SEC Company Response from CANCER THERAPEUTICS INC (CIK 0000876367) — Feb 18, 2005
CANCER THERAPEUTICS INC (CIK 0000876367)
Date: Feb. 18, 2005 · CIK: 0000876367 · Accession: 0001024920-05-000013
AI Filing Summary & Sentiment
File numbers found in text: 333-119915
Referenced dates: September 16, 1997
Letter
11585 SOUTH STATE, SUITE 102 DRAPER, UTAH 84020 (801)816-2511 FAX:(801)816-2599 KDENOS@DENOSLAW.COM February 17, 2005 VIA FEDERAL EXPRESS Mr. Jay Ingram Mr. John Reynolds U.S. SECURITIES AND EXCHANGE COMMISSION Division of Corporate Finance Office of Emerging Growth Companies 450 Fifth Street, N.W., Mail Stop 0511 Washington, D.C. 20549 Telephone (202) 942-2791 Facsimile (202) 942-9516
Re: Cancer Therapeutics, Inc. Registration Statement on Form SB-2 File No. 333-119915
Dear Messrs. Ingram and Reynolds:
This firm serves as counsel to Cancer Therapeutics, Inc. in connection with its submission of a registration statement with the Securities and Exchange Commission on Form SB-2. We acknowledge receipt of your second set of comments to our initial filing on Form SB-2 on January 25, 2005. We thank you for your input and this letter is intended to respond accordingly. Each paragraph number of this letter corresponds to your comments to us dated January 25, 2005, and we have attached two redlined copies and one clean copy, each such copy bound, of our amended registration statement on Form SB-2 for your timely review and comment as appropriate. We note to you that references to page numbers in the registration statement will be with respect to the redlined copies.
General _______
1. COMMENT. Please file on EDGAR a redlined version of each future amendment to your registration statement. See Rule 472 of Regulation C.
RESPONSE: We have filed the redlined version of this amendment in accordance with Rule 472 of Regulation C.
2. COMMENT. Supplementally confirm your awareness that, prior to any involvement of any broker-dealer in the offering, such broker-dealer must seek and obtain clearance of the underwriting compensation and arrangements from the NASD Corporate Finance.
<PAGE>
RESPONSE: We are aware that prior to any involvement of any broker-dealer in the offering, such broker-dealer must seek and obtain clearance of the underwriting compensation and arrangements from NASD Corporate Finance.
Registration Statement Facing Page __________________________________
3. COMMENT. Please include the Commission registration number on the facing page of all future amendments to this registration statement.
RESPONSE: We have included the Commission registration number on the facing page.
Prospectus Cover Page _____________________
4. COMMENT. Delete the final two paragraphs on the cover page. See Item 501(a) of Regulation S-B.
RESPONSE: We have deleted the final two paragraphs on the cover page.
Table of Contents _________________
5. COMMENT. Remove the last three items of the table unless these items are to be delivered with final prospectus.
RESPONSE: We have removed these items from the table of contents.
6. COMMENT. The EDGAR filing does not contain page numbers. Please revise.
RESPONSE: We have included page numbers in the EDGAR filing.
Prospectus Summary - Going Concern __________________________________
7. COMMENT. Typographical errors in this section should be corrected for the "three month period ended August 31, 2003" (should be "2004") and "accumulated deficit of $2,726,721" (should be "$2,752,899). Please revise.
RESPONSE: We have corrected the errors in this section. Please see the corrections on page 2.
<PAGE>
Risk Factors ____________
8. COMMENT. The Second risk factor is vague and mitigating. The company has no working capital, will be insolvent even after the maximum offering proceeds, is in default on several loan obligations and has an Internal Revenue lien against its assets. "The financial condition is dire" per several other disclosures in the prospectus. Please revise the risk factor.
RESPONSE: Please see the additional disclosures on page 3.
9. COMMENT. We reissue our previous comment 10 because some of your risk factors are still too broad and generic and do not state the material risk specific to Cancer Therapeutics, Inc. We remind you that, as a general rule, a risk factor is probably too generic if it is readily transferable to other offering documents or describes circumstances or factual situations that are equally applicable to other similarly situated businesses. The following risk factors should be revised, deleted or moved to another section of the prospectus as appropriate: 10, 12, 14, and 15.
RESPONSE: Please see the additional disclosures on pages 4-6.
10. COMMENT. We reissue our previous comment 11. To the extent possible, avoid the generic conclusion you make in some of your risk factors that the risk discussed would have a material adverse effect on your business, income, financial condition, and/or operating results or your business may be harmed. For example, see the third risk factor. Instead, replace this language with specific disclosure of how your business, financial condition, and/or operating results would be affected.
RESPONSE: Please see the additional disclosures on page 3-6.
Use of Proceeds _______________
11. COMMENT. Commensurate with Item 504 of Regulation S-B, please disclose the priority of each purpose. Also, please address the full range of offering proceeds. Currently, you merely provide disclosure assuming the minimum and maximum amounts are sold.
RESPONSE: We have modified this section on Page 7 consistent with the above comment.
<PAGE>
Dilution - Net Tangible Book Value __________________________________
12. COMMENT. We note your discussion of post offering pro forma net book values does not appear to factor in the effect of offering expenses ($68,559). Please revise your computations to factor in such costs and revise the table to provide us with a supplemental schedule supporting the revised amounts.
RESPONSE: We have revised this section on pages 8 and 9 accordingly.
Management's Discussion and Analysis ____________________________________ Overview ________
13. COMMENT. Please provide a basis for your statement that Cancer Therapeutics is "an experienced U.S. producer and provider of treatments for cancer ...." To this extent, we reissue our previous comment 17. The company is merely in the research stage and has minimal revenues of any kind.
RESPONSE: Please see the additional disclosures on page 10.
14. COMMENT. We note reliance on what appear to be market analyses. See, for example, reference to the American Cancer Society's Cancer Statistics 2004. We thus partially reissue our previous comment 33 and urge you to disclose whether the source is publicly available for no or nominal charge. If the sources are not available for no or nominal charge, then the company must adopt the information as the company's own or provide a consent for it's' use. Some examples include the following. This is not an exhaustive list.
a. The disclosure in the second, third, and fourth paragraphs of the "Overview" subsection on page 13; b. The disclosure in the "Conventional Cancer Treatment Modalities" subsection on page 19; c. The disclosure in the "Biotherapy Treatment" section on page 20; d. The disclosure in the "Annual Target Market" subsection commencing on page 20.
RESPONSE: Please see the additional disclosures on pages 10-20.
15. Please provide a basis for the statement appearing on page 13 that reads, "[e]ven if 10% of 1.4 million newly diagnosed patients choose to store their tumors, this equates to a $175 million market opportunity." All projections must comply with the guidelines for projections in Item 10 of Regulations S-K and S_B. We may have further comment.
RESPONSE: The Company has deleted this statement. Please see page 10.
<PAGE>
Results of Operations _____________________ Results of Operations and Statements of Operations, page F/S-5
16. COMMENT. Refer to prior comments 24 and 56. Based on the expanded disclosure provided on bad debt expense, supplementally explain how the amounts written off were "loans" since payments were made to volunteers you were attempting to employ and no repayment was expected once the volunteer left the Company. It appears that the funds provided were never intended as loans, and in substance, the transactions were equivalent to paying contractors for services rendered and should have been accounted for as such. We may have further comment after reviewing your response.
RESPONSE: The Commission's position is correct, and the Company has revised its financial statements accordingly. Please see changes to the Management's Discussion and Analysis of Financial Condition and Results of Operation on page 11, as well as the Company's Statements of Operations for each of the fiscal years ended May 31, 2003 and 2004 on page F/S-5.
Bad Debt Expense
17. COMMENT. The "employee and related party loans written off...during the fiscal years ended May 31, 2004 and 2003" should be fully discussed hereunder and/or in Certain Relationships and Related Transactions section, including names, amounts and reasons pursuant to Item 404 of Regulation S-B.
RESPONSE: In accordance with our response to comment 16, we have also updated the disclosure under Related Party Transactions on Page 25.
Business ________ Corporate Organization ______________________
18. COMMENT. Immune Complex Corporation may be considered a predecessor of the company as defined in Rule 405 of Regulation C under the Securities Act. Please address and, if so, include the history and development of the predecessor. Any insolvency proceedings against it esulting in the liquidation should be discussed. Indicate any overlap of officers and directors with those of the company.
RESPONSE: Please see the additional disclosures on page 13.
19. Consider the exemption from registration available for the spin-off and advise. See Staff Legal Bulletin No. 4 dated September 16, 1997 in this regard.
RESPONSE: We note that Staff Legal Bulletin No. 4 (September 16, 1997) ("Bulletin") provides that spun off shares will not have to be registered with the Commission if the following five conditions are met:
1. The shareholders of Immune Complex Corporation do not provide
<PAGE>
consideration for their receipt of Cancer Therapeutics shares;
2. The spin off is pro-rata to the shareholders of Cancer Therapeutics;
3. Immune Complex Corporation provides adequate information about the spin off and Cancer Therapeutics to its shareholders and to trading markets;
4. Immune Complex Corporation has a valid business purpose for the spin off; and
5. Immune Complex Corporation has either formed Cancer Therapeutics or has held its Cancer Therapeutics shares for more than two years.
Pursuant to the Bulletin, the spin off of Cancer Therapeutics in liquidation of Immune Complex Corporation met the following conditions:
1. The shareholders of Immune Complex Corporation did not provide consideration for their receipt of Cancer Therapeutics shares;
2. The spin off of Cancer Therapeutics shares was pro-rata to the shareholders of Immune Complex Corporation; and
3. The spin off of Cancer Therapeutics was the result of a business decision by the board of Immune Complex Corporation, a defunct company, to allow its shareholders to directly hold shares of Cancer Therapeutics with the hope that the growth and development of Cancer Therapeutics would permit the Immune Complex Corporation Shareholders to recover a portion of their losses in holding Immune Complex Corporation shares.
Immune Complex Corporation only held its shares of Cancer Therapeutics for approximately 21 months and, consequently, the required holding period has not been met. It is therefore clear that the spin off of Cancer Therapeutics did not specifically meet all of the criteria of the Bulletin and that the relevant analysis would appear to turn on whether the spin off is a distribution of securities. But whether or not the spin off is indeed a distribution, what course of action would be in the best interests of the shareholders of Immune Complex Corporation shareholders to enable them to benefit from their receipt of Cancer Therapeutics shares? We believe that, since the underlying purpose of the securities laws is to provide full and fair disclosure to investors, particularly investors who provide consideration in exchange for securities, the dissemination of the registration statement and future annual reports filed under the Exchange Act (including other Exchange Act Filings Accessible on the EDGAR system) to Immune Complex Corporation shareholders who received Cancer Therapeutics shares is the course of action that best positions them to benefit from a transaction that, although was three months short of
<PAGE>
technical compliance with the Bulletin, strives to achieve its intent. We, of course, welcome the Commission's further comments on this position.
20. COMMENT. Please define "biotherapy" and "oncology markets".
RESPONSE: We have defined "biotherapy" and "oncology markets." on pages 1 and 13.
The Business of Cancer Therapeutics ___________________________________ Services
21. COMMENT. Please continue to revise your disclosure consistent with our previous comment 36. Because you are still in the developmental state of advancing the service associated with Tumor Derived Activated Cells, please provide an estimated timeframe associated with the developmental process, i.e., discuss how long the service will be in the developmental stage.
RESPONSE: Please see the additional disclosures on pages 14 and 15.
Outlo
Show Raw Text
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<TEXT>
K E N E T H I. D E N O S, P. C.
11585 SOUTH STATE, SUITE 102
DRAPER, UTAH 84020
(801)816-2511
FAX:(801)816-2599
KDENOS@DENOSLAW.COM
February 17, 2005
VIA FEDERAL EXPRESS
Mr. Jay Ingram
Mr. John Reynolds
U.S. SECURITIES AND EXCHANGE COMMISSION
Division of Corporate Finance
Office of Emerging Growth Companies
450 Fifth Street, N.W., Mail Stop 0511
Washington, D.C. 20549
Telephone (202) 942-2791
Facsimile (202) 942-9516
Re: Cancer Therapeutics, Inc.
Registration Statement on Form SB-2
File No. 333-119915
Dear Messrs. Ingram and Reynolds:
This firm serves as counsel to Cancer Therapeutics, Inc. in connection
with its submission of a registration statement with the Securities and Exchange
Commission on Form SB-2. We acknowledge receipt of your second set of comments
to our initial filing on Form SB-2 on January 25, 2005. We thank you for your
input and this letter is intended to respond accordingly. Each paragraph number
of this letter corresponds to your comments to us dated January 25, 2005, and we
have attached two redlined copies and one clean copy, each such copy bound, of
our amended registration statement on Form SB-2 for your timely review and
comment as appropriate. We note to you that references to page numbers in the
registration statement will be with respect to the redlined copies.
General
_______
1. COMMENT. Please file on EDGAR a redlined version of each future
amendment to your registration statement. See Rule 472 of Regulation
C.
RESPONSE: We have filed the redlined version of this amendment in
accordance with Rule 472 of Regulation C.
2. COMMENT. Supplementally confirm your awareness that, prior to any
involvement of any broker-dealer in the offering, such broker-dealer
must seek and obtain clearance of the underwriting compensation and
arrangements from the NASD Corporate Finance.
<PAGE>
RESPONSE: We are aware that prior to any involvement of any
broker-dealer in the offering, such broker-dealer must seek and obtain
clearance of the underwriting compensation and arrangements from NASD
Corporate Finance.
Registration Statement Facing Page
__________________________________
3. COMMENT. Please include the Commission registration number on the
facing page of all future amendments to this registration statement.
RESPONSE: We have included the Commission registration number on the
facing page.
Prospectus Cover Page
_____________________
4. COMMENT. Delete the final two paragraphs on the cover page. See Item
501(a) of Regulation S-B.
RESPONSE: We have deleted the final two paragraphs on the cover page.
Table of Contents
_________________
5. COMMENT. Remove the last three items of the table unless these items
are to be delivered with final prospectus.
RESPONSE: We have removed these items from the table of contents.
6. COMMENT. The EDGAR filing does not contain page numbers. Please
revise.
RESPONSE: We have included page numbers in the EDGAR filing.
Prospectus Summary - Going Concern
__________________________________
7. COMMENT. Typographical errors in this section should be corrected for
the "three month period ended August 31, 2003" (should be "2004") and
"accumulated deficit of $2,726,721" (should be "$2,752,899). Please
revise.
RESPONSE: We have corrected the errors in this section. Please see the
corrections on page 2.
<PAGE>
Risk Factors
____________
8. COMMENT. The Second risk factor is vague and mitigating. The company
has no working capital, will be insolvent even after the maximum
offering proceeds, is in default on several loan obligations and has
an Internal Revenue lien against its assets. "The financial condition
is dire" per several other disclosures in the prospectus. Please
revise the risk factor.
RESPONSE: Please see the additional disclosures on page 3.
9. COMMENT. We reissue our previous comment 10 because some of your risk
factors are still too broad and generic and do not state the material
risk specific to Cancer Therapeutics, Inc. We remind you that, as a
general rule, a risk factor is probably too generic if it is readily
transferable to other offering documents or describes circumstances or
factual situations that are equally applicable to other similarly
situated businesses. The following risk factors should be revised,
deleted or moved to another section of the prospectus as appropriate:
10, 12, 14, and 15.
RESPONSE: Please see the additional disclosures on pages 4-6.
10. COMMENT. We reissue our previous comment 11. To the extent possible,
avoid the generic conclusion you make in some of your risk factors
that the risk discussed would have a material adverse effect on your
business, income, financial condition, and/or operating results or
your business may be harmed. For example, see the third risk factor.
Instead, replace this language with specific disclosure of how your
business, financial condition, and/or operating results would be
affected.
RESPONSE: Please see the additional disclosures on page 3-6.
Use of Proceeds
_______________
11. COMMENT. Commensurate with Item 504 of Regulation S-B, please disclose
the priority of each purpose. Also, please address the full range of
offering proceeds. Currently, you merely provide disclosure assuming
the minimum and maximum amounts are sold.
RESPONSE: We have modified this section on Page 7 consistent with the
above comment.
<PAGE>
Dilution - Net Tangible Book Value
__________________________________
12. COMMENT. We note your discussion of post offering pro forma net book
values does not appear to factor in the effect of offering expenses
($68,559). Please revise your computations to factor in such costs and
revise the table to provide us with a supplemental schedule supporting
the revised amounts.
RESPONSE: We have revised this section on pages 8 and 9 accordingly.
Management's Discussion and Analysis
____________________________________
Overview
________
13. COMMENT. Please provide a basis for your statement that Cancer
Therapeutics is "an experienced U.S. producer and provider of
treatments for cancer ...." To this extent, we reissue our previous
comment 17. The company is merely in the research stage and has
minimal revenues of any kind.
RESPONSE: Please see the additional disclosures on page 10.
14. COMMENT. We note reliance on what appear to be market analyses. See,
for example, reference to the American Cancer Society's Cancer
Statistics 2004. We thus partially reissue our previous comment 33 and
urge you to disclose whether the source is publicly available for no
or nominal charge. If the sources are not available for no or nominal
charge, then the company must adopt the information as the company's
own or provide a consent for it's' use. Some examples include the
following. This is not an exhaustive list.
a. The disclosure in the second, third, and fourth paragraphs of the
"Overview" subsection on page 13;
b. The disclosure in the
"Conventional Cancer Treatment Modalities" subsection on page 19;
c. The disclosure in the "Biotherapy Treatment" section on page 20;
d. The disclosure in the "Annual Target Market" subsection commencing
on page 20.
RESPONSE: Please see the additional disclosures on pages 10-20.
15. Please provide a basis for the statement appearing on page 13 that
reads, "[e]ven if 10% of 1.4 million newly diagnosed patients choose
to store their tumors, this equates to a $175 million market
opportunity." All projections must comply with the guidelines for
projections in Item 10 of Regulations S-K and S_B. We may have further
comment.
RESPONSE: The Company has deleted this statement. Please see page 10.
<PAGE>
Results of Operations
_____________________
Results of Operations and Statements of Operations, page F/S-5
16. COMMENT. Refer to prior comments 24 and 56. Based on the expanded
disclosure provided on bad debt expense, supplementally explain how
the amounts written off were "loans" since payments were made to
volunteers you were attempting to employ and no repayment was expected
once the volunteer left the Company. It appears that the funds
provided were never intended as loans, and in substance, the
transactions were equivalent to paying contractors for services
rendered and should have been accounted for as such. We may have
further comment after reviewing your response.
RESPONSE: The Commission's position is correct, and the Company has
revised its financial statements accordingly. Please see changes to the
Management's Discussion and Analysis of Financial Condition and Results
of Operation on page 11, as well as the Company's Statements of
Operations for each of the fiscal years ended May 31, 2003 and 2004 on
page F/S-5.
Bad Debt Expense
17. COMMENT. The "employee and related party loans written off...during
the fiscal years ended May 31, 2004 and 2003" should be fully
discussed hereunder and/or in Certain Relationships and Related
Transactions section, including names, amounts and reasons pursuant to
Item 404 of Regulation S-B.
RESPONSE: In accordance with our response to comment 16, we have also
updated the disclosure under Related Party Transactions on Page 25.
Business
________
Corporate Organization
______________________
18. COMMENT. Immune Complex Corporation may be considered a predecessor of
the company as defined in Rule 405 of Regulation C under the
Securities Act. Please address and, if so, include the history and
development of the predecessor. Any insolvency proceedings against it
esulting in the liquidation should be discussed. Indicate any overlap
of officers and directors with those of the company.
RESPONSE: Please see the additional disclosures on page 13.
19. Consider the exemption from registration available for the spin-off
and advise. See Staff Legal Bulletin No. 4 dated September 16, 1997 in
this regard.
RESPONSE: We note that Staff Legal Bulletin No. 4 (September 16, 1997)
("Bulletin") provides that spun off shares will not have to be
registered with the Commission if the following five conditions are
met:
1. The shareholders of Immune Complex Corporation do not provide
<PAGE>
consideration for their receipt of Cancer Therapeutics shares;
2. The spin off is pro-rata to the shareholders of Cancer
Therapeutics;
3. Immune Complex Corporation provides adequate information about
the spin off and Cancer Therapeutics to its shareholders and to
trading markets;
4. Immune Complex Corporation has a valid business purpose for the
spin off; and
5. Immune Complex Corporation has either formed Cancer Therapeutics
or has held its Cancer Therapeutics shares for more than two
years.
Pursuant to the Bulletin, the spin off of Cancer Therapeutics in
liquidation of Immune Complex Corporation met the following conditions:
1. The shareholders of Immune Complex Corporation did not provide
consideration for their receipt of Cancer Therapeutics shares;
2. The spin off of Cancer Therapeutics shares was pro-rata to the
shareholders of Immune Complex Corporation; and
3. The spin off of Cancer Therapeutics was the result of a business
decision by the board of Immune Complex Corporation, a defunct
company, to allow its shareholders to directly hold shares of
Cancer Therapeutics with the hope that the growth and development
of Cancer Therapeutics would permit the Immune Complex
Corporation Shareholders to recover a portion of their losses in
holding Immune Complex Corporation shares.
Immune Complex Corporation only held its shares of Cancer Therapeutics
for approximately 21 months and, consequently, the required holding period
has not been met. It is therefore clear that the spin off of Cancer
Therapeutics did not specifically meet all of the criteria of the Bulletin
and that the relevant analysis would appear to turn on whether the spin off
is a distribution of securities. But whether or not the spin off is indeed
a distribution, what course of action would be in the best interests of the
shareholders of Immune Complex Corporation shareholders to enable them to
benefit from their receipt of Cancer Therapeutics shares? We believe that,
since the underlying purpose of the securities laws is to provide full and
fair disclosure to investors, particularly investors who provide
consideration in exchange for securities, the dissemination of the
registration statement and future annual reports filed under the Exchange
Act (including other Exchange Act Filings Accessible on the EDGAR system)
to Immune Complex Corporation shareholders who received Cancer Therapeutics
shares is the course of action that best positions them to benefit from a
transaction that, although was three months short of
<PAGE>
technical compliance with the Bulletin, strives to achieve its intent. We,
of course, welcome the Commission's further comments on this position.
20. COMMENT. Please define "biotherapy" and "oncology markets".
RESPONSE: We have defined "biotherapy" and "oncology markets." on
pages 1 and 13.
The Business of Cancer Therapeutics
___________________________________
Services
21. COMMENT. Please continue to revise your disclosure consistent with our
previous comment 36. Because you are still in the developmental state
of advancing the service associated with Tumor Derived Activated
Cells, please provide an estimated timeframe associated with the
developmental process, i.e., discuss how long the service will be in
the developmental stage.
RESPONSE: Please see the additional disclosures on pages 14 and 15.
Outlo