SEC Comment Letter for Citius Pharmaceuticals, Inc. (CTXR) (CIK 0001506251) (CTXR) — Oct 29, 2015
Citius Pharmaceuticals, Inc. (CTXR) (CIK 0001506251)
Date: Oct. 29, 2015 · CIK: 0001506251 · Accession: 0000000000-15-051825
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-170781, 333-206903
Letter
Mail Stop 3561 October 29, 2015 Leonard Mazur Chief Executive Officer Citius Pharmaceuticals, Inc. 63 Great Road Maynard, MA 01754
Re: Citius Pharmaceuticals, Inc. Amendment No. 1 to Registration Statement on Form S -1 Filed October 16 , 2015 File No. 333 -206903
Dear Mr. Mazur :
We have reviewed your amended registration statement and have the following 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. If you do not believe our comments apply to your facts and circumstanc es or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your registration statement and the information you provide in response to these comments, we may have additional comments. Unless w e note otherwise, our references to prior comment are comments in our October 8, 2015 letter.
General
1. We note that you have filed this amendment using file number 333-170781 . For future amendments relating to this offering, please ensure that you use the file number associated with your Form S -1 filed on September 11, 2015, 333-206903 .
2. We note your response to our prior comment 1 that you have addressed the violations listed in the letter from the FDA dated June 9, 2014 . Please tell u s whether, even though you have addressed the violations, there remain risks associated with such violations. To the extent that there are, please disclose in an appropriate section of your prospectus.
Leonard Mazur Citius Pharmaceuticals, Inc. October 29, 2015 Page 2
3. We note your response to o ur prior comment 2. It appears that it is within the Placement Agent’s control to decide whet her to exercise the Placement Agent Unit Warrants and receive the Placement Agent Warrants that overlie the common stock you are registering for resale. Because the immediately overlying Placement Agent Warrants have not yet been issued, the Placement Agent is not yet at market risk with respect to the Placement Agent Warrants, and the Placement Agent is not irrevocably bound to purchase the Placement Agent Warrants, it does not appear that the underlying common stock can be registered for resale at this time. You may file a new registration statement for the resale of the common stock after the immediately overlying Placement Agent Warrants have been issued. Please revise accor dingly.
Prospectus Summary, page 2
4. Please disclose in this section that if all data results from your Phase 2 and Phase 3 studies are positive with respect to your hydrocortisone and lidocaine product , you anticipate being able to file a New Drug Appl ication (NDA) in three to four years. Please also disclose that you are not permitted to market any of your product candidates in the United States until you receive approval of an NDA from the FDA.
5. Please revise to include a brief summary of the post -marketing study of Suprenza required by the FDA and the cost of such study. In addition, please clarify here that “[b]ased upon the losses incurred to date and the limited likelihood of reaching profitability, [you] will likely discontinue the sale of Suprenza.” In addition, please clarify here and throughout whether Prenzamax is able to sell Suprenza before the post - marketing study has been completed .
6. We note your disclosure that “Prenzamax’s performance of its duties pursuant to the license agreemen t has been guaranteed by Akrimax.” In an appropriate place in your prospectus, please explain the terms of the guarantee.
7. Please disclose here, if true, that of the 25% of sales you would receive if Alpex marketed and sold Suprenza, you would pay 35% of such payment s to Prenzamax.
Business, page 36
Terms of the license, page 39
Royalty Payments to Alpex, page 40
8. We note your disclosure on page 41 that “Alpex has the right to market the Products outside the Territory and use clinical data generated by the Company to file for regulatory approvals in markets where the Company is not licensed to sell the Product.” Please provide a brief definition of the term “T erritory,” disclose where you are licensed to sell Suprenza and discuss the term of the license.
Leonard Mazur Citius Pharmaceuticals, Inc. October 29, 2015 Page 3
9. We note your disclosure that “Prenzamax and Citius shall each be responsible for fifty percent (50%) of the royalty due to Alpex.” Please clarify whether you are responsible for 50% of the cost of goods per tablet to Alpex if Alpex manufactures the Suprenza tablet or if you are on ly responsible for 50% of the royalty payments if Prenzamex elects to have the tablet manufactured by a third party. In addition , you state that “Alpex shall receive a royalty payment in the amount of eight percent (8%). ” Please clarify whether you mean 8% of the cost of purc hasing the Suprenza tablet .
10. We note your disclosure that Alpex will pay you 13% of the net sales of Supren za if Alpex sells Suprenza in markets where you are not licensed to sell it, but, on page 37, you state that Alpex will pay you 25% of the net sales. Please revise for consistency and clarity.
11. Please briefly describe how the terms “Milestone” and “down payments” are defined in the agreement with Alpex.
IGI Laboratories Supply Agreement, page 46
12. Please clarify what you mean by “an understanding with IGI” and describe the material terms of such understanding.
Management, page 48
13. We note your response to our prior comment 24 that you have been advised that the Placement Agent will not request a nominee to serve on your board of directors. Please tell us whether you have an agreement with the Placement Agent to nominate a member to serve on your board o f directors. If you do, please disclose in your prospectus, describe the material terms of the agreement, identify the Placement Agent and file the agreement as an exhibit with the next amendment of your registration statement.
14. We note that Mr. Holubiak is a director and officer of other companies in your industry. Please tell us whether you believe this will c reate conflict s of interests, and revise your prospectus accordingly.
Transactions with Related Persons, Promoters and Certain Control Persons, p age 57
15. We note your response to our prior comment 27 and reissue in part. Please disclose the material terms of the consulting agreement and identify the party with whom you have signed such agreement and your relationship with the party.
Leonard Mazur Citius Pharmaceuticals, Inc. October 29, 2015 Page 4
Placement Agent Units and Warrants, page 59
16. We note your response to our prior comment 11 and reissue in part. Please briefly describe the material terms of the Placement Agent Warrants, including what determines whether they will be exercised on a cash or cashles s basis.
Signature, page II -7
17. We note your response to our prior comment 30 and reissue in part. Please identify Mr. Mazur as your principal financial officer and principal accounting office in the second signature block, as he has signed only in his c apacity as your Chief Executive Officer and director.
Exhibits
18. Please filed executed versions of the Exhibits 10.5, 10.6, 10.7, 10.8 and 10.9.
You may contact Amy Geddes at (202) 551 -3304 or Melissa Raminpour at (202) 551 - 3379 if you have questions regarding comments on the financial statements and related matters. Please contact Sonia Bednarowski at (202) 551 -3666 or me at (202) 551 -3611 with any other questions.
Sincerely,
/s/ A.N. Parker
Show Raw Text
Mail Stop 3561 October 29, 2015 Leonard Mazur Chief Executive Officer Citius Pharmaceuticals, Inc. 63 Great Road Maynard, MA 01754 Re: Citius Pharmaceuticals, Inc. Amendment No. 1 to Registration Statement on Form S -1 Filed October 16 , 2015 File No. 333 -206903 Dear Mr. Mazur : We have reviewed your amended registration statement and have the following 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. If you do not believe our comments apply to your facts and circumstanc es or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your registration statement and the information you provide in response to these comments, we may have additional comments. Unless w e note otherwise, our references to prior comment are comments in our October 8, 2015 letter. General 1. We note that you have filed this amendment using file number 333-170781 . For future amendments relating to this offering, please ensure that you use the file number associated with your Form S -1 filed on September 11, 2015, 333-206903 . 2. We note your response to our prior comment 1 that you have addressed the violations listed in the letter from the FDA dated June 9, 2014 . Please tell u s whether, even though you have addressed the violations, there remain risks associated with such violations. To the extent that there are, please disclose in an appropriate section of your prospectus. Leonard Mazur Citius Pharmaceuticals, Inc. October 29, 2015 Page 2 3. We note your response to o ur prior comment 2. It appears that it is within the Placement Agent’s control to decide whet her to exercise the Placement Agent Unit Warrants and receive the Placement Agent Warrants that overlie the common stock you are registering for resale. Because the immediately overlying Placement Agent Warrants have not yet been issued, the Placement Agent is not yet at market risk with respect to the Placement Agent Warrants, and the Placement Agent is not irrevocably bound to purchase the Placement Agent Warrants, it does not appear that the underlying common stock can be registered for resale at this time. You may file a new registration statement for the resale of the common stock after the immediately overlying Placement Agent Warrants have been issued. Please revise accor dingly. Prospectus Summary, page 2 4. Please disclose in this section that if all data results from your Phase 2 and Phase 3 studies are positive with respect to your hydrocortisone and lidocaine product , you anticipate being able to file a New Drug Appl ication (NDA) in three to four years. Please also disclose that you are not permitted to market any of your product candidates in the United States until you receive approval of an NDA from the FDA. 5. Please revise to include a brief summary of the post -marketing study of Suprenza required by the FDA and the cost of such study. In addition, please clarify here that “[b]ased upon the losses incurred to date and the limited likelihood of reaching profitability, [you] will likely discontinue the sale of Suprenza.” In addition, please clarify here and throughout whether Prenzamax is able to sell Suprenza before the post - marketing study has been completed . 6. We note your disclosure that “Prenzamax’s performance of its duties pursuant to the license agreemen t has been guaranteed by Akrimax.” In an appropriate place in your prospectus, please explain the terms of the guarantee. 7. Please disclose here, if true, that of the 25% of sales you would receive if Alpex marketed and sold Suprenza, you would pay 35% of such payment s to Prenzamax. Business, page 36 Terms of the license, page 39 Royalty Payments to Alpex, page 40 8. We note your disclosure on page 41 that “Alpex has the right to market the Products outside the Territory and use clinical data generated by the Company to file for regulatory approvals in markets where the Company is not licensed to sell the Product.” Please provide a brief definition of the term “T erritory,” disclose where you are licensed to sell Suprenza and discuss the term of the license. Leonard Mazur Citius Pharmaceuticals, Inc. October 29, 2015 Page 3 9. We note your disclosure that “Prenzamax and Citius shall each be responsible for fifty percent (50%) of the royalty due to Alpex.” Please clarify whether you are responsible for 50% of the cost of goods per tablet to Alpex if Alpex manufactures the Suprenza tablet or if you are on ly responsible for 50% of the royalty payments if Prenzamex elects to have the tablet manufactured by a third party. In addition , you state that “Alpex shall receive a royalty payment in the amount of eight percent (8%). ” Please clarify whether you mean 8% of the cost of purc hasing the Suprenza tablet . 10. We note your disclosure that Alpex will pay you 13% of the net sales of Supren za if Alpex sells Suprenza in markets where you are not licensed to sell it, but, on page 37, you state that Alpex will pay you 25% of the net sales. Please revise for consistency and clarity. 11. Please briefly describe how the terms “Milestone” and “down payments” are defined in the agreement with Alpex. IGI Laboratories Supply Agreement, page 46 12. Please clarify what you mean by “an understanding with IGI” and describe the material terms of such understanding. Management, page 48 13. We note your response to our prior comment 24 that you have been advised that the Placement Agent will not request a nominee to serve on your board of directors. Please tell us whether you have an agreement with the Placement Agent to nominate a member to serve on your board o f directors. If you do, please disclose in your prospectus, describe the material terms of the agreement, identify the Placement Agent and file the agreement as an exhibit with the next amendment of your registration statement. 14. We note that Mr. Holubiak is a director and officer of other companies in your industry. Please tell us whether you believe this will c reate conflict s of interests, and revise your prospectus accordingly. Transactions with Related Persons, Promoters and Certain Control Persons, p age 57 15. We note your response to our prior comment 27 and reissue in part. Please disclose the material terms of the consulting agreement and identify the party with whom you have signed such agreement and your relationship with the party. Leonard Mazur Citius Pharmaceuticals, Inc. October 29, 2015 Page 4 Placement Agent Units and Warrants, page 59 16. We note your response to our prior comment 11 and reissue in part. Please briefly describe the material terms of the Placement Agent Warrants, including what determines whether they will be exercised on a cash or cashles s basis. Signature, page II -7 17. We note your response to our prior comment 30 and reissue in part. Please identify Mr. Mazur as your principal financial officer and principal accounting office in the second signature block, as he has signed only in his c apacity as your Chief Executive Officer and director. Exhibits 18. Please filed executed versions of the Exhibits 10.5, 10.6, 10.7, 10.8 and 10.9. You may contact Amy Geddes at (202) 551 -3304 or Melissa Raminpour at (202) 551 - 3379 if you have questions regarding comments on the financial statements and related matters. Please contact Sonia Bednarowski at (202) 551 -3666 or me at (202) 551 -3611 with any other questions. Sincerely, /s/ A.N. Parker Anne Nguyen Parker Assistant Director Office of Transportation and Leisure cc: Arthur S. Marcus, Esq. Sichenzia Ross Friedman Ference LLP