SecProbe.io

May 31, 2011

John B. Whelan Chief Executive Officer and Chief Financial Officer AP Pharma, Inc. 123 Saginaw Drive Redwood City, California 94063
 Re: AP Pharma, Inc.
  Registration Statement on Form S-1
  Filed May 18, 2011
  File No. 333-174288
 Dear Mr. Whelan:
We have limited our review of your registra tion statement to those issues we have
addressed in our comments.  In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.
 Please respond to this letter by amending your registration statement and providing the
requested information.  Where you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
 After reviewing any amendment to your re gistration statement and the information you
provide in response to these comments, we may have additional comments.

1. We note that you are registering the sale  of 271,221,610 shares.  Given the size of the
offering under this registration statement relative to the number of shares outstanding held by non-affiliates, the nature of the offeri ng and the total amount of shares being sold
by the selling security holders, the trans action appears to be a primary offering.
Accordingly, because you are not eligible to  conduct a primary at-the-market offering
under Rule 415(a)(4), the shares offered must be at a fixed price.  In addition you must:

• File a new registration statement for th e resale offering at the time of each
conversion of convertible notes becaus e you are not eligible to conduct the
offering on a delayed or continuous basis under Rule 415(a)(1)(x);
• Identify the selling shareholders as underw riters in the registration statement; and

• Include the price at which the underw riters will sell the securities.

John B. Whelan AP Pharma, Inc.
 May 31, 2011  Page 2

If you disagree with our analysis, please a dvise the staff of the company’s basis for
determining that the transaction is appropriately characterized as a transaction that is eligible to be made under Rule 415(a)(1)(i) .  In your analysis, please address the
following among any other relevant factors:

• The date on which and the manner in whic h each selling shareholder received the
shares and/or the overlying securities;

• The relationship of each selling shareholder with the company, including an
analysis of whether the selling sharehol der is an affiliate of the company;

• Any relationships among the selling shareholders;

• The dollar value of the shares registered in relation to the proceeds that the company received from the selling share holders for the securities, excluding
amounts of proceeds that were returned (or will be returned) to the selling
shareholders and/or their affiliates in fees or other payments;

• The discount at which the shareholders will purchase the common stock underlying the convertible notes (or any re lated security, such as a warrant or
option) upon conversion or exercise; and

• Whether or not any of the selling shareholders is in the business of buying and
selling securities.
2. Please provide us, with a view toward disclosu re in the prospectus, with the total dollar
value of the securities underlyi ng the convertible notes that yo u have registered for resale
(using the number of underlying securities that you have re gistered for resale and the
market price per share for those securities on th e date of the sale of the convertible notes).

3. Please provide us, with a view toward disc losure in the prospectus, with tabular
disclosure of the dollar amount of each paymen t (including the value of any payments to
be made in common stock) in connection with the transaction that you have made or may
be required to make to any selling shareholder, any affiliate of a selling shareholder, or any person with whom any selling shareholde r has a contractual re lationship regarding
the transaction (including any interest paym ents, liquidated damages, payments made to
“finders” or “placement agents,” and any othe r payments or potential payments).  Please
provide footnote disclosure of the terms of each such payment.  Please do not include any repayment of principal on the conve rtible notes in this disclosure.

Further, please provide us, with a view to ward disclosure in the prospectus, with
disclosure of the net proceeds to the issuer fr om the sale of the convertible notes and the
total possible payments to all selling shareholde rs and any of their affiliates in the first
year following the sale of convertible notes.

John B. Whelan AP Pharma, Inc.
 May 31, 2011  Page 3

4. Please provide us, with a view toward disc losure in the prospectus, with tabular
disclosure of:

• the total possible profit the selling share holders could realize as a result of the
conversion discount for the securities underlyi ng the convertible notes, presented in a
table with the following information disclosed separately:

• the market price per share of the securi ties underlying the convertible notes on the
date of the sale of the convertible notes;

• the conversion price per share of the underl ying securities on the date of the sale
of the convertible notes;

• the total possible shares underlying the c onvertible notes (assuming no interest
payments and complete conversion throughout the term of the note);

• the combined market price of the total number of shares underlying the
convertible notes, calculated by using the market price pe r share on the date of the
sale of the convertible notes and th e total possible shar es underlying the
convertible notes;

• the total possible shares the selling shar eholders may receive and the combined
conversion price of the total number of shares underlying the convertible notes
calculated by using the conversion price on th e date of the sale of the convertible
notes and the total possibl e number of shares the selling shareholders may
receive; and

• the total possible discount to  the market price as of th e date of the sale of the
convertible notes, calculated by subtracti ng the total conversion price on the date
of the sale of the convertible notes from the combined market price of the total
number of shares underlying the convertible notes on that date.

If there are provisions in the convertible notes that could re sult in a change in the price
per share upon the occurrence of certain events, please provide  additional tabular
disclosure as appropriate.  For example, if the conversion price per share is fixed unless
and until the market price falls below a stated  price, at which point the conversion price
per share drops to a lower price, pl ease provide addi tional disclosure.

5. Please provide us, with a view toward disc losure in the prospectus, with tabular
disclosure of:

• the total possible profit to be  realized as a result of any conversion discounts for
securities underlying any other warrants, options, notes, or othe r securities of the

John B. Whelan AP Pharma, Inc.
 May 31, 2011  Page 4

issuer that are held by the selling shareholders or any affiliates of the selling shareholders, presented in a table with th e following information disclosed separately:

• market price per share of the underlying secu rities on the date of  the sale of that
other security;

• the conversion/exercise price per share as of the date of the sale of that other
security, calculated as follows:

- if the conversion/exercise price per share is set at a fixed price, use the price
per share on the date of the sa le of that othe r security; and

- if the conversion/exercise price per sh are is not set at a fixed price and,
instead, is set at a floating rate in re lationship to the market price of the
underlying security, use the conversion/ex ercise discount rate and the market
rate per share on the date of the sale of  that other security  and determine the
conversion price per shar e as of that date;

• the total possible shares to  be received under the partic ular securities (assuming
complete conversion/exercise);

• the combined market price of the total number of underlying shares, calculated by
using the market price per share on the date of the sale of that other security and
the total possible shares  to be received;

• the total possible shares to  be received and the combin ed conversion price of the
total number of shares underlying that other security calculated by using the
conversion price on the date of the sale of that other security and the total possible
number of underl ying shares; and

• the total possible discount to the market price as of the date of the sale of that
other security, calculated by subtracting th e total conversion/exercise price on the
date of the sale of that other security from the combined market price of the total number of underlying shares on that date.

6. Please provide us, with a view toward disc losure in the prospectus, with tabular
disclosure of:

• the gross proceeds paid or payable to the i ssuer in the convertible  notes transaction;

• all payments that have been made or that  may be required to be made by the issuer
that are disclosed in response to comment 3;

• the resulting net proceeds to the issuer; and

John B. Whelan AP Pharma, Inc.
 May 31, 2011  Page 5

• the combined total possible profit to be realized as a result of any conversion
discounts regarding the securi ties underlying the convert ible notes and any other
warrants, options, notes, or othe r securities of the issuer that are held by the selling
shareholders or any affiliates of the selli ng shareholders that is  disclosed in response
to comments 4 and 5.

Further, please provide us, with a view to ward disclosure in the prospectus, with
disclosure – as a percentage – of the total amount of all possi ble payments as disclosed in
response to comment 3 and the total possible di scount to the market price of the shares
underlying the convertible notes as disclosed in response to comment 4 divided by the net
proceeds to the issuer from the sale of the c onvertible notes, as well as the amount of that
resulting percentage aver aged over the term of the convertible notes.

7. Please provide us, with a view toward disc losure in the prospectus, with tabular
disclosure of all prior securities transact ions between the issuer (or any of its
predecessors) and the selling shareholders, any affiliates of the selling shareholders, or any person with whom any selling shareholde r has a contractual re lationship regarding
the transaction (or any predecessors of thos e persons), with the table including the
following information disclosed separately for each transaction:

• the date of the transaction;

• the number of shares of the class of securi ties subject to the transaction that were
outstanding prior to the transaction;

• the number of shares of the class of securi ties subject to the transaction that were
outstanding prior to the transaction and held by persons other than the selling
shareholders, affiliates of the company, or affiliates of the selling shareholders;

• the number of shares of the class of securi ties subject to the transaction that were
issued or issuable in connection with the transaction;

• the percentage of total issued  and outstanding securities that  were issued or issuable
in the transaction (assuming full issuance), with the percentage calculated by taking
the number of shares issued and outstanding prior to the applicable transaction and
held by persons other than the selling sh areholders, affiliates of the company, or
affiliates of the selling shareholders, and dividing that number by the number of shares issued or issuable in connect ion with the applic able transaction;

• the market price per share of the class of  securities subject to the transaction
immediately prior to the tr ansaction (reverse split ad justed, if necessary); and

• the current market price per share of the cla ss of securities subject  to the transaction
(reverse split adjusted, if necessary).

John B. Whelan AP Pharma, Inc.
 May 31, 2011  Page 6

8. Please provide us, with a view toward disc losure in the prospectus, with tabular
disclosure comparing:

• the number of shares outstanding prior to th e convertible notes transaction that are
held by persons other than the selling sh areholders, affiliates of the company, and
affiliates of the selling shareholders;

• the number of shares registered for resale by the selling shareholders or affiliates of the selling shareholders in  prior registration statements;

• the number of shares registered for resale  in those prior regi stration statements by
the selling shareholders or affiliates of the selling shareholders that continue to be
held by the selling shareholders or affiliates of the selling shareholders;

• the number of shares that have been sold in prior registered resale transactions by
the selling shareholders or affiliates of the selling shareholders; and

• the number of shares registered for resale on behalf of the selling shareholders or
affiliates of the selling shareholders in the current transaction.

In this analysis, the calculation of the number of outstanding shares should not
include any securities underl ying any outstanding convertib le securities, options, or
warrants.

9. Please provide us, with a view toward disclo sure in the prospectus , with the following
information:

• whether the issuer has the in tention, and a reasonable basi s to believe that it will
have the financial ability, to make all payments on the overlying securities; and

• whether – based on information obtained from  the selling shareholders – any of the
selling shareholders have an existing s hort position in the company’s common stock
and, if any of the selling shareholders have an existing short position in the
company’s stock, the following additional information:

- the date on which each such selling share holder entered into that short position;
and

- the relationship of the date on which each such selling shareholder entered into
that short position to the date of the announcement of the convertible notes
transaction and the filing of the registration statement ( e.g., before or after the
announcement of the convertible notes trans action, before the filing or after the
filing of the registrati on statement, etc.).

John B. Whelan AP Pharma, Inc.
 May 31, 2011  Page 7

10. Please provide us, with a view toward disclosure in the prospectus, with:

• a materially complete description of the relationships and arrangements that have
existed in the past three years or are to be performed in the futu re between the issuer
(or any of its predecessors) and the selli ng shareholders, any affiliates of the selling
shareholders, or any person with whom any selling shareholder has a contractual relationship regarding the transaction (or a ny predecessors of those persons) – the
information provided should include, in reason able detail, a complete description of
the rights and obligations of the parties in connection with the sale  of the convertible
notes; and
• copies of all agreements between the issuer (or any of its predecessors) and the selling shareholders, any affiliates of the selling shareholders, or any person with whom any selling shareholder has a c ontractual relationship regard ing the transaction (or any
predecessors of those persons) in connection wi th the sale of the convertible notes.

If it is your view that  such a description of  the relationships and arrangements between
and among those parties already is presented in  the prospectus and that all agreements
between and/or among those parties are included as exhibits to the registration statement,
please provide us with confirmati on of your view in this regard.

11. Please provide us, with a view toward disclosu re in the prospectus, with a description of
the method by which the company determined the number of shares it seeks to re