SEC Company Response from Pathogenics, Inc. (CIK 0001320731) — Jul 1, 2005
Pathogenics, Inc. (CIK 0001320731)
Date: July 1, 2005 · CIK: 0001320731 · Accession: 0001214782-05-000225
AI Filing Summary & Sentiment
File numbers found in text: 333-123431
Referenced dates: April 20, 2005
Letter
DAVID M. LOEV, ATTORNEY AT LAW 2777 ALLEN PARKWAY, SUITE 1000 HOUSTON, TX 77019 TELEPHONE (713) 524-4110 FACSIMILE (713) 524-4122 July 1, 2005 Ms. Mary K. Fraser, Esq. Division of Corporate Finance United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549
RE: Pathogenics, Inc. Form SB-2 Registration Statement File No. 333-123431
Dear Ms. Fraser:
We have enclosed three red-lined copies of the amended registration statement for your review. In response to your letter dated April 20, 2005, Pathogenics, Inc. (the "Company") has the following responses:
COMMENTS APPLICABLE TO ENTIRE FILING ------------------------------------
1. We have revised the filing as you have requested and have added a Glossary Section which we believe will help with some of the more complex terms used throughout the Registration Statement.
PROSPECTUS COVER PAGE -----------------------
2. We have revised the filing as you have requested.
3. The selling shareholders determined they would sell the shares at $0.10 per share arbitrarily based on the fact that the Company's common stock does not currently trade on any market or exchange. Selling shareholders will sell at a price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. If before the Company's shares are quoted on the OTC Bulletin Board, selling shareholders wish to sell at a price different from $0.10 per share, the Company agrees to file a post-effective amendment beforehand.
<PAGE>
4. The Company has arbitrarily determined the fair market value of its common stock, as our common stock is not traded on any market or exchange.
5. We have the provided the information you requested and revised accordingly.
PROSPECTUS SUMMARY -------------------
6. We have provided documentation of the factual and statistical claims made through-out the prospectus summary section.
7. The Company does not wish to publicly disclose the current research and development activities of N-Chlorotaurine beyond the current description in the SB-2 "for the treatment of several topical and body cavity indications" for the following reasons:
(1) these studies have not yet been completed, and therefore the researchers do not wish to make known their activities prior to publication in a peer reviewed medical journal;
(2) should these activities prove successful, the Company intends on filing patent applications on their results and therefore must avoid potential patent baring prior to its disclosures; and
(3) the Company does not want to provide valuable information of its research and development activities to potential business competitors.
However, strictly for the purpose of confidentially answering this comment, we are CONFIDENTIALLY undertaking the following human clinical studies -------------- with NCT: a. Phase 2b pilot study in Otitis externa - dose finding study. b. Phase 2a pilot study in postoperative treatment after tympanoplasty - observe drying effect, antimicrobial activity. c. Phase 2a pilot study in vaginitis - determine tolerability. d. Phase 2a pilot study on eradication of MRSA in nasal carriers - nasal spray application. e. Phase 2a pilot study in bile duct infections - irrigation of bile duct.
8. We have revised as you requested.
9. We have revised to give details regarding the Company's clinical studies as you requested.
10. All of these previously completed studies were performed by the inventors/licensors of NCT in Innsbruck, Austria at the University Hospital of Innsbruck and the Institute of Hygiene and Social Medicine, Leopold-Franzens-University of Innsbruck. These studies were supported by the Austrian Science Fund and the Jubilee Research Fund of the Austrian National Bank. The current research is being performed by the inventors/licensors of NCT in Innsbruck, Austria at the University Hospital of Innsbruck and the Institute of Hygiene and Social Medicine, Leopold-Franzens-University of Innsbruck, and is being supported in part by the Company and in part by the Austrian Science Fund and the Jubilee Research Fund of the Austrian National Bank.
<PAGE>
11. We have revised the registration statement to disclose the consulting services which were provided to the Company by Mr. Mackey in connection with the Consulting Agreement.
12. The Company currently has a commitment in place from the selling shareholders to purchase shares of the Company's common stock. While some of the convertible preferred stock tranches have not been issued to the convertible preferred stock purchasers, there is a firm commitment in place to purchase the additional tranches, and it is just a matter of timing of when the convertible preferred stock purchasers purchase shares of the Company's common stock.
13. We do not believe this to be a delayed offering, as the price and terms have been set, there is a firm commitment to make the purchases of convertible preferred stock, and it just a timing issue as to when the Company receives the payment for these purchases.
14. We have disclosed the aggregate number of shares of common stock that the convertible preferred stock may be converted into as you requested.
15. None of the selling shareholders broker-dealers.
RISK FACTORS -------------
16. We have removed all statements throughout the document which state that we can "give no assurance," and have replaced those statements with explanations of why we cannot make the assurance or prediction.
17. We have described the consequences if the events we cannot assure or predict occur, as you requested.
18. We have revised the risk factor headings to be complete sentences and identify specific risks to the Company, as you requested.
RISK OF CONTINUING OUR OPERATIONS WITHOUT ADDITIONAL FINANCING AND/OR IN THE -------------------------------------------------------------------------------- EVENT WE ARE FORCED TO PAY PENALTIES TO THE CONVERTIBLE PREFERRED STOCK HOLDERS --------------------------------------------------------------------------------
19. We have disclosed what the Company will likely do if the five companies do not follow through on their purchase commitments, as you requested.
<PAGE>
20. We have disclosed the amount of dividends we will owe on the convertible preferred stock and that we plan to pay such dividends in cash or shares of stock.
21. We have revised as you requested and included information on the Company's use of proceeds from the sale of the additional tranches of convertible preferred stock.
22. We have discussed the risk that the Company will be unable to meet its current and future liabilities and remain in operation until additional money can be raised in greater detail.
23. We have added information on the Company's use of proceeds and the fact that there may not be money available after paying the Company's expenses to conduct research and development. However, the Company does have plans to raise additional revenue after the Company's registration statement is declared effective, which amount will be used for general operating expenses and research and development.
THE COMPANY MAY BE FORCED TO PAY PENALTIES IN CONNECTION WITH THE REGISTRATION -------------------------------------------------------------------------------- OF THE CONVERTIBLE PREFERRED STOCK --------------------------------------
24. We have revised the risk factor to eliminate any risk that can no longer occur.
25. We have quantified the amount of the penalties we could be required to pay, and have disclosed the fact that we do not currently have sufficient funds to pay these penalties.
OUR INDEPENDENT PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT AS TO -------------------------------------------------------------------------------- WHETHER OUR COMPANY CAN CONTINUE AS A GOING CONCERN -----------------------------------------------------------
26. We have revised the risk factor to state risk factors which may lead to us being unable to continue as a going concern.
WELACK ANY OPERATING HISTORY WHICH YOU CAN USE TO EVALUATE US, MAKING ANY -------------------------------------------------------------------------------- INVESTMENT IN THE COMPANY RISKY -----------------------------------
27. We have deleted the term "long standing" as you requested.
USE OF PROCEEDS -----------------
28. We have disclosed the amount of proceeds and percentage of the money received in connection with the sale of the Convertible Preferred Stock for each of the stated activities.
<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL ------------------------------------------
EXPERTS -------
29. We have revised as you suggested, and have removed information referring to the financial statements as of December 31, 2003, and have included references to the period from the Company's inception through December 31, 2004.
LICENSE AGREEMENT FOR PATENT RIGHTS ---------------------------------------
30. We have revised as you requested.
31. We have added clarification to indicate that the License Agreement was assigned to Tyrol Therapeutics, LLC (formerly Pathogenics, LLC, and now the Company's wholly owned subsidiary after the February 10, 2005 Reorganization), not the Company itself.
32. Clarification has been added as follows: The Company believes it does not require the licensor's consent to the February 10, 2005 Reorganization, since under Article 9.1(i) of the License Agreement, "the licensee may assign the agreement to a purchaser, merging or consolidating corporation, or acquirer of substantially all of the licensee's assets or business and/or pursuant to any reorganization qualifying under section 368 of the Internal Revenue Code of 1986 as amended, as may be in effect at such time." The Company believes that the Agreement and Plan of Reorganization is intended to qualify as a reorganization under the provisions of section 368(a)(1)(B) of the United States Internal Revenue Code of 1986, as amended.
BUSINESS --------
33. We have provided explanations for some of the more technical terms used throughout the registration statement, and have additionally included a Glossary of those terms.
34. We have deleted the statement regarding NCT representing a unique and optimum compromise from the Registration Statement.
BACKGROUND: INFECTIOUS DISEASES ---------------------------------
35. We have deleted this information from the registration statement.
36. We have deleted this information from the registration statement.
37. We have deleted this information from the registration statement.
<PAGE>
POTENTIAL MARKET FOR NCT ---------------------------
38. We have deleted this information from the registration statement.
ANTIMICORBIAL RESISTANCE -------------------------
39. We have removed the previously cited materials from the registration statement, as we no longer feel it is applicable to the discussion of our business.
N-CHLOROTAURINE ---------------
40. We have revised this section to replace technical jargon with plain English explanations throughout.
41. We have revised and expanded as you requested.
42. We have revised our disclosure to make it more clear to investors and have added a Glossary section to provide definitions of some of the more technical terms used throughout our registration statement.
43. We have deleted this information from the registration statement.
44. We have added disclosure of the timeline and costs associated with submitting the application for an Investigational New Drug (IND) application, as well as the those for submitting a New Drug Application (NDA).
PATENTS, TRADEMARKS AND LICENSES -----------------------------------
45. The term "Priority date" refers to the patent application filing date of an initial or "parent" patent application, upon which a subsequent or "child" patent application is based. This date is important to determine whether the invention disclosed in the patent application is novel and unobvious in light of other references at the time of filing. The text has been revised to clearly show that the subsequent applications where based upon the original/parent application DE 10045868.8, and reference to the priority date has been deleted.
MANAGEMENT'S DISCUSSION AND ANALYSIS ---------------------------------------
46. Please see answer to question #7 above.
LIQUIDITY AND CAPITAL RESOURCES ----------------------------------
47. The financial statements have been updated to include the interim information as of March 31, 2005 which includes the proceeds from the issuance of preferred shares.
<PAGE>
48. We have revised to disclose how long we can satisfy our cash requirements and the fact that we will need to raise additional funds in the next twelve months.
49. We have revised the registration statement to quantify the extent to which each of the listed items may impact our cash requirements.
50. We have added a discussion of risks associated with us not raising sufficient additional financing and the possibility that we will be required to pay penalties in connection with the registration of the convertible preferred stock.
51. We have deleted the statement that the Company is taking steps in an attempt to raise equity capital and/or to borrow additional funds.
52. We have included disclosure of the fact that the Company's independent auditing firm has raised "substantial doubt about Tyrol's ability to continue as a going concern."
CONTROLS AND PROCEDURES -------------------------
53. We have revised to disclose that our controls and procedures were effective to under Exchange Act Rule 13a-15.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -----------------------------------------------------------------
INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS --------------------------------------------------------------------------------
54. We have revised as you
Show Raw Text
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<FILENAME>filename1.txt
<TEXT>
DAVID M. LOEV, ATTORNEY AT LAW
2777 ALLEN PARKWAY, SUITE 1000
HOUSTON, TX 77019
TELEPHONE (713) 524-4110
FACSIMILE (713) 524-4122
July 1, 2005
Ms. Mary K. Fraser, Esq.
Division of Corporate Finance
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Pathogenics, Inc.
Form SB-2 Registration Statement
File No. 333-123431
Dear Ms. Fraser:
We have enclosed three red-lined copies of the amended registration statement
for your review. In response to your letter dated April 20, 2005, Pathogenics,
Inc. (the "Company") has the following responses:
COMMENTS APPLICABLE TO ENTIRE FILING
------------------------------------
1. We have revised the filing as you have requested and have added a
Glossary Section which we believe will help with some of the more complex
terms used throughout the Registration Statement.
PROSPECTUS COVER PAGE
-----------------------
2. We have revised the filing as you have requested.
3. The selling shareholders determined they would sell the shares at
$0.10 per share arbitrarily based on the fact that the Company's common
stock does not currently trade on any market or exchange. Selling
shareholders will sell at a price of $0.10 per share until our shares are
quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices. If before the Company's shares are quoted
on the OTC Bulletin Board, selling shareholders wish to sell at a price
different from $0.10 per share, the Company agrees to file a post-effective
amendment beforehand.
1
<PAGE>
4. The Company has arbitrarily determined the fair market value of its
common stock, as our common stock is not traded on any market or exchange.
5. We have the provided the information you requested and revised
accordingly.
PROSPECTUS SUMMARY
-------------------
6. We have provided documentation of the factual and statistical claims
made through-out the prospectus summary section.
7. The Company does not wish to publicly disclose the current research
and development activities of N-Chlorotaurine beyond the current
description in the SB-2 "for the treatment of several topical and body
cavity indications" for the following reasons:
(1) these studies have not yet been completed, and therefore the
researchers do not wish to make known their activities prior to publication
in a peer reviewed medical journal;
(2) should these activities prove successful, the Company intends on
filing patent applications on their results and therefore must avoid
potential patent baring prior to its disclosures; and
(3) the Company does not want to provide valuable information of its
research and development activities to potential business competitors.
However, strictly for the purpose of confidentially answering this comment,
we are CONFIDENTIALLY undertaking the following human clinical studies
--------------
with NCT:
a. Phase 2b pilot study in Otitis externa - dose finding study.
b. Phase 2a pilot study in postoperative treatment after
tympanoplasty - observe drying effect, antimicrobial activity.
c. Phase 2a pilot study in vaginitis - determine tolerability.
d. Phase 2a pilot study on eradication of MRSA in nasal carriers -
nasal spray application.
e. Phase 2a pilot study in bile duct infections - irrigation of bile
duct.
8. We have revised as you requested.
9. We have revised to give details regarding the Company's clinical
studies as you requested.
10. All of these previously completed studies were performed by the
inventors/licensors of NCT in Innsbruck, Austria at the University Hospital
of Innsbruck and the Institute of Hygiene and Social Medicine,
Leopold-Franzens-University of Innsbruck. These studies were supported by
the Austrian Science Fund and the Jubilee Research Fund of the Austrian
National Bank. The current research is being performed by the
inventors/licensors of NCT in Innsbruck, Austria at the University Hospital
of Innsbruck and the Institute of Hygiene and Social Medicine,
Leopold-Franzens-University of Innsbruck, and is being supported in part by
the Company and in part by the Austrian Science Fund and the Jubilee
Research Fund of the Austrian National Bank.
2
<PAGE>
11. We have revised the registration statement to disclose the consulting
services which were provided to the Company by Mr. Mackey in connection
with the Consulting Agreement.
12. The Company currently has a commitment in place from the selling
shareholders to purchase shares of the Company's common stock. While some
of the convertible preferred stock tranches have not been issued to the
convertible preferred stock purchasers, there is a firm commitment in place
to purchase the additional tranches, and it is just a matter of timing of
when the convertible preferred stock purchasers purchase shares of the
Company's common stock.
13. We do not believe this to be a delayed offering, as the price and
terms have been set, there is a firm commitment to make the purchases of
convertible preferred stock, and it just a timing issue as to when the
Company receives the payment for these purchases.
14. We have disclosed the aggregate number of shares of common stock that
the convertible preferred stock may be converted into as you requested.
15. None of the selling shareholders broker-dealers.
RISK FACTORS
-------------
16. We have removed all statements throughout the document which state
that we can "give no assurance," and have replaced those statements with
explanations of why we cannot make the assurance or prediction.
17. We have described the consequences if the events we cannot assure or
predict occur, as you requested.
18. We have revised the risk factor headings to be complete sentences and
identify specific risks to the Company, as you requested.
RISK OF CONTINUING OUR OPERATIONS WITHOUT ADDITIONAL FINANCING AND/OR IN THE
--------------------------------------------------------------------------------
EVENT WE ARE FORCED TO PAY PENALTIES TO THE CONVERTIBLE PREFERRED STOCK HOLDERS
--------------------------------------------------------------------------------
19. We have disclosed what the Company will likely do if the five
companies do not follow through on their purchase commitments, as you
requested.
3
<PAGE>
20. We have disclosed the amount of dividends we will owe on the
convertible preferred stock and that we plan to pay such dividends in cash
or shares of stock.
21. We have revised as you requested and included information on the
Company's use of proceeds from the sale of the additional tranches of
convertible preferred stock.
22. We have discussed the risk that the Company will be unable to meet its
current and future liabilities and remain in operation until additional
money can be raised in greater detail.
23. We have added information on the Company's use of proceeds and the
fact that there may not be money available after paying the Company's
expenses to conduct research and development. However, the Company does
have plans to raise additional revenue after the Company's registration
statement is declared effective, which amount will be used for general
operating expenses and research and development.
THE COMPANY MAY BE FORCED TO PAY PENALTIES IN CONNECTION WITH THE REGISTRATION
--------------------------------------------------------------------------------
OF THE CONVERTIBLE PREFERRED STOCK
--------------------------------------
24. We have revised the risk factor to eliminate any risk that can no
longer occur.
25. We have quantified the amount of the penalties we could be required to
pay, and have disclosed the fact that we do not currently have sufficient
funds to pay these penalties.
OUR INDEPENDENT PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT AS TO
--------------------------------------------------------------------------------
WHETHER OUR COMPANY CAN CONTINUE AS A GOING CONCERN
-----------------------------------------------------------
26. We have revised the risk factor to state risk factors which may lead
to us being unable to continue as a going concern.
WELACK ANY OPERATING HISTORY WHICH YOU CAN USE TO EVALUATE US, MAKING ANY
--------------------------------------------------------------------------------
INVESTMENT IN THE COMPANY RISKY
-----------------------------------
27. We have deleted the term "long standing" as you requested.
USE OF PROCEEDS
-----------------
28. We have disclosed the amount of proceeds and percentage of the money
received in connection with the sale of the Convertible Preferred Stock for
each of the stated activities.
4
<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL
------------------------------------------
EXPERTS
-------
29. We have revised as you suggested, and have removed information
referring to the financial statements as of December 31, 2003, and have
included references to the period from the Company's inception through
December 31, 2004.
LICENSE AGREEMENT FOR PATENT RIGHTS
---------------------------------------
30. We have revised as you requested.
31. We have added clarification to indicate that the License Agreement was
assigned to Tyrol Therapeutics, LLC (formerly Pathogenics, LLC, and now the
Company's wholly owned subsidiary after the February 10, 2005
Reorganization), not the Company itself.
32. Clarification has been added as follows: The Company believes it does
not require the licensor's consent to the February 10, 2005 Reorganization,
since under Article 9.1(i) of the License Agreement, "the licensee may
assign the agreement to a purchaser, merging or consolidating corporation,
or acquirer of substantially all of the licensee's assets or business
and/or pursuant to any reorganization qualifying under section 368 of the
Internal Revenue Code of 1986 as amended, as may be in effect at such
time." The Company believes that the Agreement and Plan of Reorganization
is intended to qualify as a reorganization under the provisions of section
368(a)(1)(B) of the United States Internal Revenue Code of 1986, as
amended.
BUSINESS
--------
33. We have provided explanations for some of the more technical terms
used throughout the registration statement, and have additionally included
a Glossary of those terms.
34. We have deleted the statement regarding NCT representing a unique and
optimum compromise from the Registration Statement.
BACKGROUND: INFECTIOUS DISEASES
---------------------------------
35. We have deleted this information from the registration statement.
36. We have deleted this information from the registration statement.
37. We have deleted this information from the registration statement.
5
<PAGE>
POTENTIAL MARKET FOR NCT
---------------------------
38. We have deleted this information from the registration statement.
ANTIMICORBIAL RESISTANCE
-------------------------
39. We have removed the previously cited materials from the registration
statement, as we no longer feel it is applicable to the discussion of our
business.
N-CHLOROTAURINE
---------------
40. We have revised this section to replace technical jargon with plain
English explanations throughout.
41. We have revised and expanded as you requested.
42. We have revised our disclosure to make it more clear to investors and
have added a Glossary section to provide definitions of some of the more
technical terms used throughout our registration statement.
43. We have deleted this information from the registration statement.
44. We have added disclosure of the timeline and costs associated with
submitting the application for an Investigational New Drug (IND)
application, as well as the those for submitting a New Drug Application
(NDA).
PATENTS, TRADEMARKS AND LICENSES
-----------------------------------
45. The term "Priority date" refers to the patent application filing date
of an initial or "parent" patent application, upon which a subsequent or
"child" patent application is based. This date is important to determine
whether the invention disclosed in the patent application is novel and
unobvious in light of other references at the time of filing. The text has
been revised to clearly show that the subsequent applications where based
upon the original/parent application DE 10045868.8, and reference to the
priority date has been deleted.
MANAGEMENT'S DISCUSSION AND ANALYSIS
---------------------------------------
46. Please see answer to question #7 above.
LIQUIDITY AND CAPITAL RESOURCES
----------------------------------
47. The financial statements have been updated to include the interim
information as of March 31, 2005 which includes the proceeds from the
issuance of preferred shares.
6
<PAGE>
48. We have revised to disclose how long we can satisfy our cash
requirements and the fact that we will need to raise additional funds in
the next twelve months.
49. We have revised the registration statement to quantify the extent to
which each of the listed items may impact our cash requirements.
50. We have added a discussion of risks associated with us not raising
sufficient additional financing and the possibility that we will be
required to pay penalties in connection with the registration of the
convertible preferred stock.
51. We have deleted the statement that the Company is taking steps in an
attempt to raise equity capital and/or to borrow additional funds.
52. We have included disclosure of the fact that the Company's independent
auditing firm has raised "substantial doubt about Tyrol's ability to
continue as a going concern."
CONTROLS AND PROCEDURES
-------------------------
53. We have revised to disclose that our controls and procedures were
effective to under Exchange Act Rule 13a-15.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
-----------------------------------------------------------------
INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
54. We have revised as you