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Prospectus Supplement		Filed Pursuant to Rule 424(b)(3)
(to Prospectus dated July 13, 2015)		Registration No 333-205483

5,000 Shares

 

Series B Non-Voting Convertible Preferred Stock

 

 

Pursuant to this prospectus supplement and the accompanying prospectus, we are offering an aggregate of 5,000 shares of Series B Non-Voting convertible preferred stock, par value $0.001 per share (which we refer to as the Series B Preferred Stock) to institutional and accredited investors pursuant to a Securities Purchase Agreement, dated May 17, 2018, at a price per share of $10,000 for aggregate gross proceeds of $50.0 million. This offering also includes an aggregate of 27,777,778 shares of our common stock initially issuable upon the conversion of the Series B Preferred Stock. We refer to the shares of Series B Preferred Stock issued hereunder and the shares of common stock issuable upon conversion of the Series B Preferred Stock collectively as the securities.

Shares of our common stock are currently traded on the Nasdaq Capital Market under the symbol “BDSI.” On May 16, 2018, the last reported sale price of our common stock was $1.95 per share. There is no established public trading market for the Series B Preferred Stock and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series B Preferred Stock on any national securities exchange or any trading system. The conversion of the Series B Preferred Stock into shares of common stock will be contingent upon our obtaining certain approvals from our stockholders. For a detailed description of the Series B Preferred Stock, see the section entitled “Description of Series B Preferred Stock” beginning on page S-15.

 

 

Investing in our securities involves a high degree of risk. You should purchase our securities only if you can afford a complete loss of your investment. See “Risk Factors” beginning on page S-6 of this prospectus supplement.

We have retained William Blair & Company, L.L.C. to act as our exclusive placement agent for this offering. We have agreed to pay the placement agent an aggregate cash fee equal to 3% of the gross proceeds of the offering. The placement agent is not required to arrange for the sale of any specific number of securities or dollar amount but will use reasonable best efforts to arrange for the sale of the securities.

We estimate the total expenses of this offering, excluding the placement agent fees, will be approximately $500,000.

It is anticipated that the securities will be delivered against payment thereon on or about May 21, 2018.

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.

Placement Agent

William Blair

The date of this prospectus supplement is May 17, 2018.

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TABLE OF CONTENTS

Prospectus Supplement

 

		Page
About This Prospectus Supplement			S-ii
Prospectus Supplement Summary			S-1
Risk Factors			S-6
Cautionary Note Regarding Forward-Looking Statements			S-9
Use of Proceeds			S-11
Price Range of Common Stock and Dividend Policy			S-12
Dilution			S-13
Capitalization			S-14
Description of Series B Preferred Stock			S-15
Plan of Distribution			S-17
Legal Matters			S-19
Experts			S-19
Where You Can Find More Information			S-19
Incorporation of Certain Information by Reference			S-19

Prospectus

 

		Page
About This Prospectus			-ii-
Cautionary Note Regarding Forward-Looking Statements			-iii-
Prospectus Summary			1
Risk Factors			8
Ratio to Earnings Fixed Changes			8
Use of Proceeds			9
Description of Capital Stock and Securities We May Offer			9
Plan of Distribution			18
Legal Matters			20
Experts			20
Where You Can Find More Information			20
Incorporation of Certain Documents by Reference			20

You should rely only on the information we have provided or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus supplement or the accompanying prospectus.

This prospectus supplement and the accompanying prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.

You should assume that the information contained in this prospectus supplement and the accompanying prospectus is accurate only as of their respective dates and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement or the accompanying prospectus or any sale of securities.

 

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RISK FACTORS

Investing in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider the risks, uncertainties and assumptions under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2017, and in our Quarterly Report for the three month period ended March 31, 2018, which risk factors are incorporated by reference into this prospectus supplement. See “Where You Can Find More Information” for an explanation of how to get a copy of these reports. Please also read carefully the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”

In addition, you are advised to consider the following additional risk factors related specifically to the offering contemplated by this prospectus supplement.

Additional Risks Related to This Offering

Our management will have broad discretion as to the use of the proceeds from this offering, and may not use the proceeds effectively.

Because we have not designated the amount of net proceeds from this offering to be used for any particular purpose, our management will have broad discretion as to the application of the net proceeds from this offering and could use them for purposes other than those contemplated at the time of the offering. Our management may use the net proceeds for corporate purposes that may not improve our financial condition or market value. See “Use of Proceeds”.

There is a material risk that we will be unable to utilize a significant portion of our net operating loss or research tax credit carryforwards or other tax attributes.

At December 31, 2017, we had U.S. federal net operating loss and research and development tax credit carryforwards of approximately $263 million and $11 million, respectively. Such operating losses and tax credits could be used by us to reduce any future taxable income and tax liabilities of ours. These losses and tax credits will expire at various dates between 2024 and 2037. We also had state net operating loss carryforwards as of December 31, 2017 of approximately $297 million. Such operating losses could also be used to reduce any future taxable income and tax liabilities of ours, and these losses and tax credits will expire at various dates between 2024 and 2030.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value)) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change U.S. federal net operating losses and other pre-change tax attributes (such as research and development tax credit carryforwards) to offset its post-change income or taxes may be limited. Our U.S. federal net operating loss carryforwards generated prior to May 2006 are subject to this limitation in an amount equal to approximately $1.5 million on an annual basis.

We have not undertaken a formal study of ownership changes in our company in several years. However, there is a material risk that this offering (due to its size) and/or past or future issuances or sales of our stock (including certain transactions involving our stock that are beyond our control) may cause us to experience one or more ownership changes, thereby limiting our ability to utilize our U.S. federal net operating loss and other tax attributes. Similar provisions of state tax law may also apply to limit our use of state net operation loss carryforwards, as well as other state tax attributes.

In addition, changes in law, including legislation commonly known as the Tax Cuts and Jobs Act of 2017, may further limit our ability to use our net operating loss carryforwards. As a result, if we achieve profitability in the future (of which no assurances can be given), we may be unable to use a material portion of our net operating loss carryforwards and other tax attributes, which would require us to pay federal and state income tax, which in turn would likely adversely affect our future cash flows.

 

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If you purchase the Series B Preferred Stock sold in this offering, assuming it is converted into shares of our common stock, you will experience immediate and substantial dilution in your investment.

The offering price of the Series B Preferred Stock in this offering will be substantially higher than the net tangible book value per share of our common stock upon conversion of the Series B Preferred Stock. Therefore, if you purchase our Series B Preferred Stock in this offering (assuming conversion of the Series B Preferred Stock into common stock), you will incur an immediate dilution in net tangible book value of $1.73 per share, after giving effect to the sale by us of shares of our Series B Preferred Stock (assuming the conversion of 5,000 shares of the Series B Preferred Stock into 27,777,778 shares of our common stock) at the per share purchase price of $10,000, less the placement agent fees and estimated offering expenses payable by us.

We will not apply to list the Series B Preferred Stock offered hereby, and an active trading market for the Series B Preferred Stock is not expected to develop.

We do not intend to apply for listing of the Series B Preferred Stock on any national securities exchange or any trading system and we do not expect a market to develop. Without an active market, the liquidity of and your ability to sell the Series B Convertible Preferred Stock will be significantly limited.

Our Series B Preferred Stock will rank junior to all our liabilities to third-party creditors in the event of a bankruptcy, liquidation or winding up of our assets.

In the event of our bankruptcy, liquidation or winding up, our assets will be available to pay obligations on our Series B Preferred Stock only after all our liabilities have been paid. Our Series B Preferred Stock will effectively rank junior to all existing and future liabilities held by third-party creditors, most notably our current senior lender CRG. The terms of our Series B Preferred Stock do not restrict our ability to raise additional capital in the future through the issuance of debt. In the event of our bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying our liabilities, to pay amounts due on any or all of our Series B Preferred Stock then outstanding.

The shares of Series B Preferred Stock sold in this offering carry no voting rights, meaning that the holders of Series B Preferred Stock will have no rights to vote on matters brought before our common stockholders.

The shares of Series B Preferred Stock being sold in this offering carry no voting rights (other than customary protective provisions relating to changes to the terms of the Series B Preferred Stock, the issuance of securities with rights that are senior to the Series B Preferred Stock, the issuance of dividends, and the redemption of securities). Therefore, you should not invest in the Series B Preferred Stock in the expectation that you will able to vote with our common stockholders on any matter or proposal brought before our common stockholders.

The shares of Series B Preferred Stock sold in this offering carry no mandatory dividend, and we do not intend to pay dividends in the foreseeable future.

The shares of Series B Preferred Stock being sold in this offering carry no mandatory dividend rights, and therefore you should not invest in the Series B Preferred Stock in the expectation that you will ever receive dividends from our company. Moreover, we have never paid cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the operation and growth of our business and currently do not plan to pay any cash dividends in the foreseeable future.

The terms of the offering contemplated hereby require stockholder approval at our 2018 Annual Meeting.

Under applicable Nasdaq Stock Market rules, the terms of this offering require approval of our stockholders, which we will seek at our 2018 Annual Meeting. If such stockholder approval is not obtained, we will be required to continue to seek stockholder approval at successive stockholders’ meetings. Failure to obtain stockholder approval of the transactions contemplated hereby will deny investors

 

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the ability to convert their Series B Preferred Stock into shares of our common stock as well as the contemplated benefits of the securities offered hereby.

We are nearing the limit on our authorized common stock, and in order to accommodate the full conversion of our Series B Preferred Stock into common stock, we will need to amend our certificate of incorporation to increase our authorized shares of common stock. Also, additional authorized shares of our common stock and preferred stock available for issuance may adversely affect the market for our common stock.

As of May 10, 2018, there are 59,288,804 shares of common stock issued and 59,273,313 shares of common stock outstanding and there were 2,709,300 shares issued and 2,093,155 outstanding of Series A Non-Voting Convertible Preferred Stock issued and outstanding. We also have 2,504,206 shares of common stock reserved for future issuance under our equity incentive plan, outstanding equity awards and outstanding warrants. Our certificate of incorporation currently provides for 75,000,000 authorized shares of common stock. As such, we are nearing the limit of our authorized common stock, and given the size of the offering described herein, we will be required to ask our stockholders to approve an amendment to our certificate of incorporation to increase the number of authorized shares of common stock at the 2018 Annual Meeting. Prior to such meeting, or after if such amendment in not approved, holders of our Series B Preferred Stock will be unable to convert such shares into shares of our common stock, and additionally we may be unable to issue common stock for a variety of purposes, including most importantly for financing purposes. This limitation on our ability to issue common stock will impair the holders of Series B Preferred Stock from converting such shares into common stock, and could generally have a material adverse effect on our ability to finance and operate our business.

Moreover, and even if our certificate of incorporation is amended to increase our authorized shares of common stock, in the event that any future financing should be in the form of, be convertible into or exchangeable for, equity securities, and upon the exercise of options and warrants, investors would experience dilution, and sales of common stock by stockholders in the market could lower the price of our common stock and the value of our company.

Finally, in addition to the above referenced authorized shares of common stock (which available authorized may be issued without stockholder approval), we have 5 million shares of authorized preferred stock, of which 2,709,300 shares have been designated as Series A Non-Voting Convertible Preferred Stock and 5,000 will be designated as Series B Preferred Stock. The remaining 2,285,700 shares of preferred stock will remain undesignated shares of preferred stock, the terms of which may be fixed by our board of directors. We have issued preferred stock in the past, and our board of directors has the authority, without stockholder approval, to create and issue one or more additional series of such preferred stock and to determine the voting, dividend and other rights of holders of such preferred stock. The issuance of any of such series of preferred stock may have an adverse effect on the holders of common stock.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement, the accompanying prospectus and the documents we have filed or will file with the SEC that are or will be incorporated by reference into this prospectus supplement and the accompanying prospectus contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (which we refer to as the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (which we refer to as the Exchange Act), that involve significant risks and uncertainties. Any statements contained, or incorporated by reference, in this prospectus supplement that are not statements of historical fact may be forward-looking statements. When we use the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and other similar terms and phrases, including references to assumptions, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements.

A variety of factors, some of which are outside our control, may cause our operating results to fluctuate significantly. They include:

 

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our plans and expectations regarding the timing and outcome of research, development, commercialization, manufacturing, marketing and distribution efforts relating to our BEMA® drug delivery technology platform and any of our approved products or product candidates;

 

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the domestic and international regulatory process and related laws, rules and regulations governing our technologies and our approved and proposed products and formulations, including: (i) the timing, status and results of our or our commercial partners’ filings with the U.S. Food and Drug Administration and its foreign equivalents, (ii) the timing, status and results of non-clinical work and clinical studies, including regulatory review thereof and (ii) the heavily regulated industry in which we operate our business generally;

 

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our ability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our products and product candidates;

 

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our ability, or the ability of our commercial partners, to actually develop, commercialize, manufacture or distribute our products and product candidates, including for BELBUCA® and BUNAVAIL®, which we are self-commercializing;

 

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our ability to generate commercially viable products and the market acceptance of our BEMA® technology platform and our proposed products and product candidates;

 

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our ability to finance our operations on acceptable terms, either through the raising of capital, the incurrence of convertible or other indebtedness or through strategic financing or commercialization partnerships;

 

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our expectations about the potential market sizes and market participation potential for our approved or proposed products;

 

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the protection and control afforded by our patents or other intellectual property, and any interest patents or other intellectual property that we license, of our or our partners’ ability to enforce our rights under such owned or licensed patents or other intellectual property;

 

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the outcome of ongoing or potential future litigation (and related activities, including inter partes reviews, inter partes reexaminations and “Paragraph IV” litigations) or other claims or disputes relating to our business, technologies, patents, products or processes;

 

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our expected revenues (including sales, milestone payments and royalty revenues) from our products or product candidates and any related commercial agreements of ours;

 

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the ability of our manufacturing partners to supply us or our commercial partners with clinical or commercial supplies of our products in a safe, timely and regulatory compliant manner and the ability of such partners to address any regulatory issues that have arisen or may in the future arise;

 

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our ability to retain members of our management team and our employees; and

 

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competition existing today or that will likely arise in the future.

The foregoing does not represent an exhaustive list of risks that may impact the forward-looking statements used herein or in the documents incorporated by reference herein. Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance and related forward-looking statements.

Moreover, new risks regularly emerge and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included or incorporated by reference in this prospectus supplement are based on information available to us on the date hereof. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this prospectus supplement and the documents we have filed with the SEC which are incorporated by reference herein.

 

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USE OF PROCEEDS

Although we have not yet identified specific uses for the net proceeds we may receive from the sale of the Series B Preferred Stock offered under this prospectus supplement, we currently anticipate using such proceeds to fund (i) commercialization efforts related to BELBUCA and BUNAVAIL and (ii) for general working capital purposes.

We are not presently a party to any definitive agreements to make any product or technology acquisitions, although we reserve the right to use portions of the net proceeds of this offering to make such acquisitions.

The amounts and timing of our use of the net proceeds from this offering will depend on a number of factors, such as the timing and progress of our commercialization efforts and the competitive operational and regulatory environment for our products. Accordingly, our management will have broad discretion in the timing and application of these proceeds. Pending application of the net proceeds as described above, we intend to temporarily invest the proceeds in short-term, interest-bearing instruments.

 

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PRICE RANGE OF COMMON STOCK

Our common stock is listed on The Nasdaq Capital Market under the symbol “BDSI.” The following table shows the high and low per share sale prices of our common stock for the periods indicated.

 

Fiscal Year Ended December 31, 2016		High				Low
1st Quarter		$	4.90			$	2.53
2nd Quarter		$	4.00			$	1.86
3rd Quarter		$	3.10			$	2.23
4th Quarter		$	2.70			$	1.50
Fiscal Year Ended December 31, 2017		High				Low
1st Quarter		$	2.15			$	1.65
2nd Quarter		$	3.05			$	1.55
3rd Quarter		$	3.60			$	2.30
4th Quarter		$	3.10			$	2.05
Fiscal Year Ending December 31, 2018		High				Low
1st Quarter		$	3.08			$	1.90

On May 16, 2018, the last sale price reported on The Nasdaq Capital Market for our common stock was $1.95 per share.

 

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DILUTION

If you invest in our Series B Preferred Stock, your interest will be diluted immediately to the extent of the difference between the public offering price per share and the adjusted net tangible book value per share of our common stock after this offering.

Our net tangible book value on March 31, 2018 was approximately $(41.9) million, or $(0.69) per share. “Net tangible book value” is total assets minus the sum of liabilities and intangible assets. “Net tangible book value per share” is net tangible book value divided by the total number of shares outstanding.

After giving effect to the sale of 5,000 shares of our Series B Preferred Stock at the public offering price of $10,000 per share, assuming the conversion of 5,000 shares of the Series B Preferred Stock into 27,777,778 shares of our common stock, and after deducting estimated offering commissions and expenses payable by us, our net tangible book value as of March 31, 2018 would have been approximately $6.1 million, or $0.07 per share of common stock. This represents an immediate increase in net tangible book value of $0.76 per share to our existing stockholders and an immediate dilution in net tangible book value of $1.73 per share to investors participating in this offering. The following table illustrates this dilution per share to investors participating in this offering:

 

offering price per share						$	1.80
Net tangible book value per share as of March 31, 2018		$	(0.69	)
Increase per share attributable to new investors		$	0.76
Net tangible book value per share after giving effect to this offering		$	0.07
Dilution per share to new investors						$	1.73

The number of shares outstanding as of the date of this prospectus, as used throughout this prospectus, unless otherwise indicated, excludes the following, all as of March 31, 2018:

 

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2,093,155 of common stock underlying our Series A Non-Voting Convertible Preferred Stock;

 

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outstanding options as of that date representing the right to purchase a total of 3,065,844 shares of our common stock at a weighted average exercise price of $3.41 per share;

 

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3,556,263 shares of our common stock which are reserved for future equity awards that may be granted in the future under our 2011 Equity Incentive Plan, as amended;

 

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outstanding warrants as of that date representing the right to purchase a total of 2,136,020 shares of our common stock at a weighted average exercise price of $2.60 per share; and

 

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27,777,778 shares of common stock underlying our Series B Non-Voting Convertible Preferred Stock.

To the extent that any of our outstanding options or warrants are exercised, we grant additional options or other awards under our stock incentive plan or issue additional warrants, or we issue additional shares of common stock in the future, there may be further dilution.

 

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CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2018:

 

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on an actual basis, without giving effect to this offering and the use of net proceeds as discussed in “Use of Proceeds”; and

 

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on an as adjusted basis to reflect this offering and the use of net proceeds as discussed in “Use of Proceeds”.

This capitalization table should be read in conjunction with management’s discussion and analysis of results of operations and our consolidated financial statements and related notes included in our Quarterly Report on Form 10-Q for the period ended March 31, 2018, and the other financial information included and incorporated by reference in this prospectus supplement.

 

		As of March 31, 2018 (in thousands, except share data)
		Actual (unaudited)				Pro forma as Adjusted (unaudited)
Cash and cash equivalents		$	12,090			$	60,090
Stockholders’ equity:
Preferred Stock, $.001 par value; 5,000,000 shares authorized; 2,093,155 shares of Series A Non-Voting Convertible Preferred Stock outstanding, as adjusted for the issuance of 5,000 shares of Series B Non-Voting Convertible Preferred Stock			2				2
Common Stock, $.001 par value; 75,000,000 shares authorized; 58,646,522 shares issued; 58,631,031 shares outstanding			59				59
Additional paid-in capital			316,970				364,970
Treasury stock, at cost, 15,491 shares			(47	)			(47	)
Accumulated deficit			(315,630	)			(315,630	)
Total stockholders’ equity		$	1,354			$	49,354

Outstanding shares of common stock as of March 31, 2018 excludes:

 

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2,093,155 shares of common stock underlying our Series A Non-Voting Convertible Preferred Stock;

 

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outstanding options as of that date representing the right to purchase a total of 3,065,844 shares of our common stock at a weighted average exercise price of $3.41 per share;

 

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3,556,263 shares of our common stock which are reserved for future equity awards that may be granted in the future under our 2011 Equity Incentive Plan, as amended;

 

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outstanding warrants as of that date representing the right to purchase a total of 2,136,020 shares of our common stock at a weighted average exercise price of $2.60 per share; and

 

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27,777,778 shares of common stock underlying our Series B Non-Voting Convertible Preferred Stock.

 

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DESCRIPTION OF SERIES B PREFERRED STOCK

The material terms and provisions of the shares of the Series B Preferred Stock are summarized below. The following description is subject to, and qualified in its entirety by, the certificate of designations for the Series B Preferred Stock, the form of which will be filed as an exhibit to a Current Report on Form 8-K to be filed with the SEC contemporaneously with the filing of this prospectus supplement. You should review a copy of the certificate of designations for a complete description of the powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series B Preferred Stock.

General

Under the terms of our certificate of incorporation, as amended, our board of directors is authorized to issue up to 5,000,000 shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. We have 2,093,155 of Series A Non-Voting Convertible Preferred Stock outstanding, and our board of directors has designated 5,000 of the remaining 2,290,700 authorized shares of preferred stock as our Series B Non-Voting Convertible Preferred Stock, par value $0.001 per share (which are the securities being issued in this offering).

Rank

The Series B Preferred Stock will rank:

 

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on par with our outstanding Series A Non-Voting Convertible Preferred Stock;

 

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senior to our common stock;

 

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senior to any class or series of our capital stock hereafter created specifically ranking by its terms junior to the Series B Preferred Stock; and

 

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junior to any class or series of our capital stock hereafter created specifically ranking by its terms senior to the Series B Preferred Stock,

in each case, as to dividends or distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily.

Conversion

Each share of Series B Preferred Stock shall be convertible into a number of shares of our common stock determined by dividing $10,000 by a conversion price of $1.80 per share (subject to adjustment as provided in the certificate of designation for the Series B Preferred Stock) at any time following the Stockholder Approval. As such, the Series B Preferred Stock is initially convertible into an aggregate of 27,777,778 shares of our common stock. The Series B Preferred Stock does not contain any price-based anti-dilution protection. The Series B Preferred Stock is convertible at any time after Stockholder Approval at the option of the holder, except that a holder will be prohibited from converting shares of Series B Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.98% of the total number of shares of our common stock then issued and outstanding, which percentage may be increased or decreased on sixty-one (61) days’ notice from the holder of Series B Preferred Stock to us provided that, until Stockholder Approval, such beneficial ownership limitation may only be increased to up to 19.99% of the total number of shares of our common stock then issued and outstanding.

We have agreed to hold our 2018 Annual Meeting of Stockholders no later than seventy-five (75) days after the closing of the offering and include on the agenda for that meeting proposals for the Stockholder Approval. Within ten days following the date of Stockholder Approval, we have the right to deliver a notice to the holders of the Series B Preferred Stock to require conversion of the Series B Preferred Stock into common stock, provided that certain conditions with respect to our common stock is satisfied. Such forced conversion shall be subject to a holder’s beneficial ownership limitation of 9% of the total number of shares of our common stock then issued and outstanding. Following an initial forced conversion of the Series B Preferred Stock, every ninety days thereafter, we have the right to require the forced conversion of still outstanding shares of Series B Preferred Stock up to the beneficial ownership limitation of 9% of the total number of shares of our common stock then issued and outstanding.

 

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Liquidation Preference

In the event of our liquidation, dissolution or winding up, holders of Series B Preferred Stock will receive a payment equal to $.001 per share of Series B Preferred Stock pari passu with the holders of our Series A Non-Voting Convertible Preferred Stock and before any proceeds are distributed to the holders of our common stock. After the payment of this preferential amount, and subject to the rights of holders of any class or series of our capital stock hereafter created specifically ranking by its terms senior to the Series B Preferred Stock, the holders of Series B Preferred Stock will participate ratably in the distribution of any remaining assets with the holders of our Series A Non-Voting Convertible Preferred Stock and the holders of our common stock and any other class or series of our capital stock hereafter created that participates with the common stock in such distributions.

Voting Rights

Shares of Series B Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of 80% of the outstanding Series B Preferred Stock will be required to amend the terms of the Series B Preferred Stock or the certificate of designations for the Series B Preferred Stock, to authorize any class of securities that is senior to the Series B Preferred Stock with respect to distribution of assets upon liquidation, the payment of dividends or rights of redemption.

Dividends

Holders of Series B Preferred Stock are entitled to receive, and we are required to pay, dividends on shares of the Series B Preferred Stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of the common stock.

Redemption

We are not obligated to redeem or repurchase any shares of Series B Preferred Stock. Shares of Series B Preferred Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.

Listing

There is no established public trading market for the Series B Preferred Stock, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series B Preferred Stock on any national securities exchange or trading system.

Fundamental Transactions

If, at any time that shares of Series B Preferred Stock are outstanding, we effect a merger or other change of control transaction, as described in the certificate of designations and referred to as a fundamental transaction, then a holder will have the right to receive, upon any subsequent conversion of a share of Series B Preferred Stock (in lieu of conversion shares) for each issuable conversion share, the same kind and amount of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such holder had been, immediately prior to such fundamental transaction, the holder of one share of common stock.

Registration Rights

In connection with the issuance of Series B Preferred Stock, we have entered into a registration rights agreement with Broadfin, who will be an “affiliate” (as such term is defined in SEC Rule 144) of our company as of the closing. In the registration rights agreement, we have granted demand registration rights and piggyback registration rights to Broadfin in connection with shares of common stock underlying the Series B Preferred Stock and other securities held by Broadfin that are subject to volume and manner of sale limitations under Rule 144.

 

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PLAN OF DISTRIBUTION

Pursuant to this prospectus supplement and the accompanying prospectus, we are offering an aggregate of 5,000 shares of our Series B Preferred Stock to institutional and accredited investors pursuant to a securities purchase agreement, dated May 17, 2018, at a price per share of $10,000.

In addition, pursuant to a placement agency agreement, dated May 17, 2018, between us and William Blair & Company, L.L.C., we have engaged William Blair & Company, L.L.C. as the exclusive placement agent in connection with this offering. The placement agent is not purchasing or selling any of the securities we are offering, and it is not required to arrange the purchase or sale of any specific number of securities or dollar amount, but the placement agent has agreed to use reasonable best efforts to arrange for the sale of the securities.

The securities purchase agreement and the placement agency agreement provide that the obligations of the purchasers in this offering and of the placement agent are subject to certain conditions precedent, including, among other things, the absence of any material adverse change in our business and the receipt of customary opinions, letters and closing certificates.

All of the securities will be sold in this offering at the same price and at a single closing. We established the conversion price of the Series B Preferred Stock following negotiations with prospective investors and with reference to the prevailing market price of our common stock, recent trends in such price and other factors. It is possible that not all of the securities we are offering pursuant to this prospectus supplement will be sold at the closing, in which case our net proceeds would be reduced. We expect that the sale of the securities will be completed on the date indicated on the cover page of this prospectus supplement.

We will pay the placement agent a placement agent fee equal to 3% of the gross proceeds of this offering. The placement agent has agreed to reimburse us for our offering-related expenses up to $20,000.

We estimate the total expenses of this offering, which will be payable by us, excluding the placement agent fees, will be approximately $500,000. We are not responsible for the expenses incurred by the placement agent.

We have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act of 1933, as amended. We have also agreed to contribute to payments the placement agent may be required to make in respect to such liabilities.

The placement agency agreement is included as Exhibit 1.1, and the securities purchase agreement is included as Exhibit 10.1, to our Current Report on Form 8-K filed with the SEC in connection with this offering.

Listing

Our common stock is listed on the Nasdaq Capital Market under the symbol “BDSI.” There is no established public trading market for the Series B Preferred Stock and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series B Preferred Stock on any national securities exchange or any trading system.

Electronic Distribution

This prospectus supplement and the accompanying prospectus may be made available in electronic format on websites or through other online services maintained by the placement agent, or by an affiliate. Other than this prospectus supplement and the accompanying prospectus in electronic format, the information on the placement agent’s website and any information contained in any other websites maintained by the placement agent are not part of this prospectus supplement or the accompanying prospectus or the registration statement of which this prospectus supplement and the accompanying prospectus forms a part, has not been approved and/or endorsed by us or the placement agent, and should not be relied upon by investors.

 

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The foregoing does not purport to be a complete statement of the terms and conditions of the placement agency agreement and securities purchase agreements. A copy of the placement agency agreement and the form of securities agreements with the investors are included as exhibits to our Current Report on Form 8-K filed with the SEC in connection with this offering. See “Where You Can Find More Information” and “Incorporation by Reference.”

Regulation M Restrictions

The placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized on the resale of the securities sold by it while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the placement agent would be required to comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of securities by the placement agent acting as a principal. Under these rules and regulations, the placement agent:

 

•

must not engage in any stabilization activity in connection with our securities; and

 

•

must not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.

Affiliations

The placement agent and its affiliates may provide various investment banking, financial advisory and other services to us and our affiliates for which services they have received, and may in the future receive, customary fees. In the course of their businesses, the placement agent and its affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the placement agent and its affiliates may at any time hold long or short positions in such securities or loans.

 

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We currently intend to retain earnings, if any, to support our business strategy and do not anticipate paying cash dividends in the foreseeable future. Payment of future dividends, if any, will be at the sole discretion of our board of directors after taking into account various factors, including our financial condition, operating results, capital requirements and any plans for expansion.

LEGAL MATTERS

The validity of the securities offered in this prospectus has been passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York. Latham  & Watkins LLP, Chicago, Illinois, is counsel for the placement agent in connection with this offering.

EXPERTS

The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2017, have been so incorporated in reliance on the report of Cherry Bekaert LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-3 with the SEC for the securities we are offering by this prospectus supplement. This prospectus supplement does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. We are required to file annual and quarterly reports, special reports, proxy statements, and other information with the SEC. We make these documents publicly available, free of charge, on our website at http://www.bdsi.com as soon as reasonably practicable after filing such documents with the SEC. You can read our SEC filings, including the registration statement, on the SEC’s website at http://www.sec.gov. You also may read and copy any document we file with the SEC at its public reference facility at Public Reference Room, 100 F Street N.E., Washington, DC 20549. Please call the SEC at 1-800-732-0330 for further information on the operation of the public reference facilities.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

We are “incorporating by reference” certain documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information in the documents incorporated by reference is considered to be part of this prospectus supplement. Statements contained in documents that we file with the SEC and that are incorporated by reference in this prospectus supplement will automatically update and supersede information contained in this prospectus supplement, including information in previously filed documents or reports that have been incorporated by reference in this prospectus supplement, to the extent the new information differs from or is inconsistent with the old information. We have filed or may file the following documents with the SEC and they are incorporated herein by reference as of their respective dates of filing:

 

•

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on March 15, 2018;

 

•

Our Current Reports on Form 8-K, as filed with the SEC on March 16, 2018, May 3, 2018, May 8, 2018 and May 11, 2018;

 

•

Our Quarterly Report on Form 10-Q, as filed with the SEC on May 10, 2018; and

 

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•

All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus supplement and before the termination or completion of this offering of common stock shall be deemed to be incorporated by reference in this prospectus supplement and to be a part of it from the filing dates of such documents, except in each case for information contained in any such filing where we indicate that such information is being furnished and is not to be considered “filed” under the Securities Exchange Act of 1934, as amended.

You may request a copy of these filings at no cost (other than exhibits unless such exhibits are specifically incorporated by reference) by writing or telephoning us at the following address and telephone number:

BioDelivery Sciences International, Inc.

4131 ParkLake Avenue, Suite # 225

Raleigh, North Carolina 27612

Telephone: (919) 582-9050

Attention: Ernest R. De Paolantonio, Chief Financial Officer

 

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Prospectus

$150,000,000

 

 

Common Stock		Preferred Stock
Debt Securities		Warrants
Rights		Units

 

 

We may offer and sell from time to time, in one or more series, any one of the following securities of our company, for total gross proceeds up to $150,000,000:

 

•

common stock;

 

•

preferred stock;

 

•

secured or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities;

 

•

warrants to purchase our securities;

 

•

rights to purchase any of the foregoing securities; or

 

•

units comprised of, or other combinations of, the foregoing securities.

We will provide specific terms of these offerings and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement, and any documents incorporated by reference, may also add, update or change information contained in this prospectus. You should read this prospectus, the applicable prospectus supplement, any documents incorporated by reference and any related free writing prospectus carefully before buying any of the securities being offered.

We may offer and sell these securities to or through one or more underwriters, dealers and agents, or directly to purchasers, on a continuous or delayed basis.

Our common stock is traded on The NASDAQ Capital Market under the symbol “BDSI.” The last reported sale price of our common stock on The NASDAQ Capital Market on July 13, 2015 was $9.64 per share.

Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” contained in the applicable prospectus supplement and in any related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus or any prospectus supplement before making a decision to purchase our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus is July 13, 2015.

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		Page
About This Prospectus			-ii-
Cautionary Note Regarding Forward-Looking Statements			-iii-
Prospectus Summary			1
Risk Factors			8
Ratio of Earnings to Fixed Charges			8
Use of Proceeds			9
Description of Capital Stock and Securities We May Offer			9
Plan of Distribution			18
Legal Matters			20
Experts			20
Where You Can Find More Information			20
Incorporation of Certain Information By Reference			20

You should rely only on the information we have provided or incorporated by reference in this prospectus or in any prospectus supplement. We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus or in any prospectus supplement.

This prospectus and any prospectus supplement is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.

You should assume that the information contained in this prospectus and in any prospectus supplement is accurate only as of their respective dates and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any prospective supplement or any sale of securities.

 

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ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. Under this shelf registration process, we may offer and sell, either individually or in combination, in one or more offerings, any combination of the securities described in this prospectus, for total gross proceeds of up to $150,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we offer securities under this prospectus, we will provide a prospectus supplement that will contain more specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. The prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update or change any of the information contained in this prospectus or in the documents that we have incorporated by reference into this prospectus.

We urge you to read carefully this prospectus, any applicable prospectus supplement and any free writing prospectuses we have authorized for use in connection with a specific offering, together with the information incorporated herein by reference as described under the heading “Incorporation of Certain Information by Reference,” before investing in any of the securities being offered. You should rely only on the information contained in, or incorporated by reference into, this prospectus and any applicable prospectus supplement, along with the information contained in any free writing prospectuses we have authorized for use in connection with a specific offering. We have not authorized anyone to provide you with different or additional information. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.

The information appearing in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate only as of the date on the front of the document and any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus supplement or any related free writing prospectus, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the section entitled “Where You Can Find More Information.”

We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference herein were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and any accompanying prospectus supplement and the documents we have filed or will file with the SEC that are or will be incorporated by reference into this prospectus and the accompanying prospectus supplement contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (which we refer to as the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (which we refer to as the Exchange Act), that involve significant risks and uncertainties. Any statements contained, or incorporated by reference, in this prospectus and any accompanying prospectus that are not statements of historical fact may be forward-looking statements. When we use the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and other similar terms and phrases, including references to assumptions, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements.

A variety of factors, some of which are outside our control, may cause our operating results to fluctuate significantly. They include:

 

•

our plans and expectations regarding the timing and outcome of our research, development, commercialization, manufacturing, marketing and distribution efforts relating to our BEMA® drug delivery technology platform and any of our approved products or product candidates;

 

•

the domestic and international regulatory process and related laws, rules and regulations governing our technologies and our approved and proposed products and formulations, including: (i) the timing, status and results of our or our commercial partners’ filings with the U.S. Food and Drug Administration and its foreign equivalents, (ii) the timing, status and results of non-clinical work and clinical studies, including regulatory review thereof and (iii) the heavily regulated industry in which we operate our business generally;

 

•

our ability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our products and product candidates;

 

•

our ability, or the ability of our commercial partners to actually develop, commercialize, manufacture or distribute our products and product candidates, including BUNAVAIL®, which is the first product we are self-commercializing;

 

•

our ability to generate commercially viable products and the market acceptance of our BEMA® technology platform and our proposed products and product candidates;

 

•

our ability to finance our operations on acceptable terms, either through the raising of capital, the incurrence of convertible or other indebtedness or through strategic financing or commercialization partnerships;

 

•

our expectations about the potential market sizes and market participation potential for our approved or proposed products;

 

•

the protection and control afforded by our patents or other intellectual property, and any interest patents or other intellectual property that we license, or our or our partners’ ability to enforce our rights under such owned or licensed patents or other intellectual property;

 

•

the outcome of ongoing or potential future litigation (and related activities, including inter-partes reviews and inter-partes reexaminations) or other claims or disputes relating to our business, technologies, products or processes;

 

•

our expected revenues (including sales, milestone payment and royalty revenues) from our products or product candidates and any related commercial agreements of ours;

 

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•

the ability of our manufacturing partners to supply us or our commercial partners with clinical or commercial supplies of our products in a safe, timely and regulatory compliant manner and the ability of such partners to address any regulatory issues that have arisen or may in the future arise;

 

•

our ability to retain members of our management team and our employees; and

 

•

competition existing today or that will likely arise in the future; and

The foregoing does not represent an exhaustive list of risks that may impact upon the forward-looking statements used herein or in the documents incorporated by reference herein. Please see “Risk Factors” in our reports filed with the SEC or in a prospectus supplement related to this prospectus for additional risks which could adversely impact our business and financial performance.

Moreover, new risks regularly emerge and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus and any accompanying prospectus supplement are based on information available to us on the date hereof or thereof. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout (or incorporated by reference in) this prospectus, any accompanying prospectus and the documents we have filed with the SEC.

 

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RISK FACTORS

We have included discussions of the risks, uncertainties and assumptions under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2014, which risk factors are incorporated by reference into this prospectus. See “Where You Can Find More Information” for an explanation of how to get a copy of this report. Additional risks related to our securities may also be described in a prospectus supplement and in any related free writing prospectus that we may authorize to be provided to you.

Investing in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider the risk factors we describe in any prospectus supplement and in any related free writing prospectus that we may authorize to be provided to you or in any report incorporated by reference into this prospectus or such prospectus supplement, including our Annual Report on Form 10-K for the year ended December 31, 2014, or any Annual Report on Form 10-K or Quarterly Report on Form 10-Q that is incorporated by reference into this prospectus or such prospectus supplement after the date of this prospectus. Although we discuss key risks in those risk factor descriptions, additional risks not currently known to us or that we currently deem immaterial also may impair our business. Our subsequent filings with the SEC may contain amended and updated discussions of significant risks. We cannot predict future risks or estimate the extent to which they may affect our financial performance.

Please also read carefully the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth our ratio of fixed charges and preference dividends to earnings for each of the periods indicated. You should read this table in conjunction with the financial statements and notes incorporated by reference in this prospectus.

 

For Fiscal Year Ended

December 31, 2014

December 31, 2013

December 31, 2012

December 31, 2011

December 31, 2010

Ratios of fixed charges and preference dividends to earnings

N/A

N/A

45.10

N/A

N/A

We have computed the ratio of fixed charges and preference dividends to earnings set forth above by dividing pre-tax loss before fixed charges and preference dividends by fixed charges and preference dividends. Fixed charges are the sum of the following:

 

•

interest expensed and capitalized;

 

•

amortized premiums related to indebtedness; and

 

•

an estimate of the interest within rental expense.

We did not pay any cash dividends on any shares of our capital stock during the periods set forth above.

We did not record earnings for the fiscal years ended December 31, 2014, 2013, 2011 and 2010. Accordingly, our earnings were insufficient to cover fixed charges for such periods and we are unable to disclose a ratio of fixed charges and preference dividends to earnings for such periods. The dollar amount of the deficiency in earnings available for fixed charges and preference dividends for the fiscal years ended December 31, 2014, 2013, 2011 and 2010 was approximately $54.2 million, $57.4 million, $23.3 million and $13.0 million, respectively.

 

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USE OF PROCEEDS

Except as otherwise disclosed in the applicable prospectus supplement, we intend to use the net proceeds from the sales of securities hereunder for the clinical and regulatory advancement of our product candidates; for commercialization of our products, including potential sales and marketing of products on our own behalf; to support of our partnered products; for potential acquisitions of new technologies and products or related companies, and to meet working capital needs. The amounts and timing of our use of the net proceeds from this offering will depend on a number of factors, such as the timing and progress of our research and development efforts, the timing and progress of any partnering and commercialization efforts, technological advances and the competitive environment for our products. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of the securities offered by us hereunder and the applicable prospectus supplement. Accordingly, our management will have broad discretion in the timing and application of these proceeds. Pending application of the net proceeds as described above, we intend to temporarily invest the proceeds in short-term, interest-bearing instruments.

DESCRIPTION OF CAPITAL STOCK AND SECURITIES WE MAY OFFER

General

The following description of our capital stock (which includes a description of securities we may offer pursuant to the registration statement of which this prospectus, as the same may be supplemented, forms a part) does not purport to be complete and is subject to and qualified in its entirety by our certificate of incorporation, as amended, and our amended and restated bylaws and by the applicable provisions of Delaware law.

Our authorized capital stock consists of 75,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of the date of this prospectus, our outstanding capital stock consists of 52,421,435 shares of common stock, $.001 par value, and 2,093,155 shares of Series B Preferred Stock, par value $.001 per share. These figures do not include securities that may be issued: (i) pursuant to outstanding warrants to purchase shares of our common stock, (ii) pursuant to our Amended and Restated 2001 Incentive Plan or (iii) pursuant to our 2011 Equity Incentive Plan, as amended.

We, directly or through agents, dealers or underwriters designated from time to time, may offer, issue and sell, together or separately, up to $150,000,000 in the aggregate of:

 

•

common stock;

 

•

preferred stock;

 

•

secured or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities;

 

•

warrants to purchase our securities;

 

•

rights to purchase our securities; or

 

•

units comprised of, or other combinations of, the foregoing securities.

We may issue the debt securities as exchangeable for or convertible into shares of common stock, preferred stock or other securities. The preferred stock may also be exchangeable for and/or convertible into shares of common stock, another series of preferred stock or other securities. The debt securities, the preferred stock, the common stock and the warrants are collectively referred to in this prospectus as the “securities.” When a particular series of securities is offered, a supplement to this prospectus will be delivered with this prospectus, which will set forth the terms of the offering and sale of the offered securities.

 

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Common Stock

As of the date of this prospectus, there were 52,436,926 shares of common stock issued and 52,421,435 shares of common stock outstanding, held of record by approximately 115 stockholders. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Subject to preferential rights with respect to any outstanding preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by our board of directors out of funds legally available therefore. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and satisfaction of preferential rights of any outstanding preferred stock.

Our common stock has no preemptive or conversion rights or other subscription rights. There are no sinking fund provisions applicable to the common stock. The outstanding shares of common stock are fully paid and non-assessable.

Preferred Stock

Our certificate of incorporation, as amended, empowers our board of directors, without action by our shareholders, to issue up to 5,000,000 shares of preferred stock from time to time in one or more series, which preferred stock may be offered by this prospectus and supplements thereto. As of the date of this prospectus, we had 2,709,300 shares of preferred stock designated as Series A Preferred Stock and had 2,093,155 shares of Series A Preferred Stock issued and outstanding. Our board may fix the rights, preferences, privileges and restrictions of our authorized but undesignated preferred shares, including:

 

•

dividend rights and preferences over dividends on our common stock or any series of preferred stock;

 

•

the dividend rate (and whether dividends are cumulative);

 

•

conversion rights, if any;

 

•

voting rights;

 

•

rights and terms of redemption (including sinking fund provisions, if any);

 

•

redemption price and liquidation preferences of any wholly unissued series of any preferred stock and the designation thereof of any of them; and

 

•

to increase or decrease the number of shares of any series subsequent to the issue of shares of that series but not below the number of shares then outstanding.

You should refer to the prospectus supplement relating to the series of preferred stock being offered for the specific terms of that series, including:

 

•

the title of the series and the number of shares in the series;

 

•

the price at which the preferred stock will be offered;

 

•

the dividend rate or rates or method of calculating the rates, the dates on which the dividends will be payable, whether or not dividends will be cumulative or noncumulative and, if cumulative, the dates from which dividends on the preferred stock being offered will cumulate;

 

•

the voting rights, if any, of the holders of shares of the preferred stock being offered;

 

•

the provisions for a sinking fund, if any, and the provisions for redemption, if applicable, of the preferred stock being offered, including any restrictions on the foregoing as a result of arrearage in the payment of dividends or sinking fund installments;

 

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•

the liquidation preference per share;

 

•

the terms and conditions, if applicable, upon which the preferred stock being offered will be convertible into our common stock, including the conversion price, or the manner of calculating the conversion price, and the conversion period;

 

•

the terms and conditions, if applicable, upon which the preferred stock being offered will be exchangeable for debt securities, including the exchange price, or the manner of calculating the exchange price, and the exchange period;

 

•

any listing of the preferred stock being offered on any securities exchange;

 

•

a discussion of any material federal income tax considerations applicable to the preferred stock being offered;

 

•

any preemptive rights;

 

•

the relative ranking and preferences of the preferred stock being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs;

 

•

any limitations on the issuance of any class or series of preferred stock ranking senior or equal to the series of preferred stock being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs; and

 

•

any additional rights, preferences, qualifications, limitations and restrictions of the series.

Upon issuance, the shares of preferred stock will be fully paid and nonassessable, which means that its holders will have paid their purchase price in full and we may not require them to pay additional funds.

Any preferred stock terms selected by our board of directors could decrease the amount of earnings and assets available for distribution to holders of our common stock or adversely affect the rights and power, including voting rights, of the holders of our common stock without any further vote or action by the stockholders. The rights of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued by us in the future. The issuance of preferred stock could also have the effect of delaying or preventing a change in control of our company or make removal of management more difficult.

Series A Preferred Stock

In connection with our registered financing which closed on December 3, 2012, our board of directors designated 2,709,300 of the 5,000,000 authorized shares of preferred stock as our Series A Non-Voting Convertible Preferred Stock, par value $.001 per share.

Rank

The Series A Preferred Stock will rank:

 

•

senior to our common stock;

 

•

senior to any class or series of our capital stock hereafter created specifically ranking by its terms junior to the Series A Preferred Stock; and

 

•

junior to any class or series of our capital stock hereafter created specifically ranking by its terms senior to the Series A Preferred Stock,

 

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in each case, as to dividends or distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily.

Conversion

Each share of Series A Preferred Stock is convertible into one share of our common stock (subject to adjustment as provided in the certificate of designation for the Series A Preferred Stock) at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.98% of the total number of shares of our common stock then issued and outstanding, which percentage may be increased or decreased by on sixty-five days notice from the holder of Series A Preferred Stock to us.

Liquidation Preference

In the event of our liquidation, dissolution or winding up, holders of Series A Preferred Stock will receive a payment equal to $.001 per share of Series A Preferred Stock before any proceeds are distributed to the holders of our common stock. After the payment of this preferential amount, and subject to the rights of holders of any class or series of our capital stock hereafter created specifically ranking by its terms senior to the Series A Preferred Stock and holders of Series A Preferred Stock will participate ratably in the distribution of any remaining assets with the common stock and any other class or series of our capital stock hereafter created that participates with the common stock in such distributions.

Voting Rights

Shares of Series A Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series A Preferred Stock will be required to amend the terms of the Series A Preferred Stock or the certificate of designation for the Series A Preferred Stock.

Dividends

Holders of Series A Preferred Stock are entitled to receive, and we are required to pay, dividends on shares of the Series A Preferred Stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of the common stock.

Redemption

We are not obligated to redeem or repurchase any shares of Series A Preferred Stock. Shares of Series A Preferred Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.

Listing

There is no established public trading market for the Series A Preferred Stock, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series A Preferred Stock on any national securities exchange or trading system.

Fundamental Transactions

If, at any time that shares of Series A Preferred Stock are outstanding, we effect a merger or other change of control transaction, as described in the certificate of designation and referred to as a fundamental transaction, then a holder will have the right to receive, upon any subsequent conversion of a share of Series A Preferred Stock (in lieu of conversion shares) for each issuable conversion share, the same kind and amount of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such holder had been, immediately prior to such fundamental transaction, the holder of one share of common stock.

 

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Warrants

We may issue warrants for the purchase of our common stock, preferred stock or debt securities or any combination thereof. Warrants may be issued independently or together with our common stock, preferred stock or debt securities and may be attached to or separate from any offered securities. To the extent warrants that we issue are to be publicly-traded, each series of such warrants will be issued under a separate warrant agreement to be entered into between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with such warrants. The warrant agent will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. This summary of certain provisions of the warrants is not complete. For the terms of a particular series of warrants, you should refer to the prospectus supplement for that series of warrants and the warrant agreement for that particular series.

Debt Securities

As used in this prospectus, the term “debt securities” means the debentures, notes, bonds and other evidences of indebtedness that we may issue from time to time. The debt securities will either be senior debt securities, senior subordinated debt or subordinated debt securities. We may also issue convertible debt securities. Debt securities issued under an indenture (which we refer to herein as an Indenture) will be indenture entered into between us and a trustee to be named therein. It is likely that convertible debt securities will not be issued under an Indenture.

The Indenture or forms of Indentures, if any, will be filed as exhibits to the registration statement of which this prospectus is a part. The statements and descriptions in this prospectus or in any prospectus supplement regarding provisions of the Indentures and debt securities are summaries thereof, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Indentures (and any amendments or supplements we may enter into from time to time which are permitted under each Indenture) and the debt securities, including the definitions therein of certain terms.

General

Unless otherwise specified in a prospectus supplement, the debt securities will be direct secured or unsecured obligations of our company. The senior debt securities will rank equally with any of our other unsecured senior and unsubordinated debt. The subordinated debt securities will be subordinate and junior in right of payment to any senior indebtedness.

We may issue debt securities from time to time in one or more series, in each case with the same or various maturities, at par or at a discount. Unless indicated in a prospectus supplement, we may issue additional debt securities of a particular series without the consent of the holders of the debt securities of such series outstanding at the time of the issuance. Any such additional debt securities, together with all other outstanding debt securities of that series, will constitute a single series of debt securities under the applicable Indenture and will be equal in ranking.

Should an indenture relate to unsecured indebtedness, in the event of a bankruptcy or other liquidation event involving a distribution of assets to satisfy our outstanding indebtedness or an event of default under a loan agreement relating to secured indebtedness of our company or its subsidiaries, the holders of such secured indebtedness, if any, would be entitled to receive payment of principal and interest prior to payments on the senior indebtedness issued under an Indenture.

Prospectus Supplement

Each prospectus supplement will describe the terms relating to the specific series of debt securities being offered. These terms will include some or all of the following:

 

•

the title of debt securities and whether they are subordinated, senior subordinated or senior debt securities;

 

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•

any limit on the aggregate principal amount of debt securities of such series;

 

•

the percentage of the principal amount at which the debt securities of any series will be issued;

 

•

the ability to issue additional debt securities of the same series;

 

•

the purchase price for the debt securities and the denominations of the debt securities;

 

•

the specific designation of the series of debt securities being offered;

 

•

the maturity date or dates of the debt securities and the date or dates upon which the debt securities are payable and the rate or rates at which the debt securities of the series shall bear interest, if any, which may be fixed or variable, or the method by which such rate shall be determined;

 

•

the basis for calculating interest if other than 360-day year or twelve 30-day months;

 

•

the date or dates from which any interest will accrue or the method by which such date or dates will be determined;

 

•

the duration of any deferral period, including the maximum consecutive period during which interest payment periods may be extended;

 

•

whether the amount of payments of principal of (and premium, if any) or interest on the debt securities may be determined with reference to any index, formula or other method, such as one or more currencies, commodities, equity indices or other indices, and the manner of determining the amount of such payments;

 

•

the dates on which we will pay interest on the debt securities and the regular record date for determining who is entitled to the interest payable on any interest payment date;

 

•

the place or places where the principal of (and premium, if any) and interest on the debt securities will be payable, where any securities may be surrendered for registration of transfer, exchange or conversion, as applicable, and notices and demands may be delivered to or upon us pursuant to the applicable Indenture;

 

•

the rate or rates of amortization of the debt securities;

 

•

if we possess the option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole or in part, pursuant to optional redemption provisions, and the other terms and conditions of any such provisions;

 

•

our obligation or discretion, if any, to redeem, repay or purchase debt securities by making periodic payments to a sinking fund or through an analogous provision or at the option of holders of the debt securities, and the period or periods within which and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant to such obligation, and the other terms and conditions of such obligation;

 

•

the terms and conditions, if any, regarding the option or mandatory conversion or exchange of debt securities;

 

•

the period or periods within which, the price or prices at which and the terms and conditions upon which any debt securities of the series may be redeemed, in whole or in part at our option and, if other than by a board resolution, the manner in which any election by us to redeem the debt securities shall be evidenced;

 

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•

any restriction or condition on the transferability of the debt securities of a particular series;

 

•

the portion, or methods of determining the portion, of the principal amount of the debt securities which we must pay upon the acceleration of the maturity of the debt securities in connection with any event of default if other than the full principal amount;

 

•

the currency or currencies in which the debt securities will be denominated and in which principal, any premium and any interest will or may be payable or a description of any units based on or relating to a currency or currencies in which the debt securities will be denominated;

 

•

provisions, if any, granting special rights to holders of the debt securities upon the occurrence of specified events;

 

•

any deletions from, modifications of or additions to the events of default or our covenants with respect to the applicable series of debt securities, and whether or not such events of default or covenants are consistent with those contained in the applicable Indenture;

 

•

any limitation on our ability to incur debt, redeem stock, sell our assets or other restrictions;

 

•

the application, if any, of the terms of the applicable Indenture relating to defeasance and covenant defeasance (which terms are described below) to the debt securities;

 

•

what subordination provisions will apply to the debt securities;

 

•

the terms, if any, upon which the holders may convert or exchange the debt securities into or for our common stock, preferred stock or other securities or property;

 

•

whether we are issuing the debt securities in whole or in part in global form;

 

•

any change in the right of the trustee or the requisite holders of debt securities to declare the principal amount thereof due and payable because of an event of default;

 

•

the depositary for global or certificated debt securities, if any;

 

•

any material federal income tax consequences applicable to the debt securities, including any debt securities denominated and made payable, as described in the prospectus supplements, in foreign currencies, or units based on or related to foreign currencies;

 

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any right we may have to satisfy, discharge and defease our obligations under the debt securities, or terminate or eliminate restrictive covenants or events of default in the Indentures, by depositing money or U.S. government obligations with the trustee of the Indentures;

 

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the names of any trustees, depositories, authenticating or paying agents, transfer agents or registrars or other agents with respect to the debt securities;

 

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to whom any interest on any debt security shall be payable, if other than the person in whose name the security is registered, on the record date for such interest, the extent to which, or the manner in which, any interest payable on a temporary global debt security will be paid if other than in the manner provided in the applicable Indenture;

 

•

if the principal of or any premium or interest on any debt securities is to be payable in one or more currencies or currency units other than as stated, the currency, currencies or currency units in which it shall be paid and the periods within and terms and conditions upon which such election is to be made and the amounts payable (or the manner in which such amount shall be determined);

 

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•

the portion of the principal amount of any debt securities which shall be payable upon declaration of acceleration of the maturity of the debt securities pursuant to the applicable Indenture if other than the entire principal amount;

 

•

if the principal amount payable at the stated maturity of any debt security of the series will not be determinable as of any one or more dates prior to the stated maturity, the amount which shall be deemed to be the principal amount of such debt securities as of any such date for any purpose, including the principal amount thereof which shall be due and payable upon any maturity other than the stated maturity or which shall be deemed to be outstanding as of any date prior to the stated maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined); and

 

•

any other specific terms of the debt securities, including any modifications to the events of default under the debt securities and any other terms which may be required by or advisable under applicable laws or regulations.

Unless otherwise specified in the applicable prospectus supplement, the debt securities will not be listed on any securities exchange. Holders of the debt securities may present registered debt securities for exchange or transfer in the manner described in the applicable prospectus supplement. Except as limited by the applicable Indenture, we will provide these services without charge, other than any tax or other governmental charge payable in connection with the exchange or transfer.

Debt securities may bear interest at a fixed rate or a variable rate as specified in the prospectus supplement. In addition, if specified in the prospectus supplement, we may sell debt securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate, or at a discount below their stated principal amount. We will describe in the applicable prospectus supplement any special federal income tax considerations applicable to these discounted debt securities.

We may issue debt securities with the principal amount payable on any principal payment date, or the amount of interest payable on any interest payment date, to be determined by referring to one or more currency exchange rates, commodity prices, equity indices or other factors. Holders of such debt securities may receive a principal amount on any principal payment date, or interest payments on any interest payment date, that are greater or less than the amount of principal or interest otherwise payable on such dates, depending upon the value on such dates of applicable currency, commodity, equity index or other factors. The applicable prospectus supplement will contain information as to how we will determine the amount of principal or interest payable on any date, as well as the currencies, commodities, equity indices or other factors to which the amount payable on that date relates and certain additional tax considerations.

Rights

We may issue rights to purchase our securities. The rights may or may not be transferable by the persons purchasing or receiving the rights. In connection with any rights offering, we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such rights offering. Each series of rights will be issued under a separate rights agent agreement to be entered into between us and one or more banks, trust companies or other financial institutions, as rights agent that we will name in the applicable prospectus supplement. The rights agent will act solely as our agent in connection with the rights and will not assume any obligation or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights.

The prospectus supplement relating to any rights that we offer will include specific terms relating to the offering, including, among other matters:

 

•

the date of determining the security holders entitled to the rights distribution;

 

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•

the aggregate number of rights issued and the aggregate amount of securities purchasable upon exercise of the rights;

 

•

the exercise price;

 

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the conditions to completion of the rights offering;

 

•

the date on which the right to exercise the rights will commence and the date on which the rights will expire; and

 

•

any applicable federal income tax considerations.

Each right would entitle the holder of the rights to purchase for cash the principal amount of securities at the exercise price set forth in the applicable prospectus supplement. Rights may be exercised at any time up to the close of business on the expiration date for the rights provided in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised rights will become void.

If less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to persons other than our security holders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements, as described in the applicable prospectus supplement.

Transfer Agent and Registrar

American Stock Transfer & Trust Company is the transfer agent and registrar for our common stock.

Listing

Our common stock is listed on The NASDAQ Capital Market under the trading symbol “BDSI.”

 

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PLAN OF DISTRIBUTION

We may sell the securities from time to time pursuant to underwritten public offerings, direct sales to the public, negotiated transactions, block trades or a combination of these methods. We may sell the securities to or through underwriters or dealers, through agents, or directly to one or more purchasers. We may distribute securities from time to time in one or more transactions:

 

•

at a fixed price or prices, which may be changed;

 

•

at market prices prevailing at the time of sale;

 

•

at prices related to such prevailing market prices; or

 

•

at negotiated prices.

A prospectus supplement or supplements will describe the terms of the offering of the securities, including, to the extent applicable:

 

•

the terms of the offering;

 

•

the name or names of the underwriters, if any;

 

•

the purchase price of the securities or other consideration therefor, and the proceeds, if any, we will receive from the sale;

 

•

any over-allotment options under which underwriters may purchase additional securities from us;

 

•

any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;

 

•

any public offering price;

 

•

any discounts or concessions allowed or re-allowed or paid to dealers; and

 

•

any securities exchange or market on which the securities may be listed.

Only underwriters or agents named in the prospectus supplement will be underwriters of or agents for the securities offered by the prospectus supplement.

If underwriters are used in the sale, they will acquire the securities for their own account and may resell the securities from time to time in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. We may offer the securities to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Subject to certain conditions, the underwriters will be obligated to purchase all of the securities offered by the prospectus supplement, other than securities covered by any over-allotment option. Any public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may change from time to time. We may use underwriters with whom we have a material relationship. We will describe in the prospectus supplement, naming the underwriter, the nature of any such relationship.

We may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering and sale of securities, and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.

 

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We may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase securities from us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. We will describe the conditions to these contracts and the commissions we must pay for solicitation of these contracts in the prospectus supplement.

We may also make sales through the Internet or through other electronic means. Since we may from time to time elect to offer securities directly to the public, with or without the involvement of agents, underwriters or dealers, utilizing the Internet or other forms of electronic bidding or ordering systems for the pricing and allocation of such securities, you will want to pay particular attention to the description of that system we will provide in a prospectus supplement.

Such electronic system may allow bidders to directly participate, through electronic access to an auction site, by submitting conditional offers to buy that are subject to acceptance by us, and which may directly affect the price or other terms and conditions at which such securities are sold. These bidding or ordering systems may present to each bidder, on a so-called “real-time” basis, relevant information to assist in making a bid, such as the clearing spread at which the offering would be sold, based on the bids submitted, and whether a bidder’s individual bids would be accepted, prorated or rejected. For example, in the case of debt security, the clearing spread could be indicated as a number of “basis points” above an index treasury note. Of course, many pricing methods can and may also be used.

Upon completion of such an electronic auction process, securities will be allocated based on prices bid, terms of bid or other factors. The final offering price at which securities would be sold and the allocation of securities among bidders would be based in whole or in part on the results of the Internet or other electronic bidding process or auction.

We may provide agents and underwriters with indemnification against civil liabilities, including liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Agents and underwriters may engage in transactions with, or perform services for, us in the ordinary course of business.

All securities we may offer, other than common stock, will be new issues of securities with no established trading market. Any underwriters may make a market in these securities, but will not be obligated to do so and may discontinue any market making at any time without notice. We cannot guarantee the liquidity of the trading markets for any securities.

Any underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation M under the Exchange Act. Over-allotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions involve purchases of the securities, either through exercise of the over-allotment option or in the open market after the distribution is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time.

Any underwriters or agents that are qualified market makers on The NASDAQ Capital Market may engage in passive market making transactions in the common stock on The NASDAQ Capital Market in accordance with Regulation M under the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales of our common stock. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

 

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LEGAL MATTERS

Unless otherwise indicated in the applicable prospectus supplement, the validity of the securities offered by this prospectus, and any supplement thereto, will be passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York. The legality of the securities for any underwriters, dealers or agents will be passed upon by counsel as may be specified in the applicable prospectus supplement.

EXPERTS

The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2014 have been so incorporated in reliance on the report of Cherry Bekaert LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement with the Securities and Exchange Commission under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus is part of that registration statement and does not contain all the information included in the registration statement.

For further information with respect to our common stock and us, you should refer to the registration statement, its exhibits and the material incorporated by reference therein. Portions of the exhibits have been omitted as permitted by the rules and regulations of the Securities and Exchange Commission. Statements made in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. In each instance, we refer you to the copy of the contracts or other documents filed as an exhibit to the registration statement, and these statements are hereby qualified in their entirety by reference to the contract or document.

The registration statement may be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549 and the Regional Offices at the Commission located in the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 233 Broadway, New York, New York 10279. Copies of those filings can be obtained from the Commission’s Public Reference Section, Judiciary Plaza, 100 F Fifth Street, N.E., Washington, D.C. 20549 at prescribed rates and may also be obtained from the web site that the Securities and Exchange Commission maintains at http://www.sec.gov. You may also call the Commission at 1-800-SEC-0330 for more information. We file annual, quarterly and current reports and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information on file at the Commission’s public reference room in Washington, D.C. You can request copies of those documents upon payment of a duplicating fee, by writing to the Securities and Exchange Commission.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

We are “incorporating by reference” certain documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information in the documents incorporated by reference is considered to be part of this prospectus supplement. Statements contained in documents that we file with the SEC and that are incorporated by reference in this prospectus supplement will automatically update and supersede information contained in this prospectus supplement, including information in previously filed documents or reports that have been incorporated by reference in this prospectus supplement, to the extent the new information differs from or is inconsistent with the old information. We have filed or may file the following documents with the SEC and they are incorporated herein by reference as of their respective dates of filing:

 

•

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the SEC on March 16, 2015;

 

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Our Current Reports on Form 8-K, as filed with the SEC on January 28, 2015, February 23, 2015, March 17, 2015, March 30, 2015, May 11, 2015, May 28, 2015 and June 4, 2015;

 

•

Our Quarterly Report on Form 10-Q, as filed with the SEC on May 11, 2015;

 

•

The description of our common stock contained in our Form 8-A filed on June 19, 2002, as amended June 20, 2002, and as it may be further amended from time to time; and

 

•

All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus supplement and before the termination or completion of this offering of common stock shall be deemed to be incorporated by reference in this prospectus supplement and to be a part of it from the filing dates of such documents, except in each case for information contained in any such filing where we indicate that such information is being furnished and is not to be considered “filed” under the Securities Exchange Act of 1934, as amended.

You may request a copy of these filings at no cost (other than exhibits unless such exhibits are specifically incorporated by reference) by writing or telephoning us at the following address and telephone number:

BioDelivery Sciences International, Inc.

4131 ParkLake Avenue, Suite # 225

Raleigh, North Carolina 27612

Telephone: (919) 582-9050

Attention: Ernest R. De Paolantonio

 

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5,000 Shares

 

BioDelivery Sciences International, Inc.

Series B Non-Voting Convertible Preferred Stock

 

 

Prospectus Supplement

May 17, 2018

 

 

Placement Agent

William Blair