of the iBioLaunch platform
to manufacture proteins that are difficult or impossible to produce on a commercially practicable basis with conventional manufacturing
systems has been demonstrated by the production of antigens for vaccine candidates for both hookworm and malaria. These iBioLaunch-produced
vaccine candidates are being developed by the Sabin Institute and the Bill and Melinda Gates Foundation, respectively, and each
has been advanced to Phase 1 clinical trials that are currently underway.
In addition to the clinical development
of these vaccine candidates, the U.S. Department of Defense, or DoD, is currently sponsoring the development of an iBioLaunch-produced
anthrax vaccine, and Bio-Manguinhos/FioCruz, or FioCruz, a unit of the Oswaldo Cruz Foundation, a central agency of the Ministry
of Health of Brazil, is sponsoring the development of an iBioLaunch-produced yellow fever vaccine to replace the vaccine it currently
makes in chicken eggs for the populations of Brazil and more than 20 other nations. These advances are occurring subsequent to
the demonstration of safety of iBioLaunch-produced vaccine candidates against each of the H1N1 “Swine” flu virus and
the H5N1 avian flu virus in successfully completed Phase 1 clinical trials.
We developed our iBioModulator technology
based on the use of a modified form of the cellulose degrading enzyme lichenase, or LicKM, from Clostridium thermocellum, a thermophilic
and anaerobic bacterium. iBioModulator enables an adjuvant component to be fused directly to preferred recombinant antigens to
create a single protein for use in vaccine applications. Multiple proteins or antigenic domains of proteins can be fused to various
portions of LicKM to enhance vaccine performance.
The iBioModulator platform has been shown
to be applicable to a range of vaccine proteins and can significantly modify the immune response to a vaccine in two important
ways. Animal efficacy studies have demonstrated that it can increase the strength of the initial immune response to a vaccine antigen
(as measured by antibody titer) and also extend the duration of the immune response. These results suggest the possibility that
use of the iBioModulator platform may lower vaccine antigen requirements and enable fewer doses to establish prolonged protective
immunity. We believe that the ability to provide better immune response and longer-term protection with fewer or zero booster inoculations
would add significant value to a vaccine by reducing the overall costs and logistical difficulties of its use.
Our near-term focus is to realize two
key objectives: (1) the establishment of additional business arrangements pursuant to which commercial, government and not-for-profit
licensees will utilize iBioLaunch and iBioModulator in connection with the production and development of therapeutic proteins
and vaccine products; and (2) the further development of select product candidates derived from or enhanced by our technology
platforms. These objectives are the core components of our strategy to commercialize the proprietary technology we have developed
and validated.
Our strategy to engage in partnering and
out-licensing of our technology platforms seeks to preserve the opportunity for iBio to share in the successful development and
commercialization of product candidates by our licensees while enhancing our own capital and financial resources for development,
alone or through commercial alliances with others, of high-potential product candidates derived from our platforms. In addition
to financial resources we may receive in connection with the license of our platform technologies, we believe that successful development
by third party licensees of iBioLaunch-derived and iBioModulator-enhanced product candidates will further validate our technology,
increase awareness of the advantages that may be realized by the use of such platforms and promote broader adoption of our technologies
by additional third parties.
The advancement of iBioLaunch-derived and
iBioModulator-enhanced product candidates is a key element of our strategy. We believe that selecting and developing products which
individually have substantial commercial value and are representative of classes of pharmaceuticals that can be successfully produced
using either or both of our technology platforms will allow us to maximize the near and longer term value of each platform while
exploiting individual product opportunities. To realize this result, we are currently advancing designated product candidates through
the preclinical phase of development and undertaking the studies required for submission of Investigational New Drug Applications,
or INDs. The most advanced product candidate we are currently internally advancing through preclinical IND enabling studies is
a proprietary recombinant protein we call IBIO-CFB03 for treatment of idiopathic pulmonary fibrosis, systemic sclerosis, and potentially
other fibrotic diseases. To the extent that we anticipate the opportunity to realize additional value, we may elect to further
the development of this or other product candidates through the early stages of clinical development before seeking to license
the product candidate to other industry participants for late stage clinical development and if successful, commercialization.
Our Corporate Information
We are a Delaware corporation. Our principal
executive/administrative offices are located at 9 Innovation Way, Suite 100, Newark, Delaware 19711, and our telephone number is
(302) 355-0650. Our website address is http://www.ibioinc.com. Except for the documents specifically incorporated by reference
herein, information on or accessed through our website is not incorporated into this prospectus and is not a part of this prospectus.
Our common stock is traded on the NYSE MKT under the symbol “IBIO.”
The Offering
Common stock being offered by the selling stockholder |
23,418,172 shares. |
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Common stock outstanding |
67,460,267 shares as of October 1, 2014 (including 1,818,172 shares issued to Aspire Capital pursuant to the Purchase Agreement). |
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Use of proceeds |
The selling stockholder will receive all of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the shares by the selling stockholder. However, we may receive up to $10.0 million in proceeds from the sale of our common stock to the selling stockholder under the common stock purchase agreement described below. Any proceeds from the selling stockholder that we receive under the purchase agreement are expected to be used for working capital and general corporate purposes. |
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NYSE MKT Symbol |
IBIO |
|
|
Risk Factors |
Investing in our securities involves a high degree of risk. You should carefully review and consider the “Risk Factors” incorporated by reference in this prospectus for a discussion of factors to consider before deciding to invest in shares of our common stock. |
Our Purchase Agreement with Aspire Capital
Fund, LLC
On August 25, 2014, we entered into a common
stock purchase agreement (referred to in this prospectus as the “Purchase Agreement”), with Aspire Capital Fund, LLC,
an Illinois limited liability company (referred to in this prospectus as “Aspire Capital” or the “selling stockholder”),
which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed
to purchase up to an aggregate of $10.0 million of our shares of common stock over the approximately 24-month term of the Purchase
Agreement. In consideration for entering into the Purchase Agreement and following the approval of the issuance of the shares by
NYSE MKT (the “Principal Market”), we issued to Aspire Capital 681,818 shares of our common stock as a commitment fee
(referred to in this prospectus as the “Commitment Shares”). In addition, upon execution of the Purchase Agreement
and following the approval of the issuance of the shares by the Principal Market, we sold to Aspire Capital 1,136,354 shares of
common stock (referred to in this prospectus as the “Initial Purchase Shares”) for $500,000. Concurrently with entering
into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital (referred to in this prospectus
as the “Registration Rights Agreement”), in which we agreed to file one or more registration statements, including
the registration statement of which this prospectus is a part, as permissible and necessary to register under the Securities Act
of 1933, as amended, or the Securities Act, the sale of the shares of our common stock that have been and may be issued to Aspire
Capital under the Purchase Agreement.
As of October 1, 2014, there were
65,642,095 shares of our common stock outstanding (28,253,959 shares held by non-affiliates) excluding the
1,818,172 shares offered that have been issued to Aspire Capital and the additional 21,600,000 shares
that may be issuable to Aspire Capital pursuant to the Purchase Agreement. If
all of such 23,418,172 shares of our common stock offered hereby were issued and outstanding as of the date hereof, such
shares would represent 26.29% of the total common stock outstanding or 45.3% of the non-affiliate shares of common stock
outstanding as of the date hereof. The number of shares of our common stock ultimately offered for sale by Aspire Capital is
dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement.
Pursuant to the Purchase
Agreement and the Registration Rights Agreement, we have registered 23,418,172 shares of our common stock under the
Securities Act, which includes the Commitment Shares and Initial Purchase Shares that have already been issued to Aspire
Capital and 21,600,000 shares of common stock which we may issue to Aspire Capital. All 23,418,172 shares of common stock are
being offered pursuant to this prospectus.
On October 20, 2014, the conditions necessary for
purchases under the Purchase Agreement to commence were satisfied. On any trading day on which the closing sale price of our
common stock exceeds $0.44 (the closing sale price of our shares on the business day before we entered into the Purchase
Agreement), we have the right, in our sole discretion, to present Aspire Capital with a purchase notice (each, a
“Purchase Notice”), directing Aspire Capital (as principal) to purchase up to 150,000 shares of our common stock
per trading day, provided that the aggregate price of such purchase shall not exceed $500,000 per trading day, up to an
additional $9.5 million of our common stock in the aggregate at a per share price (the “Purchase Price”)
calculated by reference to the prevailing market price of our common stock (as more specifically described below).
In addition, on any date on which we submit
a Purchase Notice for 150,000 shares to Aspire Capital and the closing sale price of our stock is equal to or greater than $0.44
(the closing sale price of our shares on the business day before we entered into the Purchase Agreement), we also have the right,
in our sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a “VWAP Purchase
Notice”) directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the Company’s
common stock traded on NYSE MKT on the next trading day (the “VWAP Purchase Date”), subject to a maximum number of
shares we may determine (the “VWAP Purchase Share Volume Maximum”) and a minimum trading price (the “VWAP Minimum
Price Threshold”) (as more specifically described below). The purchase price per Purchase Share pursuant to such VWAP Purchase
Notice (the “VWAP Purchase Price”) is calculated by reference to the prevailing market price of our common stock (as
more specifically described below).
The Purchase Agreement provides that the
Company and Aspire Capital shall not effect any sales under the Purchase Agreement on any purchase date where the closing sale
price of our common stock is less than $0.44 (the closing sale price of our shares on the business day before we entered into the
Purchase Agreement, the “Floor Price”). The Floor Price will be $0.20 per share of Common Stock, if our stockholders
approve the transaction contemplated by the Purchase Agreement. We may, but we are under no obligation to, request our stockholders
to approve the transaction contemplated by the Purchase Agreement. The Floor Price and the respective prices and share numbers
in the preceding paragraphs shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction. There are no trading volume requirements or restrictions under the Purchase
Agreement, and we will control the timing and amount of any sales of our common stock to Aspire Capital. Aspire Capital has no
right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Purchase Agreement.
There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first
refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Purchase Agreement may be terminated
by us at any time, at our discretion, without any penalty or cost to us.
RISK FACTORS
A purchase of shares of our Common Stock
is an investment in our securities and involves a high degree of risk. You should carefully consider the risks and uncertainties
and all other information contained in or incorporated by reference in this prospectus, including the risks and uncertainties discussed
under “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2014. All of these risk factors
are incorporated by reference herein in their entirety. If any of these risks occur, either alone or in combination with other
factors, our business, financial condition or operating results could be adversely affected and the trading price of common stock
may decline. Moreover, readers should note this is not an exhaustive list of the risks we face; some risks are unknown or not quantifiable,
and other risks that we currently perceive as immaterial may ultimately prove more significant than expected. Statements about
plans, predictions or expectations should not be construed to be assurances of performance or promises to take a given course of
action.
FORWARD-LOOKING
STATEMENTS
This prospectus and the documents incorporated
by reference into it contain forward-looking statements that involve risks and uncertainties. These forward-looking statements
are not historical facts but rather are plans and predictions based on current expectations, estimates and projections about our
industry, our beliefs and assumptions. We use words such as “anticipate,” “expect,” “intend,”
“plan,” “believe,” “seek,” “estimate” and variations of these words and similar
expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to
certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties
include those described in the section above entitled “Risk Factors.” You should not place undue reliance on these
forward-looking statements, which reflect our view only as of the date of this prospectus.
USE OF PROCEEDS
This prospectus relates to shares of our
common stock that may be offered and sold from time to time by Aspire Capital. We will not receive any proceeds upon the sale of
shares by Aspire Capital. However, we may receive proceeds up to $10 million under the Purchase Agreement with Aspire Capital.
The proceeds received from the sale of the shares under the Purchase Agreement will be used for working capital and general corporate
purposes. This anticipated use of net proceeds from the sale of our common stock to Aspire Capital under the Purchase Agreement
represents our intentions based upon our current plans and business conditions.
The aspire
capital transaction
General
On August 25, 2014, we
entered into the Purchase Agreement which provides that, upon the terms and subject to the conditions and limitations set forth
therein, Aspire Capital is committed to purchase up to an aggregate of $10.0 million of our shares of common stock over the term
of the Purchase Agreement. In consideration for entering into the Purchase Agreement, following the approval of the issuance of
the shares by the Principal Market, we issued to Aspire Capital the Commitment Shares. Following the approval of the issuance of
the shares by the Principal Market, we sold to Aspire Capital the Initial Purchase Shares for an aggregate purchase price of $500,000.
Concurrently with entering into the Purchase Agreement, we also entered into the Registration Rights Agreement, in which we agreed
to file one or more registration statements as permissible and necessary to register under the Securities Act, the sale of the
shares of our common stock that have been and may be issued to Aspire Capital under the Purchase Agreement.
As of October 1,
2014, there were 65,642,095 shares of our common stock outstanding (28,253,959 shares held by non-affiliates) excluding the 1,818,172
shares offered that have been issued to Aspire Capital and the additional 21,600,000 shares that may be issuable to Aspire Capital
pursuant to the Purchase Agreement. If all of such 23,418,172 shares of our common stock offered hereby were issued and outstanding
as of the date hereof, such shares would represent 26.29% of the total common stock outstanding or 45.3% of the non-affiliate
shares of common stock outstanding as of the date hereof. The number of shares of our common stock ultimately offered for sale
by Aspire Capital is dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement.
Pursuant to
the Purchase Agreement and the Registration Rights Agreement, we have registered 23,418,172 shares of our common stock under
the Securities Act, which includes the Commitment Shares and Initial Purchase Shares that have already been issued to
Aspire Capital and 21,600,000 shares of common stock which we may issue to Aspire Capital. All 23,418,172 shares of common
stock are being offered pursuant to this prospectus. Under the Purchase Agreement, we may have the right but not the
obligation to issue more than the 23,418,172 shares of common stock included in this prospectus to Aspire Capital. Pursuant
to the terms of NYSE MKT’s approval of our listing application for the shares to be issued under the Purchase
Agreement, we may not issue more than 13,062,776 shares of our common stock pursuant to the Purchase Agreement, unless our
stockholders approve the transaction contemplated by the Purchase Agreement. We may, but we are under no obligation to,
request our stockholders to approve the transaction contemplated by the Purchase Agreement.
On October 20, 2014, the conditions necessary for
purchases under the Purchase Agreement to commence were satisfied. On any trading day on which the closing sale price of our
common stock is not less than the Floor Price ($0.44, the closing sale price of our shares on the business day before we
entered into the Purchase Agreement), we have the right, in our sole discretion, to present Aspire Capital with a Purchase
Notice, directing Aspire Capital (as principal) to purchase up to 150,000 shares of our common stock per business day, up to
an additional $9.5 million of our common stock in the aggregate at a Purchase Price calculated by reference to the prevailing
market price of our common stock over the preceding 10-business day period (as more specifically described below); however,
no sale pursuant to a Purchase Notice may exceed $500,000 per trading day.
In addition, on any date on which we submit
a Purchase Notice to Aspire Capital for 150,000 Purchase Shares and out stock price is not less than the Floor Price ($0.44, the
closing sale price of our shares on the business day before we entered into the Purchase Agreement), we also have the right, in
our sole discretion, to present Aspire Capital with a VWAP Purchase Notice directing Aspire Capital to purchase an amount of stock
equal to up to 30% of the aggregate shares of the Company’s common stock traded on NYSE MKT on the next trading day, subject
to the VWAP Purchase Share Volume Maximum and the VWAP Minimum Price Threshold. The VWAP Purchase Price is calculated by reference
to the prevailing market price of our common stock (as more specifically described below).
The Purchase Agreement
provides that the Company and Aspire Capital shall not effect any sales under the Purchase Agreement on any purchase date where
the closing sale price of our common stock is less than the Floor Price ($0.44, the closing sale price of our shares on the business
day before we entered into the Purchase Agreement). The Floor Price will be $0.20 per share of Common Stock, if our stockholders
approve the transaction contemplated by the Purchase Agreement. We may, but we are under no obligation to, request our stockholders
to approve the transaction contemplated by the Purchase Agreement. There are no trading volume requirements or restrictions under
the Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Aspire Capital. Aspire Capital
has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Purchase
Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights
of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Purchase Agreement may be
terminated by us at any time, at our discretion, without any penalty or cost to us.
Purchase of Shares
Under The Common Stock Purchase Agreement
Under the common stock
Purchase Agreement, on any trading day selected by us on which the closing sale price of our common stock exceeds the Floor Price,
we may direct Aspire Capital to purchase up to 150,000 shares of our common stock per trading day. The Purchase Price of such
shares is equal to the lesser of:
| · | the lowest sale price of our common stock on the purchase date; or |
| · | the arithmetic average of the three lowest closing sale prices for our common stock during the
ten consecutive trading days ending on the trading day immediately preceding the purchase date. |
In addition, on any date
on which we submit a Purchase Notice to Aspire Capital for purchase of 150,000 shares, we also have the right to direct Aspire
Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the our common stock traded on NYSE MKT on
the next trading day, subject to the VWAP Purchase Share Volume Maximum and the VWAP Minimum Price Threshold, which is equal to
the greater of (a) 80% of the closing price of the Company’s common stock on the business day immediately preceding the VWAP
Purchase Date or (b) such higher price as set forth by the Company in the VWAP Purchase Notice. The VWAP Purchase Price of such
shares is the lower of:
| · | the Closing Sale Price on the VWAP Purchase Date; or |
| · | 97% of the volume-weighted average price for our common stock traded on NYSE MKT: |
| o | on the VWAP Purchase Date, if the aggregate shares to be purchased on that date have not exceeded
the VWAP Purchase Share Volume Maximum or |
| o | during that portion of the VWAP Purchase Date until such time as the sooner to occur of (i) the
time at which the aggregate shares traded on NYSE MKT exceed the VWAP Purchase Share Volume Maximum or (ii) the time at which the
sale price of the Company’s common stock falls below the VWAP Minimum Price Threshold. |
The purchase price will
be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during
the trading day(s) used to compute the purchase price. We may deliver multiple Purchase Notices and VWAP Purchase Notices to Aspire
Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase has been completed.
Minimum Share Price
Under the Purchase Agreement,
we and Aspire Capital may not effect any sales of shares of our common stock under the Purchase Agreement on any trading day that
the closing sale price of our common stock is less than the Floor Price of $0.44 per share (the closing sale price of our shares
on the business day before we entered into the Purchase Agreement). The Floor Price will be $0.20 per share of Common Stock, if
our stockholders approve the transaction contemplated by the Purchase Agreement. We may, but we are under no obligation to, request
our stockholders to approve the transaction contemplated by the Purchase Agreement.
Events of Default
Generally, Aspire Capital
may terminate the Purchase Agreement upon the occurrence of any of the following events of default:
| · | the effectiveness of any registration statement that is required to be maintained effective pursuant
to the terms of the Registration Rights Agreement between us and Aspire Capital lapses for any reason (including, without limitation,
the issuance of a stop order) or is unavailable to Aspire Capital for sale of our shares of common stock, and such lapse or unavailability
continues for a period of ten consecutive business days or for more than an aggregate of thirty business days in any 365-day period,
which is not in connection with a post-effective amendment to any such registration statement; in connection with any post-effective
amendment to such registration statement that is required to be declared effective by the SEC such lapse or unavailability may
continue for a period of no more than 60 consecutive business days; |
| · | the suspension from trading or failure of our common stock to be traded on our principal market
for a period of three consecutive business days; |
| · | the delisting of our common stock from NYSE MKT, provided however, that in the event the Company’s
Common Stock is not immediately thereafter listed and traded on the New York Stock Exchange, the Nasdaq Global Select Market, the
Nasdaq Global Market, Nasdaq Capital Market, the OTC Bulletin Board, the OTCQX marketplace or the OTCQB marketplace of the OTC
Market Group, Inc., |
| · | our transfer agent’s failure to issue to Aspire Capital shares of our common stock which
Aspire Capital is entitled to receive under the Purchase Agreement within five business days after an applicable purchase date; |
| · | any breach by us of the representations or warranties or covenants contained in the Purchase Agreement
or any related agreements which would have a material adverse effect on us, subject to a cure period of five business days; |
| · | if we become insolvent or are generally unable to pay our debts as they become due; or |
| · | any participation or threatened participation in insolvency or bankruptcy proceedings by or against
us. |
Our Termination Rights
The Purchase Agreement
may be terminated by us at any time, at our discretion, without any penalty or cost to us.
No Short-Selling or
Hedging by Aspire Capital
Aspire Capital has agreed
that neither it nor any of its agents, representatives and affiliates shall engage in any direct or indirect short-selling or hedging
of our common stock during any time prior to the termination of the Purchase Agreement.
Effect of Performance
of the Purchase Agreement on Our Stockholders
The Purchase Agreement
does not limit the ability of Aspire Capital to sell any or all of the 23,418,172 shares registered in this offering. It is anticipated
that shares registered in this offering will be sold over a period of up to approximately 24 months from the date of this prospectus.
The sale by Aspire Capital of a significant amount of shares registered in this offering at any given time could cause the market
price of our common stock to decline and/or to be highly volatile. Aspire Capital may ultimately purchase all, some or none of
the 21,600,000 shares of common stock not yet issued but registered in this offering. Pursuant to the terms of NYSE MKT’s
approval of our listing application for the shares to be issued under the Purchase Agreement, we may not issue more than 13,062,776
shares of our common stock pursuant to the Purchase Agreement, unless our stockholders approve the transaction contemplated by
the Purchase Agreement. We may, but we are under no obligation to, request our stockholders to approve the transaction contemplated
by the Purchase Agreement. After it has acquired shares pursuant to the Purchase Agreement, it may sell all, some or none of such
shares. Therefore, sales to Aspire Capital by us pursuant to the Purchase Agreement also may result in substantial dilution to
the interests of other holders of our common stock. However, we have the right to control the timing and amount of any sales of
our shares to Aspire Capital and the Purchase Agreement may be terminated by us at any time at our discretion without any penalty
or cost to us.
Percentage of Outstanding
Shares After Giving Effect to the Purchased Shares Issued to Aspire Capital
In connection with entering
into the Purchase Agreement, we authorized the sale to Aspire Capital of up to $10.0 million of our shares of common stock. However,
we estimate that we will sell no more than 22,736,354 shares to Aspire Capital under the Purchase Agreement (exclusive of the Commitment
Shares), all of which are included in this offering. Subject to any required approval by our board of directors, we may have the
right but not the obligation to issue more than the 23,418,172 shares included in this prospectus to Aspire Capital under the Purchase
Agreement. In the event we elect to issue more than 23,418,172 shares under the Purchase Agreement, we will be required to file
a new registration statement and have it declared effective by the SEC. The number of shares ultimately offered for sale by Aspire
Capital in this offering is dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement. Pursuant
to the terms of NYSE MKT’s approval of our listing application for the shares to be issued under the Purchase Agreement,
we may not issue more than 13,062,776 shares of our common stock pursuant to the Purchase Agreement, unless our stockholders approve
the transaction contemplated by the Purchase Agreement. We may, but we are under no obligation to, request our stockholders to
approve the transaction contemplated by the Purchase Agreement. The following table sets forth the number and percentage of outstanding
shares to be held by Aspire Capital after giving effect to the sale of shares of common stock issued to Aspire Capital at varying
purchase prices:
Assumed Average
Purchase Price | | |
Proceeds from
the Sale of
Shares to Aspire
Capital Under
the Purchase
Agreement
Registered in
this Offering | | |
Number of Shares
to be Issued in this
Offering at the
Assumed Average
Purchase Price (1) | | |
Percentage of
Outstanding Shares
After Giving Effect
to the Purchased
Shares Issued to
Aspire Capital (2) | |
$ | 0.44 | (3) | |
$ | 10,000,000 | | |
| 22,727,263 | | |
| 33.7 | % |
$ | 0.50 | | |
$ | 10,000,000 | | |
| 20,136,354 | | |
| 29.9 | % |
$ | 0.75 | | |
$ | 10,000,000 | | |
| 13,803,021 | | |
| 20.5 | % |
$ | 1.00 | | |
$ | 10,000,000 | | |
| 10,636,354 | | |
| 15.8 | % |
$ | 1.50 | | |
$ | 10,000,000 | | |
| 7,469,687 | | |
| 11.1 | % |
$ | 2.00 | | |
$ | 10,000,000 | | |
| 5,886,354 | | |
| 8.7 | % |
| (1) | Excludes 681,818 Commitment Shares issued under the Purchase Agreement between the Company and
Aspire Capital. |
| (2) | The denominator is based on 67,460,267 shares outstanding as of October 1, 2014, which
includes the 1,818,172 Initial Purchase Shares and the Commitment Shares previously issued to Aspire Capital and the number
of shares set forth in the adjacent column which would have been sold to Aspire Capital. The numerator is based on the
number of shares which we may sell to Aspire Capital under the Purchase Agreement which includes the Initial Purchase Shares
at the corresponding assumed purchase price for the remaining shares set forth in the adjacent column. |
| (3) | The Floor Price (the closing sale price of our shares on the business day before we entered into
the Purchase Agreement). |
dilution
The sale of our common stock to Aspire
Capital pursuant to the Purchase Agreement will have a dilutive impact on our stockholders. As a result, our net income per share,
if any, would decrease in future periods and the market price of our common stock could decline. In addition, the lower our stock
price is at the time we exercise our right to sell shares to Aspire Capital, the more shares of our common stock we will have to
issue to Aspire Capital pursuant to the Purchase Agreement and our existing stockholders would experience greater dilution.
After giving effect to the sale in this
offering of 23,418,172 shares of common stock at an assumed average sale price of $.58 per share (based on the lowest sales price
of our common stock as of October 1, 2014), our pro forma as adjusted net tangible book value as of June 30, 2014 would have
been approximately $16,551,631 or $.186 per share of common stock. This represents an immediate increase in pro forma as adjusted
net tangible book value of $.132 per share to our existing stockholders and an immediate dilution of $.394 per share to our new stockholders.
SELLING
STOCKHOLDER
The selling stockholder
may from time to time offer and sell any or all of the shares of our common stock set forth below pursuant to this prospectus.
When we refer to the “selling stockholder” in this prospectus, we mean the entity listed in the table below, and its
respective pledgees, donees, permitted transferees, assignees, successors and others who later come to hold any of the selling
stockholder’s interests in shares of our common stock other than through a public sale.
The following table sets
forth, as of the date of this prospectus, the name of the selling stockholder for whom we are registering shares for sale to the
public, the number of shares of common stock beneficially owned by the selling stockholder prior to this offering, the total number
of shares of common stock that the selling stockholder may offer pursuant to this prospectus and the number of shares of common
stock that the selling stockholder will beneficially own after this offering. Except as noted below, the selling stockholder does
not have, or within the past three years has not had, any material relationship with us or any of our predecessors or affiliates
and the selling stockholder is not or was not affiliated with registered broker-dealers.
Based on the information
provided to us by the selling stockholder, assuming that the selling stockholder sells all of the shares of our common stock beneficially
owned by it that have been registered by us and does not acquire any additional shares during the offering, the selling stockholder
will not own any shares other than those appearing in the column entitled “Beneficial Ownership After This Offering.”
We cannot advise you as to whether the selling stockholder will in fact sell any or all of such shares of common stock. In addition,
the selling stockholder may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at
any time and from time to time, the shares of our common stock in transactions exempt from the registration requirements of the
Securities Act of 1933 after the date on which it provided the information set forth in the table below.
| |
| |
| | |
Beneficial Ownership After this Offering (1) | |
Name | |
Shares of
Common
Stock
Owned
Prior to this
Offering | |
Shares of
Common
Stock Being
Offered | | |
Number of Shares | | |
%(2) | |
Aspire Capital Fund, LLC (3) | |
350,000(4) | |
| 23,418,172 | | |
| 350,000 | | |
| * | |
_____________________________
* Represents
less than 1% of outstanding shares.
| (1) | Assumes the sale of all shares of common stock registered pursuant to this prospectus, although
the selling stockholder is under no obligation to sell any shares of common stock at this time. |
| (2) | Based on 67,460,267 shares of common stock outstanding on October 1, 2014. |
| (3) | Aspire Capital Partners, LLC is the managing member of Aspire Capital Fund, LLC. SGM Holdings Corp.
is the managing member of Aspire Capital Partners, LLC. Steven G. Martin is the president and sole shareholder of SGM Holdings
Corp. Erik J. Brown is a principal of Aspire Capital Partners, LLC. Christos Komissopoulos is a principal of Aspire Capital Partners,
LLC. Each may be deemed to have shared voting and investment power over shares owned by Aspire Capital Fund, LLC. Each of Aspire
Capital Partners, LLC, SGM Holdings Corp., Mr. Martin, Mr. Brown and Mr. Komissopoulos disclaim beneficial ownership of the shares
of common stock held by Aspire Capital Fund, LLC. Aspire Capital is not a licensed broker dealer or an affiliate of a licensed
broker dealer. |
| (4) | As of the date hereof, 1,818,172 shares of our common stock have been acquired by Aspire Capital
under the Purchase Agreement, consisting of shares we issued to Aspire Capital as a commitment fee and the Initial Purchase Shares
sold to Aspire Capital. We may elect in our sole discretion to sell to Aspire Capital up to an additional 21,600,000 shares under
the Purchase Agreement and included in this prospectus but Aspire Capital does not presently beneficially own those shares as determined
in accordance with the rules of the SEC. |
MANAGEMENT
The following table sets forth the names and ages of our directors
and our executive officers:
Name |
|
Age |
|
Position Held With Us |
Robert B. Kay |
|
74 |
|
Executive Chairman and Chief Executive Officer |
Robert L. Erwin |
|
61 |
|
President |
Mark Giannone |
|
57 |
|
Chief Financial Officer |
Terence Ryan, Ph.D. |
|
59 |
|
Chief Scientific Officer |
General James T. Hill (ret.) |
|
68 |
|
Director |
Glenn Chang |
|
66 |
|
Director |
John D. McKey, Jr. |
|
71 |
|
Director |
Philip K. Russell, M.D. |
|
82 |
|
Director |
Seynour Flug |
|
79 |
|
Director |
Arthur Y. Elliott, Ph.D. |
|
78 |
|
Director |
The following are brief biographies of
each director and executive officer:
Robert B. Kay has served as
our Executive Chairman and Chief Executive Officer since we became a publicly traded company in August 2008. Previously, Mr. Kay
was a founder and senior partner of the New York law firm of Kay Collyer & Boose LLP, with a particular focus on mergers and
acquisitions and joint ventures. Mr. Kay received his B.A. from Cornell University’s College of Arts & Sciences and his
J.D. from New York University Law School.
Robert L. Erwin has been our
President since we became a publicly traded company in August 2008. Mr. Erwin led Large Scale Biology Corporation from its founding
in 1988 through 2003, including a successful initial public offering in 2000, and continued as non-executive Chairman until 2006.
He served as Chairman of Icon Genetics AG from 1999 until its acquisition by a subsidiary of Bayer AG in 2006. Mr. Erwin recently
served as Managing Director of Bio-Strategic Directors LLC, providing consulting services to the life sciences industry. He is
currently Chairman of Novici Biotech, a private biotechnology company and a Director of Oryn Therapeutics. Mr. Erwin’s non-profit
work focuses on applying scientific advances to clinical medicine, especially in the field of oncology. He is co-founder, President
and Director of the Marti Nelson Cancer Foundation, Oncology. Mr. Erwin received his BS degree with Honors in Zoology and an MS
degree in Genetics from Louisiana State University.
Mark Giannone
has served as our Chief Financial Officer since December 2013. Mr. Giannone has been a member
of the accounting firm of Bosco Giannone LLC since its formation in 1999. His prior experience included employment as a senior
accountant at Kenneth Leventhal & Co. (acquired by Ernst &Young LLP) and as a tax manager at BDO Seidman, a lecturer in
various continuing education programs for the New York State Society of Certified Public Accountants and New York University.
Terence E. Ryan, Ph.D. has been
our chief scientific officer since March 2012, and prior to that served as senior vice president since joining the Company in July
2010. Dr. Ryan previously served as assistant vice president, Systems Biology at Wyeth Pharmaceuticals (later Pfizer, Inc.) from
2007 to 2010, and director of Integrative Biology at GlaxoSmithKline from 2003 to 2007. He has also been director, Cell Biology
at Celera Genomics from 2000 to 2003 and associate director of Cell Technologies and Protein Sciences at Regeneron Pharmaceuticals,
Inc. Dr. Ryan received his A.B. in Biology from Princeton University, his M.S. and Ph.D. in Microbiology from Rutgers University
and was a post-doctoral fellow in Molecular Virology at the University of Wisconsin.
General James T. Hill has been
a director since we became a publicly traded company in August 2008. General Hill was the Commander of the 4-Star United States
Southern Command, reporting directly to the President and Secretary of Defense at the time of his retirement from active duty.
As such he led all U.S. military forces and operations in Central America, South America and the Caribbean, worked directly with
U.S. Ambassadors, foreign heads of state, key Washington decision-makers, foreign senior military and civilian leaders, developing
and executing United States policy. His responsibilities included management, development and execution of plans and policy within
the organization including programming, communications, manpower, operations, logistics and intelligence. General Hill’s
experience of implementing plans and policies within diverse geographic regions and his insights regarding the conduct of business
affairs in Central and South America is a key resource for us.
Glenn
Chang has been a director since we became a publicly traded company in August 2008.
Since February 2014, Glenn Chang serves as Chief Financial Officer of Singer Vehicle Design, a private company in the
business of automotive design and restoration. Mr. Chang served as the Chief Financial Officer of Alma Bank, a New York
headquartered bank with over $900 million of assets and 13 branches in the New York City Metropolitan area from late 2012 to
February 2014. Before joining Alma, from 1999 to 2012, Mr. Chang served as a founder, Director, Chief Financial Officer and
consultant to First American International Bank which is the largest locally owned Chinese American Bank. Prior to that he
spent 20 years at Citibank, N.A as Vice President. Mr. Chang is a retired Certified Public Accountant. Mr. Chang’s
extensive executive and financial leadership in his current and former positions and his training and experience as a
Certified Public Accountant adds vital expertise to our board of directors and our Audit Committee in the form of
financial understanding, business perspective and audit expertise. Mr. Chang is qualified as an Audit Committee Financial
Expert as defined in Regulation S-K Item 407(d)(5)(ii).
John D. McKey, Jr. has been
a director since we became a publicly traded company in August 2008. Since 2003, Mr. McKey has served as of counsel at McCarthy,
Summers, Bobko, Wood, Sawyer & Perry, P.A. in Stuart, Florida, and previously was a partner from 1987 through 2003. From 1977
to 1987, Mr. McKey was a partner at Gunster Yoakley in Palm Beach, Florida. Mr. McKey received his B.B.A at the University of Georgia
and his J.D. from the University Of Florida College Of Law. Mr. McKey’s extensive experience representing private and public
companies operating in varied business sectors brings our board insights and acumen to best corporate practices and implementation
of strategic and financial plans.
Philip K. Russell, M.D. has
been a director since March 2010. Major General (retired.) Russell served in the U.S. Army Medical Corps from 1959 to 1990, pursuing
a career in infectious disease and tropical medicine research. Following his military service, Dr. Russell joined the faculty of
Johns Hopkins University’s School of Hygiene and Public Health and worked closely with the World Health Organization as special
advisor to the Children’s Vaccine Initiative. He was founding board member of the International AIDS Vaccine Initiative,
and is an advisor to the Bill & Melinda Gates Foundation. He has served on numerous advisory boards of national and international
agencies, including the Centers for Disease Control (“CDC”), the National Institutes of Health (“NIH”)
and the Institute of Medicine. Dr. Russell is a past Chairman of the Albert B. Sabin Vaccine Institute. Dr. Russell’s extensive
experience and expertise in the field of infectious diseases and his association with leading governmental and not-for-profit entities
engaged in pioneering work throughout the world provides us with invaluable insights into priorities for these entities and business
development opportunities for us.
Seymour Flug has been a director
since December 2012. Prior to retiring, Mr. Flug was Chairman of the Board and CEO of Diners Club International and a Managing
Director of Citibank. Prior to joining Citibank, Mr Flug served as Senior Vice President of Hess Oil Company. Mr. Flug began his
career as Certified Public Accountant at Deloitte & Touche, a predecessor to the firm now known as Deloitte. Mr. Flug received
his B.B.A from Baruch College. Mr. Flug’s experience leading a multinational company and his experience as a certified public
accountant allow him to offer us unique perspectives on global business opportunities, best business practices and additional audit
expertise. Mr. Flug is qualified as an Audit Committee Financial Expert as defined in Regulation S-K Item 407(d)(5)(ii).
Arthur Y.
Elliott, Ph.D. has been a director since October 2010. Dr. Elliott serves as a member of the American Association for
Advancement of Science, American Society for Microbiology, and American Tissue Culture Association. Prior to retiring, Dr. Elliott
spent 16 years with Merck & Co., serving ultimately as Executive Director of Biological Operations, Merck Manufacturing Division,
responsible for the bulk manufacture, testing, release and registration of all biological products sold. Dr. Elliott also directed
the manufacturing, process development, and other operations of North American Vaccine, Inc. for six years, and most recently served
as consultant to Aventis (Sanofi Pasteur) Pharmaceutical Corporation in its design and implementation of new, highly automated
manufacturing facilities for influenza vaccines. Dr. Elliott has served with the United States Department of Health and Human Services
(“HHS”) in the Avian Influenza Pandemic Preparedness Program in Washington, D.C. as Senior Program Manager for the
Antigen Sparing Project since 2006. The program involves the cooperation of three pharmaceutical companies and four government
groups (NIH, CDC, United States Food and Drug Administration, and HHS). While at Merck, he worked closely with both Merck Research
Laboratories and the Merck Vaccine Division to forecast the timely transfer of technology for new and improved products from the
research laboratories through the manufacturing area and into the marketing division for sales introductions. He has served as
a biological consultant to the World Health Organization, NIH and The Bill & Melinda Gates Foundation. Dr. Elliott holds a
Ph.D. in Virology from Purdue University, and an M.S. in Microbiology and a B.A. in Biology from North Texas State University.
Dr. Elliot’s extensive experience and expertise with the manufacture of vaccines and therapeutics
is particularly relevant to our business and our efforts to manufacture such products which in a key component of our business.
EXECUTIVE
COMPENSATION
Summary Compensation Table
The table below summarizes the total compensation
paid or earned by our principal executive officer, principal financial officer and our two other most highly compensated executive
officers who were serving as executive officers at June 30, 2014, the end of our last completed fiscal year. We refer to the executive
officers identified in this table as our “named executive officers”.
iBio
Inc.
Summary
Compensation Table
Name and Principal Position | |
Fiscal Year | |
Salary | | |
Bonus | | |
Option Awards | | |
Total | |
Robert B. Kay | |
2014 | |
$ | 300,000 | | |
$ | 0 | | |
$ | 132,281 | | |
$ | 512,311 | |
Executive Chairman | |
2013 | |
| 300,000 | | |
| 0 | | |
| 289,288 | | |
| 589,288 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Scott Kain | |
2014 | |
| 125,000 | (1) | |
| 0 | | |
| 0 | | |
| 125,000 | |
Chief Financial Officer | |
2013 | |
| 67,500 | | |
| 0 | | |
| 58,006 | | |
| 125,506 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Mark Giannone | |
2014 | |
| 22,000 | (2) | |
| 0 | | |
| 51,155 | | |
| 73,155 | |
Chief Financial Officer | |
2013 | |
| 0 | | |
| 0 | | |
| 0 | | |
| - | |
| |
| |
| | | |
| | | |
| | | |
| | |
Robert Erwin | |
2014 | |
| 230,000 | | |
| 0 | | |
| 132,281 | | |
| 362,281 | |
President | |
2013 | |
| 230,000 | | |
| 0 | | |
| 289,288 | | |
| 519,288 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Terence E. Ryan, Ph.D. | |
2014 | |
| 200,000 | | |
| 0 | | |
| 0 | | |
| 200,000 | |
Chief Scientific Officer | |
2013 | |
| 200,000 | | |
| 0 | | |
| 0 | | |
| 200,000 | |
|
(1) |
Mr. Kain’s employment ended November 30, 2013. |
|
(2) |
Mr. Giannone’s employment commenced December 5, 2013 |
Outstanding Equity Awards at Fiscal Year-End
The following table shows information regarding unexercised
stock options held by our named executive officers as of June 30, 2014.
Name | |
Unexercised Options | | |
Exercise Price | | |
Expiration Date | | |
Market Value | |
Robert Kay (2) | |
| 250,000 | | |
$ | 0.20 | | |
| 2 | /13/19 | |
$ | 55,000 | |
Robert Kay (2) | |
| 250,000 | | |
$ | 0.66 | | |
| 8 | /10/19 | |
$ | - | |
Robert Kay (3) | |
| 300,000 | | |
$ | 1.73 | | |
| 8 | /16/20 | |
$ | - | |
Robert Kay (4) | |
| 500,000 | | |
$ | 3.07 | | |
| 12 | /30/20 | |
$ | - | |
Robert Kay (2) | |
| 500,000 | | |
$ | 3.07 | | |
| 12 | /30/20 | |
$ | - | |
Robert Kay (2) | |
| 300,000 | | |
$ | 1.96 | | |
| 10 | /21/21 | |
$ | - | |
Robert Kay (2) | |
| 300,000 | | |
$ | 1.10 | | |
| 7 | /24/22 | |
$ | - | |
Robert Kay (2) | |
| 300,000 | | |
$ | 0.50 | | |
| 7 | /16/23 | |
$ | - | |
Robert Erwin (2) | |
| 250,000 | | |
$ | 0.20 | | |
| 2 | /13/19 | |
$ | 55,000 | |
Robert Erwin (2) | |
| 250,000 | | |
$ | 0.66 | | |
| 8 | /10/19 | |
$ | - | |
Robert Erwin (2) | |
| 300,000 | | |
$ | 1.73 | | |
| 8 | /16/20 | |
$ | - | |
Robert Erwin (2) | |
| 300,000 | | |
$ | 1.96 | | |
| 10 | /21/21 | |
$ | - | |
Robert Erwin (2) | |
| 300,000 | | |
$ | 1.10 | | |
| 7 | /24/22 | |
$ | - | |
Robert Erwin (2) | |
| 300,000 | | |
$ | 0.50 | | |
| 7 | /16/23 | |
$ | - | |
Terence Ryan (6) | |
| 100,000 | | |
$ | 1.38 | | |
| 7 | /14/20 | |
$ | - | |
Terence Ryan (8) | |
| 100,000 | | |
$ | 1.96 | | |
| 10 | /21/21 | |
$ | - | |
Mark Giannone (7) | |
| 100,000 | | |
$ | 0.58 | | |
| 1 | /24/24 | |
| | |
|
(1) |
The market value for each award is based upon the closing stock price of $0.42 per share of common stock on June 30, 2014, less the exercise price of the option. |
| (2) | Options vest in five equal annual installments on the
anniversary date of grant. |
| (3) | One fifth vest on grant date and one fifth on each subsequent
anniversary date of grant. |
| (4) | Options vested on July 1, 2011. |
| (5) | Options vested on July 1, 2012. |
| (6) | Options vest in two equal annual installments on the
anniversary date of grant. |
| (7) | Options vest in three equal annual installments on the
anniversary date of grant. |
Employment Agreements
As of June 30, 2014, we did not have any employment contracts
or other similar agreements or arrangements with any of our named executive officers.
Equity Incentive Plan
On August 12, 2008, the Company
adopted the iBioPharma 2008 Omnibus Equity Incentive Plan (the “Plan”) for employees, officers, directors and
external service providers. In December 2013 our stockholders approved an amendment to the Plan to increase the number of
shares of our common stock authorized for issuance thereunder from 10 million shares to 15 million shares. Under the
provisions of the Plan, the Company may grant options to purchase stock and/or make awards of restricted stock up to an
aggregate amount of 15 million shares. Stock options granted under the Plan may be either incentive stock options (as defined
by Section 422 of the internal Revenue Code of 1986, as amended) or non-qualified stock options at the discretion of the
board of directors. Vesting of awards occurs ratably on the anniversary of the grant date over the service period as
determined at the time of grant.
DIRECTOR
COMPENSATION
Compensation for our non-employee directors
has historically consisted of a grant of stock options vesting over a three-year period and additional cash compensation. We do
not have a fixed policy with respect to this compensation, but the compensation is generally equal for each non-employee director
except in cases where a director assumes additional responsibilities above and beyond standard board service. Directors who are
also our employees receive no additional compensation for their services as directors.
Director Compensation Table
The following table sets forth summary information concerning
the total compensation paid to our non-employee directors for services to the Company during the fiscal year ended June 30, 2014:
Director Compensation | |
Fees Earned or Paid in Cash | | |
Option Awards | | |
Total | |
General James T. Hill | |
$ | 25,000 | | |
$ | 26,456 | | |
$ | 51,456 | |
Glenn Chang | |
| 10,000 | | |
| 26,456 | | |
| 36,456 | |
John D. McKey | |
| 10,000 | | |
| 26,456 | | |
| 36,456 | |
Philip K. Russell | |
| 10,000 | | |
| 26,456 | | |
| 36,456 | |
Arthur Elliot | |
| 10,000 | | |
| 26,456 | | |
| 36,456 | |
Seymour Flug | |
| 10,000 | | |
| 26,456 | | |
| 36,456 | |
| |
| | | |
| | | |
| | |
| |
| 75,000 | | |
| 158,736 | | |
| 233,736 | |
|
(2) |
The aggregate number of stock options outstanding for each non-employee director was as follows: Gen. Hill 330,000, Mr. Chang 330,000, Mr. McKey 430,000, Dr. Russell 240,000, Dr. Elliott 240,000, and Mr. Flug 120,000. |
CORPORATE
GOVERNANCE
Board Committees
Our board of directors has the authority to appoint committees
to perform certain management and administrative functions. Our board of directors has constituted audit, compensation and nominating
committees.
Nominating Committee and Nomination Process
The Nominating Committee was formed to
address general governance and policy oversight; succession planning; to identify qualified individuals to become prospective board
members and make recommendations regarding nominations for our board of directors; to advise the board with respect to appropriate
composition of board committees; to advise the board about and develop and recommend to the board appropriate corporate governance
documents and assist the board in implementing guidelines; to oversee the annual evaluation of the board and our chief executive
officer, and to perform such other functions as the board may assign to the committee from time to time. The Nominating Committee
has a charter which is available on our website at www.ibioinc.com. The Nominating Committee consists of three independent directors:
Arthur Y. Elliott, Ph.D., (Nominating Committee Chairman), Glenn Chang and General James T. Hill.
Our directors take a critical role in guiding
our strategic direction and oversee the management of our company. Board candidates are considered based upon various criteria,
such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for
the long-term interests of our stockholders and personal integrity and judgment. In addition, directors must have time available
to devote to board activities and to enhance their knowledge of the life sciences industry. Accordingly, we seek to attract and
retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities.
Our board of directors believes given the
diverse skills and experience required to grow our company that the input of all members of the Nominating Committee is important
for considering the qualifications of individuals to serve as directors but does not have a diversity policy. Further, the Nominating
Committee believes that the minimum qualifications for serving as our director are that a nominee demonstrate, by significant accomplishment
in his or her field, an ability to make a meaningful contribution to the board’s oversight of our business and affairs of
and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities.
Whenever a new seat or a vacated seat on the board is being filled, candidates that appear to best fit the needs of the board and
our company are identified and unless such individuals are well known to the board, they are interviewed and further evaluated
by the Nominating Committee. Candidates selected by the Nominating Committee are then recommended to the full board for their nomination
to stockholders. The Nominating Committee recommends a slate of directors for election at the annual meeting. In accordance with
NYSE MKT LLC rules, the slate of nominees is approved by a majority of the independent directors.
In carrying out its responsibilities, our
board will consider candidates suggested by stockholders. If a stockholder wishes to formally place a candidate’s name in
nomination, however, he or she must do so in accordance with the provisions of our First Amended and Restated Bylaws. Suggestions
for candidates to be evaluated by the Nominating Committee must be sent to Secretary, iBio, Inc. 9 Innovation Way, Suite 100, Newark,
DE 19711.
Audit Committee
The Audit Committee of the board of directors
makes recommendations regarding the retention of the independent registered public accounting firm, reviews the scope of the annual
audit undertaken by our independent registered public accounting firm and the progress and results of their work, reviews our financial
statements, and oversees the internal controls over financial reporting and corporate programs to ensure compliance with applicable
laws and regulations. The Audit Committee reviews all services performed for us by the independent registered public accounting
firm and determines whether they are compatible with maintaining the registered public accounting firm's independence. The Audit
Committee has a charter, which is reviewed annually and as may be required due to changes in industry accounting practices or the
promulgation of new rules or guidance documents. The Audit Committee charter is available on our website at www.ibioinc.com. The
Audit Committee consists of two independent directors as determined by NYSE MKT LLC listing standards: Glenn Chang (Audit Committee
Chairman) and Seymour Flug. Mr. Chang and Mr. Flug are each qualified as an Audit Committee Financial Expert as defined in Regulation
S-K Item 407(d)(5)(ii).
Compensation Committee
The Compensation Committee of the Board
of Directors reviews and approves executive compensation policies and practices, reviews salaries and bonuses for our senior executive
officers, administers our equity incentive plan and other benefit plans, and considers other matters as may, from time to time,
be referred to them by our board of directors. The Compensation Committee has a charter which is available on our website at www.ibioinc.com.
The members of the Compensation Committee are General James T. Hill (Compensation Committee Chairman), Arthur Y. Elliott, Ph.D.
and Philip K. Russell, M.D.
Board Leadership Structure and Role in Risk Oversight
Our chief executive officer also serves
as the executive chairman of our board of directors. We do not have a lead independent director. Our executive chairman, when present,
presides over all meetings of our board. We believe this leadership structure is appropriate for our Company at this time because
(1) of our size, (2) of the size of our bard, (3) our chief executive officer is responsible for our day-to-day operation and implementing
our strategy, and (4) discussion of developments in our business and financial condition and results of operations are important
parts of the discussion at meetings of our board of directors and it makes sense for our chief executive officer to chair those
discussions.
Our board of directors oversees our risk
management. This oversight is administered primarily through the following:
| · | Our board’s review and approval of our business strategy, including the projected opportunities
and challenges facing our business; |
| · | At least quarterly review of our business developments and financial results; |
| · | Our Audit Committee’s oversight of our internal controls over financial reporting and its
discussions with management and the independent registered public accountants regarding the quality and adequacy of our internal
controls and financial reporting; and |
| · | Our board’s review and recommendations regarding our executive officer compensation and its
relationship to our business objectives and goals. |
Meetings of the Board of Directors and Committees
During the fiscal year ended June
30, 2014, the board of directors held three meetings in person or by telephone and acted by unanimous written consent on four
occasions and the Audit Committee held four meetings in person or by telephone. No meetings in person or by telephone were
held and no actions were taken by either the Nominating Committee or Compensation Committee as matters addressable by such
committees were considered and approved by the full board. Between meetings, members of the board of the directors are
provided with information regarding our operations and are consulted on an informal basis with respect to pending business.
Each director attended at least 75% of the aggregate of the total number of meetings of the board and the total number of
meetings of the committees on which such director serves.
Although we do not have a policy with regard
to board members’ attendance at our annual meetings of stockholders, all of the directors are encouraged to attend such meetings.
Stockholder Communications with the Board of Directors
Interested parties may communicate with
the board of directors or specific members of the board of directors, including the independent directors and the members of the
Audit Committee, by submitting correspondence addressed to the Board of Directors of iBio, Inc. c/o any specified individual director
or directors at 9 Innovation Way, Suite 100, Newark, Delaware 19711. Any such correspondence will be forwarded to the indicated
directors.
Code of Ethics
We have adopted a written
code of ethics within the meaning of Item 406 of SEC Regulation S-K, which applies to all of our employees, including our principal
executive officer and our chief financial officer, a copy of which can be found on our website at www.ibioinc.com. If we make any
waivers or substantive amendments to the code of ethics that are applicable to our principal executive officer or our chief financial
officer, we will disclose the nature of such waiver or amendment in a Current Report on Form 8-K in a timely manner. No waivers
from any provision of our policy have been granted.
Available information about iBio
Previously filed SEC current reports, quarterly
reports, annual reports, and reports under Section 16(a) of the Securities Exchange Act of 1934 are available on our website at
www.ibioinc.com and in print for any stockholder upon written request to our Secretary.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is traded on the NYSE MKT under the trading
symbol “IBIO.”
The following table sets forth the high
and low sale prices for our common stock during the years ended June 30, 2014 and 2013 as reported by the NYSE MKT. The quotations
shown represent inter-dealer prices without adjustment for retail markups, markdowns or commissions, and may not necessarily reflect
actual transactions. As of October 17, 2014, the closing price of our Common Stock was $3.21 as reported
on the NYSE MKT.
| |
High | | |
Low | |
Year ended June 30, 2014: | |
| | |
| |
First Quarter | |
$ | 0.62 | | |
$ | 0.42 | |
Second Quarter | |
$ | 0.45 | | |
$ | 0.29 | |
Third Quarter | |
$ | 0.68 | | |
$ | 0.35 | |
Fourth Quarter | |
$ | 0.52 | | |
$ | 0.36 | |
| |
| | | |
| | |
Year ended June 30, 2013: | |
| | | |
| | |
First Quarter | |
$ | 1.46 | | |
$ | 0.71 | |
Second Quarter | |
$ | 1.15 | | |
$ | 0.62 | |
Third Quarter | |
$ | 0.87 | | |
$ | 0.51 | |
Fourth Quarter | |
$ | 0.64 | | |
$ | 0.38 | |
Holders
As of October 1, 2014, there were 81 holders of
record of our common stock.
Dividends
We have never declared or paid any cash dividends on our common
stock.
Equity Compensation Plans
The following table provides information regarding the status
of our existing equity compensation plans at June 30, 2014:
| |
Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options | | |
Weighted Average Exercise Price of Outstanding Options and Warrants | | |
Number of Options Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the previous columns) | |
Equity compensation plans approved by stockholders | |
| 8,483,334 | | |
$ | 1.25 | | |
| 6,516,666 | |
Equity compensation plans not approved by stockholders | |
| — | | |
| — | | |
| — | |
Total | |
| 8,483,334 | | |
$ | 1.25 | | |
| 6,516,666 | |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information
with respect to the beneficial ownership of our outstanding common stock as of October 1, 2014:
| · | each person who is known by us to be the beneficial owner of 5% or more of our outstanding common
stock; |
| · | each of our directors including our chief executive officer; |
| · | each of our other named executive officers; and |
| · | all of our current executive officers and directors as a group. |
Except as otherwise noted in the footnotes
below, to our knowledge, each of the persons named in this table has sole voting and investment power with respect to the securities
indicated as beneficially owned.
| |
Number of | |
Percent of | |
| |
Shares | |
Shares | |
Name and Address of Beneficial Owner(1) | |
Beneficially | |
Beneficially | |
5% Stockholders | |
Owned (2) | |
Owned(2) | |
| |
| |
| |
Eastern Capital Limited | |
| 23,744,000 | (3) |
| 34.3 | % |
E. Gerald Kay | |
| 5,945,695 | (4) |
| 8.8 | % |
Carl DeSantis | |
| 5,751,143 | (5) |
| 8.5 | % |
| |
| | |
| | |
Directors | |
| | |
| | |
| |
| | |
| | |
Robert B. Kay | |
| 3,190,962 | (6) |
| 4.6 | % |
Glenn Chang | |
| 282,152 | (7) |
| 0.4 | % |
Arthur Y. Elliott, Ph.D. | |
| 180,002 | (8) |
| 0.3 | % |
John McKey, Jr. | |
| 856,560 | (9) |
| 1.3 | % |
Seymour Flug | |
| 40,002 | |
| 0.1 | % |
General James T. Hill | |
| 285,001 | (10) |
| 0.4 | % |
Philip K. Russell, M.D. | |
| 180,002 | (10) |
| 0.3 | % |
| |
| | |
| | |
Other Executive Officers | |
| | |
| | |
| |
| | |
| | |
Robert L. Erwin | |
| 1,160,000 | (10) |
| 1.7 | % |
Terence E. Ryan, Ph.D. | |
| 200,000 | |
| 0.3 | % |
Mark Giannone | |
| 22,834 | |
| 0.0 | % |
| |
| | |
| | |
All current directors and executive officers as a group (10 persons) | |
| 6,397,515 | (11) |
| 8.8 | % |
* Represents less than 1% of outstanding shares.
| (1) | The address of Eastern Capital Limited (“Eastern”)
is Box 31363, Grand Cayman, E9 KY1 1206. The address of E. Gerald Kay is c/o Integrated BioPharma, Inc., 225 Long Avenue, Box
278, Hillside, New Jersey 07205. The address of Carl DeSantis is c/o CDS International Holdings, Inc., 3299 NW 2nd Avenue, Boca
Raton, FL 33431. The address of each of our directors and executive officers is c/o iBio, Inc., 9 Innovation Way, Suite 100, Newark,
Delaware 19711. |
|
(2) |
Beneficial ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to shares of our common stock. On September 29, 2014, there were 67,460,267 shares
of common stock outstanding. Shares of common stock issuable under warrants or stock options that are exercisable within
60 days after September 29, 2014 are deemed outstanding and are included for purposes of computing the number of shares
owned and percentage ownership of the person holding the warrants or option but are not deemed outstanding for computing
the percentage ownership of any other person. |
|
(3) |
Consists of 21,960,000 shares of common stock and warrants to purchase 1,784,000 shares of common stock held by Eastern. This information is based solely on information set forth in a Schedule 13D/A Amendment No. 3 filed with the SEC on October 18, 2013 by Eastern, Portfolio Services Ltd. and Kenneth B. Dart. |
|
(4) |
Consists of 5,945,695 shares of common stock. This information is based solely on information set for forth in a Schedule 13D filed with the SEC on June 13, 2013 by E. Gerald Kay and EGK, LLC. The number of shares of common stock beneficially owned by these entities may have changed since the filing of the Schedule 13D. |
|
(5) |
Consists of 5,751,143 shares of common stock. This information is based solely on information set forth in a Schedule 13D/A Amendment No. 1 filed with the SEC on September 29, 2014 by Carl DeSantis, the DeSantis Revocable Trust, CD Financial LLC. |
|
(6) |
Includes (i) 819,629 shares of common stock held by EVJ LLC, of which Mr. Kay is the manager, and (ii) 2,160,000 shares of common stock underlying stock options held by Mr. Kay. |
|
(7) |
Includes 270,002 shares of common stock underlying vested stock options. |
|
(8) |
All shares listed are shares of common stock underlying vested stock options |
|
(9) |
Includes 370,002 shares of common stock underlying vested stock options |
|
(10) |
Includes 270,001 shares of common stock underlying vested stock options. |
| (11) | Includes 4,830,011 shares of common stock underlying
vested stock options. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Director Independence
Our board of directors has determined that
Messrs. Chang, Flug and McKey, Drs. Elliott and Russell and General Hill are each “independent directors” as such term
is defined in Section 803 of the New York Stock Exchange MKT Company Guide.
Policies and Procedures for Related
Person Transactions
The policy our board of directors is to
review with management and our independent registered public accounting firm any related party transactions brought to the board’s
attention which could reasonably be expected to have a material impact on our financial statements. The Company’s practice
is for management to present to the board of directors each proposed related party transaction, including all relevant facts and
circumstances relating thereto, and to update the board of directors as to any material changes to any approved related party transaction.
In connection with this requirement, each of the transactions or relationships disclosed below were disclosed to and approved by
our board of directors. In addition, transactions involving our directors and their affiliated entities were disclosed and reviewed
by our board of directors in its assessment of our directors’ independence requirements.
Research and Development Services Vendor
In January 2012, the Company entered into
an agreement with a vendor in which iBio’s President is a minority stockholder. The vendor performs laboratory feasibility
analyses of gene expression, protein purification and preparation of research samples. The transaction has been conducted on an
arm’s length basis at market terms. The accounts payable balance includes amounts due this vendor of approximately $38,000
and $93,000 at June 30, 2014 and 2013, respectively. Research and development expenses related to this vendor were approximately
$527,000 and $424,000 for the years ended June 30, 2014 and 2013, respectively.
Consulting Services by Board Member
In February 2012, the Company entered into
a business development consulting agreement with a member of the Board of Directors. The six month agreement included monthly payments
of $15,000 and 60,000 stock options which vested in six equal monthly installments of 10,000 options per month. The options have
an exercise price of $0.93 per share and will expire ten years from the date of grant. The consulting expense for the years ended
June 30, 2014 and 2013 was $0 and $15,000, respectively, and is included in general and administrative.
Consulting Services by Fraunhofer Employee
From July 1, 2011 through February 29,
2012, the Company employed as our Chief Scientific Officer an executive of Fraunhofer Center for Molecular Biology (“Fraunhofer”).
As of March 1, 2012, the Fraunhofer executive ceased to be an employee of the Company and became a consultant pursuant to an agreement
with the Company, with the title and role of Chief Scientific Advisor to the Company. The agreement is extant but is terminable
at will by either party and provides that during its term stock options previously granted when the executive was an employee
will continue to vest. During this time, we have been a party to a number of agreements with Fraunhofer including:
| · | a Technology Transfer Agreement initially effective January 2004, as subsequently amended; |
| · | an agreement by and among us, Fraunhofer and FioCruz/BioManguinhos entered into in January 2011; |
| · | a research services agreement entered into by us and Fraunhofer in December 2010; |
| · | a research services agreement entered into by us and Fraunhofer in March 2011; and |
| · | a patent expense sharing agreement entered into by us and Fraunhofer in February 2010. |
More specifically, during the fiscal year
ended June 30, 2012:
| · | The Technology Transfer Agreement, provided, among other things, that the Company would remit to
Fraunhofer (1) semi-annual payments of $1 million for research and development services rendered by Fraunhofer related to the commercialization
of our iBioLaunch and iBioModulator technology platforms and (2) a minimum annual royalty payment in the amount $200,000. Interest
at the rate of prime plus 2% on certain unpaid balances was charged by Fraunhofer. The interest expense for the year ended June
30, 2012 was approximately $0.1 million. The total expense recorded for the year ended June 30, 2012 was approximately $2.3 million. |
| · | Pursuant to the agreement among us, Fraunhofer and FioCruz, we engaged Fraunhofer as a contractor
to fulfill our obligation to FioCruz to provide to it certain research and development services. The services were billed to FioCruz
at Fraunhofer’s cost and we recognized revenue from FioCruz for the provision of the research services to it and an offsetting
equivalent expense for amounts due from us to Fraunhofer for the services rendered. The revenue and expense for the year ended
June 30, 2012 was approximately $1.3 million. |
| · | We incurred expenses for the year ended June 30, 2012 in the approximate amount of $0.6 million
pursuant to the research services agreement we entered into with Fraunhofer in December 2010 that allowed us to evaluate gene expression
and protein production using the iBioLaunch platform. |
| · | We incurred expenses for the year ended June 30, 2012 in the approximate amount of $0.3 million
pursuant to the research services agreement we entered into with Fraunhofer in March 2011 that allowed us to evaluate the mechanism
of immune-potentiating activity of lichenase, a key element of our iBioModulator platform. |
| · | Pursuant to the patent expense sharing agreement, Fraunhofer was required to reimburse the Company
for certain costs incurred for patent protection of our iBioLaunch and iBioModulator technology. The type and amount of costs to
be reimbursed was an area of dispute between the parties. For the year ended June 30, 2012, the Company recorded a vendor concession
of $0.1 million in general and administrative expenses to reduce the receivable to an agreed-upon settlement amount of approximately
$0.2 million. |
We remain a party to a number of agreements with Fraunhofer and in September 2013 entered into an agreement
with Fraunhofer that materially modified certain of the terms of the Technology Transfer Agreement and patent expense sharing agreement
and impacted both historical and future amounts due from us to Fraunhofer and from Fraunhofer to us.
Limitation of Liability of Officers
and Directors and Indemnification
Our certificate of incorporation, as amended,
provides for indemnification of our officers and directors to the extent permitted by Delaware law, which generally permits indemnification
for actions taken by officers or directors as our representatives if the officer or director acted in good faith and in a manner
he or she reasonably believed to be in the best interest of the corporation.
As permitted under Delaware law, the By-laws
contain a provision indemnifying directors against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with an action, suit or proceeding if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best interests of our Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful.
Historical Relationship with Integrated
BioPharma, Inc.
We were a subsidiary of Integrated BioPharma,
Inc. (“Integrated BioPharma”) from February 21, 2003 until August 18, 2008. On that date, Integrated BioPharma spun
off iBio in a transaction that was intended to be a tax free distribution to Integrated BioPharma and its U.S. stockholders. As
part of that transaction, we entered into a number of agreements with Integrated BioPharma including an indemnification and insurance
matters agreement and a tax responsibility allocation agreement. Messrs. E. Gerald Kay and Carl DeSantis, affiliates of Integrated
BioPharma, were in 2008 and continue to remain beneficial holders of more than 5% of our common stock. The agreements are described
below.
Indemnification. In general, under
the indemnification and insurance matters agreement, we agreed to indemnify Integrated BioPharma, its affiliates and each of its
and their respective directors, officers, employees, agents and representatives from all liabilities that arise from:
| · | any breach by us of the separation and distribution agreement or any ancillary agreement; |
| · | any of our liabilities reflected on our consolidated balance sheets included in the information
statement relating to the spin-off; |
| · | our assets or businesses; |
| · | the management or conduct of our assets or businesses; |
| · | the liabilities allocated to or assumed by us under the separation and distribution agreement,
the indemnification and insurance matters agreement or any of the other ancillary agreements; |
| · | various on-going litigation matters in which we are named defendant, including any new claims asserted
in connection with those litigations, and any other past or future actions or claims based on similar claims, facts, circumstances
or events, whether involving the same parties or similar parties, subject to specific exceptions; |
| · | claims that are based on any violations or alleged violations of U.S. or foreign securities laws
in connection with transactions arising after the distribution relating to our securities and the disclosure of financial and other
information and data by us or the disclosure by Integrated BioPharma as part of the distribution of our financial information or
our confidential information; or |
| · | any actions or claims based on violations or alleged violations of securities or other laws by
us or our directors, officers, employees, agents or representatives, or breaches or alleged breaches of fiduciary duty by our board
of directors, any committee of our board or any of its members, or any of our officers or employees. |
Integrated BioPharma agreed to indemnify
us and our affiliates and our directors, officers, employees, agents and representatives from all liabilities that arise from:
| · | any breach by Integrated BioPharma of the separation and distribution agreement or any ancillary
agreement; |
| · | any liabilities allocated to or to be retained or assumed by Integrated BioPharma under the separation
and distribution agreement, the indemnification and insurance matters agreement or any other ancillary agreement; |
| · | liabilities incurred by Integrated BioPharma in connection with the management or conduct of Integrated
BioPharma’s businesses; and |
| · | various ongoing litigation matters to which we are not a party. |
Integrated BioPharma is not obligated to
indemnify us against any liability for which we are also obligated to indemnify Integrated BioPharma. Recoveries by Integrated
BioPharma under insurance policies will reduce the amount of indemnification due from us to Integrated BioPharma only if the recoveries
are under insurance policies Integrated BioPharma maintains for our benefit. Recoveries by us will in all cases reduce the amount
of any indemnification due from Integrated BioPharma to us.
Under the indemnification and insurance
matters agreement, a party has the right to control the defense of third-party claims for which it is obligated to provide indemnification,
except that Integrated BioPharma has the right to control the defense of any third-party claim or series of related third- party
claims in which it is named as a party whether or not it is obligated to provide indemnification in connection with the claim and
any third-party claim for which Integrated BioPharma and we may both be obligated to provide indemnification. We may not assume
the control of the defense of any claim unless we acknowledge that if the claim is adversely determined, we will indemnify Integrated
BioPharma in respect of all liabilities relating to that claim. The indemnification and insurance matters agreement does not apply
to taxes covered by the tax responsibility allocation agreement.
Offset. Integrated BioPharma is
permitted to reduce amounts it owes us under any of our agreements with Integrated BioPharma, by amounts we may owe to Integrated
BioPharma under those agreements.
Assignment. We may not assign or
transfer any part of the indemnification and insurance agreement without Integrated BioPharma’s prior written consent. Nothing
contained in the agreement restricts the transfer of the agreement by Integrated BioPharma.
Tax Responsibility Allocation Agreement
Tax Responsibility Allocation Agreement.
In order to allocate our responsibilities for taxes and certain other tax matters, we and Integrated BioPharma entered into a tax
responsibility allocation agreement prior to the date of the distribution. Under the terms of the agreement, with respect to consolidated
federal income taxes, and consolidated, combined and unitary state income taxes, Integrated BioPharma will be responsible for,
and will indemnify and hold us harmless from, any liability for income taxes with respect to taxable periods or portions of periods
ending prior to the date of distribution to the extent these amounts exceed the amounts we have paid to Integrated BioPharma prior
to the distribution or in connection with the filing of relevant tax returns. Integrated BioPharma is also responsible for, and
will indemnify and hold us harmless from, any liability for income taxes of Integrated BioPharma or any member of the Integrated
BioPharma group (other than us) by reason of our being severally liable for those taxes under U.S. Treasury regulations or analogous
state or local provisions. Under the terms of the agreement, with respect to consolidated federal income taxes, and consolidated,
combined and unitary state income taxes, we are responsible for, and will indemnify and hold Integrated BioPharma harmless from,
any liability for our income taxes for all taxable periods, whether before or after the distribution date. With respect to separate
state income taxes, we are also responsible for, and will indemnify and hold Integrated BioPharma harmless from, any liability
for income taxes with respect to taxable periods or portions of periods beginning on or after the distribution date. We are also
responsible for, and will indemnify and hold Integrated BioPharma harmless from, any liability for our non-income taxes and our
breach of any obligation or covenant under the terms of the tax responsibility allocation agreement, and in certain other circumstances
as provided therein. In addition to the allocation of liability for our taxes, the terms of the agreement also provide for other
tax matters, including tax refunds, returns and audits.
DESCRIPTION
OF SECURITIES
Capital Stock
We are authorized to issue
175,000,000 shares of common stock, par value $0.001 per share, following an amendment to our Certificate of Incorporation
approved by our stockholders on December 17, 2013, of which 67,460,267 shares were issued and outstanding as of October
1, 2014, and 1,000,000 shares of preferred stock, no par value, of which no shares were issued and outstanding as of
October 1, 2014.
Provisions of our certificate of incorporation,
bylaws and provisions of applicable Delaware law may discourage, delay or prevent a merger or other change in control that a stockholder
may consider favorable. Pursuant to our certificate of incorporation, our Board of Directors may issue additional shares of common
or preferred stock. Any additional issuance of common stock could have the effect of impeding or discouraging the acquisition of
control of us by means of a merger, tender offer, proxy contest or otherwise, including a transaction in which our stockholders
would receive a premium over the market price for their shares, and thereby protect the continuity of our management. Specifically,
if in the due exercise of its fiduciary obligations, the Board of Directors were to determine that a takeover proposal was not
in our best interest, shares could be issued by our Board of Directors without stockholder approval in one or more transactions
that might prevent or render more difficult or costly the completion of the takeover by:
| • | Diluting the voting or other rights of the proposed acquirer
or insurgent stockholder group, |
| • | Putting a substantial voting block in institutional or
other hands that might undertake to support the incumbent Board of Directors, or |
| • | Effecting an acquisition that might complicate or preclude
the takeover. |
Our certificate of incorporation also allows
our Board of Directors to fix the number of directors in the by-laws. Cumulative voting in the election of directors is specifically
denied in our certificate of incorporation. The effect of these provisions may be to delay or prevent a tender offer or takeover
attempt that a stockholder may determine to be in his, her or its best interest, including attempts that might result in a premium
over the market price for the shares held by the stockholders.
We also are subject to Section 203 of the
Delaware General Corporation Law. In general, these provisions prohibit a Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder,
unless the transaction in which the person became an interested stockholder is approved in a manner presented in Section 203 of
the Delaware General Corporation Law. Generally, a “business combination” is defined to include mergers, asset sales
and other transactions resulting in financial benefit to a stockholder. In general, an “interested stockholder” is
a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of a corporation’s
voting stock. This statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire us.
Common Stock
Holders of common stock are entitled to
one vote per share on all matters to be voted upon by the stockholders and are not entitled to cumulative voting for the election
of directors. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time
by the Board of Directors out of funds legally available therefor subject to the rights of preferred stockholders. We do not intend
to pay any cash dividends to the holders of common stock and anticipate reinvesting our earnings. In the event of liquidation,
dissolution or winding up of our company, the holders of common stock are entitled to share ratably in all assets remaining after
payment of liabilities and the preferences of preferred stockholders. Shares of common stock have no preemptive, conversion or
other subscription rights. There are no redemption or sinking fund provisions applicable to common stock.
Preferred Stock
We are authorized to issue 1,000,000 shares
of preferred stock, with no par value, and the Board of Directors is authorized to create one or more series of preferred stock,
and to designate the rights, privileges, restrictions, preferences and limitations of any given series of preferred stock. Accordingly,
the Board of Directors may, without stockholder approval, issue shares of preferred stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other rights of the holders of common stock.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Certificate of Incorporation will provide
for indemnification of our officers and directors to the extent permitted by Delaware law, which generally permits indemnification
for actions taken by officers or directors as our representatives if the officer or director acted in good faith and in a manner
he or she reasonably believed to be in the best interest of the corporation.
As permitted under Delaware law, our By-laws
contain a provision indemnifying directors against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with an action, suit or proceeding if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best interests of our company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful.
The separation and distribution agreement that we have entered
into with Integrated BioPharma provides for indemnification by us of Integrated BioPharma and its directors, officers and employees
for some liabilities, including liabilities under the Securities Act and the Securities Exchange Act of 1934 in connection with
the distribution, and a mutual indemnification of each other for product liability claims arising from their respective businesses,
and also requires that we indemnify Integrated BioPharma for various liabilities of iBio, and for any tax that may be imposed with
respect to the distribution and which result from our actions or omissions in that regard.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable.
PLAN OF
DISTRIBUTION
The common stock offered
by this prospectus is being offered by Aspire Capital, the selling stockholder. The common stock may be sold or distributed from
time to time by the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may
act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. The sale of the common stock offered by this prospectus may be effected in one
or more of the following methods:
| · | ordinary brokers’ transactions; |
| · | transactions involving cross or block trades; |
| · | through brokers, dealers, or underwriters who may act solely as agents; |
| · | “at the market” into an existing market for the common stock; |
| · | in other ways not involving market makers or established business markets, including direct sales
to purchasers or sales effected through agents; |
| · | in privately negotiated transactions; or |
| · | any combination of the foregoing. |
In order to comply with
the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers.
In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state
or an exemption from the registration or qualification requirement is available and complied with.
The selling stockholder
may also sell shares of common stock under Rule 144 promulgated under the Securities Act, if available, rather than under this
prospectus. In addition, the selling stockholder may transfer the shares of common stock by other means not described in this prospectus.
Brokers, dealers, underwriters,
or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts,
or concessions from the selling stockholder and/or purchasers of the common stock for whom the broker-dealers may act as agent.
Aspire Capital has informed us that each such broker-dealer will receive commissions from Aspire Capital which will not exceed
customary brokerage commissions.
Aspire Capital is an
“underwriter” within the meaning of the Securities Act.
Neither we nor Aspire
Capital can presently estimate the amount of compensation that any agent will receive. We know of no existing arrangements between
Aspire Capital, any other shareholder, broker, dealer, underwriter, or agent relating to the sale or distribution of the shares
offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed
that will set forth the names of any agents, underwriters, or dealers and any compensation from the selling stockholder, and any
other required information. Pursuant to a requirement of the Financial Industry Regulatory Authority, or FINRA, the maximum commission
or discount and other compensation to be received by any FINRA member or independent broker-dealer shall not be greater than eight
percent (8%) of the gross proceeds received by us for the sale of any securities being registered pursuant to Rule 415 under the
Securities Act.
We will pay all of the
expenses incident to the registration, offering, and sale of the shares to the public other than commissions or discounts of underwriters,
broker-dealers, or agents. We have agreed to indemnify Aspire Capital and certain other persons against certain liabilities in
connection with the offering of shares of common stock offered hereby, including liabilities arising under the Securities Act or,
if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Aspire Capital has
agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to
us by Aspire Capital specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required
to be paid in respect of such liabilities.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have
been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and
is therefore, unenforceable.
Aspire Capital and its
affiliates have agreed not to engage in any direct or indirect short selling or hedging of our common stock during the term of
the Purchase Agreement.
We have advised Aspire
Capital that while it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation
M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling
stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price
of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares
offered hereby this prospectus.
We may suspend the sale
of shares by Aspire Capital pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus
is required to be supplemented or amended to include additional material information.
This offering will terminate
on the date that all shares offered by this prospectus have been sold by Aspire Capital.
LEGAL MATTERS
The legality of the securities offered hereby
has been passed on for us by Andrew Abramowitz, PLLC, New York, New York.
EXPERTS
The consolidated financial statements of iBio, Inc. and subsidiaries
as of June 30, 2014 and 2013, and for the years then ended, incorporated by reference in the registration statement, of which
this prospectus is a part, have been audited by CohnReznick LLP, an independent registered public accounting firm, as set forth
in their report, which includes an explanatory paragraph related to iBio Inc. and subsidiaries’ ability to continue as a
going concern, in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a Registration
Statement on Form S-1 under the Securities Act covering the sale of the securities offered by this prospectus. This prospectus,
which is a part of the Registration Statement, does not contain all of the information in the Registration Statement and the exhibits
filed with it, portions of which have been omitted as permitted by the SEC rules and regulations. For further information concerning
us and the securities offered by this prospectus, please refer to the Registration Statement and to the exhibits filed therewith.
The Registration Statement, including
all exhibits, and other materials that we filed with the SEC may be inspected without charge at the SEC’s Public Reference
Room at the SEC’s principal office at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. You may obtain information
on the operation of this public reference room by calling 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that file electronically with the SEC and state the
address of that site (http://www.sec.gov). The Registration Statement, including all exhibits and schedules and amendments, has
been filed with the SEC through the Electronic Data Gathering Analysis and Retrieval system and is available to the public from
the SEC’s web site at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate
by reference” information from other documents that we file with it, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference that we filed with the SEC prior to the date of
this prospectus.
We incorporate by reference into this prospectus
and the registration statement of which this prospectus is a part the information or documents listed below that we have filed
with the SEC (Commission File No. 011-35023).
| · | our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 filed on September 29,
2014; and |
| · | our Current Report on Form 8-K filed on August 26, 2014. |
Any statement contained in a document incorporated
or deemed to be incorporated by reference in this prospectus will be deemed modified, superseded or replaced for purposes of this
prospectus to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement.
You may request, orally or in
writing, a copy of any or all of the documents incorporated herein by reference. These documents will be provided to you at
no cost, by contacting: iBio, Inc., Attention: Elizabeth Moyle 9 Innovation Way, Suite 100, Newark, Delaware 19711,
Telephone: (302) 355-2396, E-mail bmoyle@ibioinc.com. In addition, copies of any or all of the documents incorporated herein
by reference may be accessed at our website http://www.ibioinc.com.
PROSPECTUS
IBIO, INC.
23,418,172
Shares of Common Stock
October 20, 2014
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