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CORRESP
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corresp

    October 16, 2006

    Alan L. Talesnick

    (303) 894-6378

    atalesnick@pattonboggs.com

BY EDGAR AND OVERNIGHT COURIER

Ms. Pamela A. Long

Securities and Exchange Commission

100 F Street, N.E.

Mail Stop 7010

Washington, D.C. 20549

    Re:

    Lifeline Therapeutics, Inc.

    Registration Statement on Form SB-2

    File No. 333-126288

    June 30, 2005 Form 10-KSB File N

Dear Ms. Long:

     On behalf of Lifeline Therapeutics, Inc. (the “Registrant”), this letter is to address the
questions raised in your August 17, 2006 letter. The information included in this letter has been
provided to us by the Registrant.

     Please see our responses to the six comments outlined below:

Comment 1. With respect to each of the following transactions, please tell us
whether related parties were involved and if so, describe the relationship with the related
party and what percentage of the total consideration received was from a related party.

    •

    The $2.9 million of 10% bridge notes, convertible into common stock at $2 per
share, issued between January and March of 2005. The March 31, 2005 Form 10-QSB
states that the $60,000 of these securities was issued to related parties.

    •

    The $2.7 million private placement of warrants and common stock, at $2 per
share, on April 18, 2005.

    •

    The $2.3 million private placement of warrants and common stock, at $2 per
share, on May 18, 2005.

Ms. Pamela A. Long

October 16, 2006

Page 2

Response to Comment 1. Related parties were involved in the transactions, see below
for the relationship to the Registrant and the corresponding percentage of the total
consideration that was received from the related party.

    •

    The $2.9 million of 10% bridge notes, convertible into common stock at $2 per
share, issued between January and March of 2005.

Investors in the bridge notes who were related parties at the time of their investment
are as follows:

    Transaction

    Convertible

    % of

    Related Party

    Relationship

    Date

    Note

    Total

    Carol W. Streets Roth IRA

    Spouse of Former Director

    09/23/04

    $
    32,000

    Daniel W Streets

    Former Director

    11/23/04

    28,000

    Total Mr. Streets and Spouse

    $
    60,000

    2.0
    %

    Leigh Severance-PSPT

    Director

    01/17/05

    $
    75,000

    Leigh Severance-PPT

    Director

    01/17/05

    75,000

    Sharon Severance

    Spouse of Director

    2/3/2005

    10,000

    Leigh Severance-PSPT

    Director

    2/4/2005

    85,000

    Leigh Severance-PPT

    Director

    2/4/2005

    15,000

    H. Leigh Severance

    Director

    2/4/2005

    250,000

    Total Mr. Severance and Spouse

    $
    510,000

    17.3
    %

    Total related party participation

    $
    570,000

    19.3
    %

    Total borrowings

    $
    2,954,000

    100.0
    %

Note: Two bridge note investors became directors subsequent to their investment

The above information is also set forth in Item 12 – Certain Relationships and Related
Party Transactions of the Registrant’s Form 10-KSB for the fiscal year ended June 30, 2005.
On or before the January 17, 2005 sale of the January 2005 bridge notes shown above, the
placement agent committed to a price for the March-May 2005 private placement in order to
inform the prospective bridge note investor of what the pricing would be for the later
private placement. This was done to provide an incentive for the prospective bridge
investors to provide the bridge capital that the Registrant needed until

Ms. Pamela A. Long

October 16, 2006

Page 3

the funding from the private placement could be received. The investors in the bridge notes
were interested in the bridge notes only as a preliminary step to the private placement.
Unless the pricing terms were attractive, investors would not have likely invested in the
bridge notes. Accordingly, the $2.00 per share price for the March/April 2005 private
placement was established during the first two weeks of January 2005 in order that the
placement agent would be able to use this as an enticement for potential bridge investors.
(The Registrant has confirmed this information with a representative of the private
placement agent at that time.) For the 30 days preceding January 17, 2005, the price range
of the Respondent’s stock was $2.70 to $3.50 per share with a weighted average of $3.02 per
share for December 17, 2004 through January 14, 2005. The private placements that occurred
in April and May 2005 were priced in January 2005 at $2.00 per share based on the market
value of the stock in December 2004 and early January 2005 when the stock had not traded
above $3.50 per share and when the 30-day average weighted average trading price was $3.02
per share. At that time the $2.00 price represented a 34% discount from the 30-day weighted
average trading price and a discount of 38% from the closing price of $3.20 on January 14,
2005.

    •

    The $2.7 million private placement of warrants and common stock, at $2 per
share, on April 18, 2005.

No related parties invested in the April 18, 2005 private placement. As indicated above,
the $2 per share pricing occurred in early January 2005 when the trading price had not been
above $3.50 per share for the preceding 30 days even though the closing price at April 18,
2005 was $6.30.

    •

    The $2.3 million private placement of warrants and common stock, at $2 per
share, on May 18, 2005.

Investors in the May 18 private placement who were related parties at the time of their
investment are as follows:

    Transaction

    Private

    % of

    Related Party

    Relationship

    Date

    Placement

    Total

    Baz, Javier

    Director

    5/18/2005

    $
    685,627

    29.5
    %

    James D. & Kathleen D. Crapo

    Director

    5/18/2005

    50,000

    2.1
    %

    H.L. Severance, Inc. Profit Sharing
Plan

    Controlled by Director

    5/18/2005

    25,000

    1.1
    %

    Race Place Investments Corporation,
LLC

    Controlled by Director

    5/18/2005

    50,000

    2.1
    %

    Severance, Leigh

    Director

    5/18/2005

    25,000

    1.1
    %

    Total related party participation

    $
    835,627

    35.9
    %

    Total May 18, 2005 private placement

    $
    2,326,627

    100.0
    %

All related party investments were at the same terms as all other investors

Ms. Pamela A. Long

October 16, 2006

Page 4

The closing price of the Registrant’s stock on May 18, 2005 was $7.65 per share. The
price range of the Respondent’s stock for the 30 days preceding May 18, 2005 was $4.40 to
$7.65 per share with a weighted average of $5.93 per share. However, the private placement
price was determined during the first two weeks of January 2005, when the weighted average
price trading for the 30 days preceding January 17, 2005 was $3.02 per share.

Comment 2. With respect to the above three transactions, please describe for us how
the restrictions on resale differ from the resale restrictions attached to the 1 million
shares issued March 10, 2005 to Mr. Barber. The March 10, 2005 Settlement and Release
Agreement appears to suggest that the securities issued to Mr. Barber have materially
different restrictions.

Response to Comment 2.

The restrictions covering the shares of common stock issued to Mr. Barber (the “Barber
Shares”) and the restrictions covering the shares of common stock issued or issuable in the
other three transactions described under Comment 1 above (the “Other Shares”) are
substantially the same with respect to the sales in the public market after the effective
date of the Registration Statement. Although after the Registration Statement becomes
effective, Mr. Barber is restricted to the sale of 150,000 shares during the first and each
subsequent 90-day period. This restriction does not appear to make a practical difference
because, given the current limited trading volume of the Registrant’s common stock, and
assuming the effectiveness of the registration statement (which is the event that triggers
the limitation and which would render free-trading status to, and the possible sale of, the
other shares subject to the registration statement), the limitation of 150,000 shares for
each of the 90-day periods appears to exceed the amount that would be practically feasible
for the Registrant to sell during the time period anyway.

Comment 3. On March 10, 2005 you acquired the remaining minority shareholder
interest in Lifeline Nutraceuticals by issuing 1,000,000 shares of your common stock. We
note that you allocated the entire purchase consideration to goodwill. It is unclear to us
why you did not allocate a portion of the purchase price to other intangible assets as

Ms. Pamela A. Long

October 16, 2006

Page 5

required by paragraph 37 of SFAS 141. In this regard, we note the discussion of
intellectual property rights on page 8 of the Form SB-2 filed June 30, 2005. Given that
Protandim sales commenced March 2005, it would appear that a substantial allocation should
be made to the acquired interest in the product. Exhibit A to your May 26, 2006 letter also
identifies “Intellectual Property in the form of patent applications... owned by Lifeline
Nutraceuticals” as the number one reason that the minority interest was acquired. This
asset must be separately valued pursuant to 39 and A14e of SFAS 141. Paragraph A14 of SFAS
141 also lists other examples of intangible assets that meet the criteria for recognition
apart from goodwill.

Response to Comment 3. On March 10, 2005, the minority interest of our subsidiary
was acquired through the issuance of 1,000,000 shares of common stock and the entire
purchase consideration was allocated as goodwill.

The Registrant has the policy of capitalizing legal and other costs associated with the
acquisition of patents into patent costs. Amortization of these patent costs will start
once the patents are granted. As of March 10, 2005, only $26,000 of patent costs had been
incurred and capitalized into intangibles.

According to SFAS 141, Business Combinations, paragraph 39, “an intangible asset shall be
recognized as an asset apart from goodwill...only if it is separable, that is, it is capable
of being separated or divided from the acquired entity and sold, transferred, licensed,
rented, or exchanged (regardless of whether there is an intent to do so)”. Please see SFAS
141, paragraph 39 that is set forth below. The nature and intent of the transaction with
Mr. Barber was purely to acquire the remaining minority interest in Lifeline Nutraceuticals,
and management did not believe that there were any intangible assets arising separately from
goodwill in the manner described in SFAS 141, paragraph 39.

SFAS 141, paragraph 39, states, “An intangible asset shall be recognized as an asset apart
from goodwill if it arises from contractual or other legal rights (regardless of whether
those rights are transferable or separable from the acquired entity or from other rights and
obligations). If an intangible asset does not arise from contractual or other legal rights,
it shall be recognized as an asset apart from goodwill only if it is separable, that is, it
is capable of being separated or divided from the acquired entity and sold, transferred,
licensed, rented, or exchanged (regardless of whether there is an intent to do so).”

The facts and circumstances surrounding the transaction with Mr. Barber drove the allocation
of the purchase consideration entirely to goodwill. At the time of the transaction, neither
the Registrant nor the subsidiary had applied for a patent. Mr. Barber did not own directly
any portion of the patents and trademarks prior to the date of the

Ms. Pamela A. Long

October 16, 2006

Page 6

transaction. If he had, a portion of the purchase price would have been allocated to
intangibles.

In reviewing the transaction with Mr. Barber, the transaction was undertaken for the
following business reasons:

    1.

    Lifeline Nutraceuticals was the operating company with the intellectual
property, business relationships, etc. Lifeline Therapeutics, from both a corporate and
a financial community perspective wanted to own 100% of this subsidiary in order to
simplify the corporate structure and to enhance the possibility of increasing the
market value of the Registrant’s common stock; and

    2.

    By owning 100% of the subsidiary, the Registrant could eliminate concerns over
fiduciary relationships between the companies as operations were initiated.

According to SFAS 141, paragraph 43, “[t]he excess of the cost of an acquired entity over
the net of the amounts assigned to assets acquired and liabilities assumed shall be
recognized as an asset referred to as goodwill. An acquired intangible asset that does not
meet the criteria in paragraph 39 shall be included in the amount recognized as goodwill.”
As the consideration received in the transaction with Mr. Barber was not considered
separable from goodwill and did not meet the criteria in SFAS 141, paragraph 39, the
Respondent believes the entire intangible asset should be reflected as goodwill.

Comment 4. We note the Settlement and Release Agreement included as exhibit 10.1 to
your Form 10-K filed March 14, 2005. Part I.G. of the contract specifically states that the
settlement addressed the parties “desire to avoid the uncertainty, time, and expense of
litigating their dispute”. Consequently, part of the consideration must be allocated to the
legal settlement. This allocation should approximate the difference between the fair value
of the 1 million shares and the equivalent fair value of the acquired business as determined
by your independent valuation specialist. Page 17 of the Quist Valuation report documents
their conclusion that the fair value of Lifeline was $36 million which, in light of the
18,111,064 shares outstanding on March 31, 2005, equates to $2 per share. Based on
management’s $5.31 fair value estimate, the portion allocable to the acquired minority
interest would be $2 per share and the portion allocable to legal settlement would be the
remainder ($3.31 per share). Given the specific language in the settlement agreement, it
appears inappropriate that legal expense was not recognized.

Response to Comment 4. The Settlement and Release Agreement entered into with Mr.
Barber addresses the entire agreement with Mr. Barber. This includes the share exchange
which is separate from consideration of $250,000 paid to Mr. Barber for a covenant not to
compete. As a separate condition, Mr. Barber permanently waived his rights to claim

Ms. Pamela A. Long

October 16, 2006

Page 7

any amounts owed for services rendered, costs, expenses, and any other amounts advanced or
claimed as owed by Lifeline through the date of the Agreement.

While it is correct that the parties desired “to avoid the uncertainty, time, and expense of
litigating their dispute”, it appears that the purchase of the minority interest did not
include consideration for legal expenses related to a settlement. Further, as the agreement
indicates, the purchase transaction is a separate transaction from other provisions of the
agreement including the non-compete agreement, claims for prior services rendered,
nondisclosures, non-disparagement and other separately identifiable and agreed upon terms.
In addition, the Registrant believes that the value of the stock paid to Mr. Barber was not
less than the value of the stock acquired in the subsidiary (see response to Comment 5).
Therefore, there is nothing allocable to legal expenses from this part of the transaction.

Accordingly, the Registrant does not believe there is a reason to allocate any portion of
the purchase price on the minority interest to legal expense. Doing so would be outside the
scope of the agreement and would be allocated without merit.

An independent entity named Quist Valuation (“Q