SEC Company Response from Propanc Biopharma, Inc. (PPCB) (CIK 0001517681) (PPCB) — Aug 18, 2011
Propanc Biopharma, Inc. (PPCB) (CIK 0001517681)
Date: Aug. 18, 2011 · CIK: 0001517681 · Accession: 0001354488-11-002980
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-175092
Referenced dates: July 19, 2011
Letter
VIA EDGAR Securities and Exchange Commission Division of Corporation Finance Propanc Health Group Corporation Amendment No. 1 to the Registration Statement on Form S-1 Filed June 23, 2011 File No. 333-175092
Dear Mr. Krug:
We are counsel to Propanc Health Group Corporation (“Propanc,” the “Company” or “our client”). On behalf of our client, we respond as follows to the Staff’s comments dated July 19, 2011, relating to the above-captioned Registration Statement. Captions and section headings herein will correspond to those set forth in Amendment No. 1 to the Registration Statement on Form S-1, a copy of which has been marked with the changes from the initial filing and is enclosed herein. Please note that for the Staff’s convenience, we have recited each of the Staff’s comments and provided the Company’s response to each comment in italics immediately thereafter.
Form S-1
General
Comment 1. Please provide us proofs of all graphic, visual, or photographic information you will provide in the printed prospectus prior to its use, for example in a preliminary prospectus. Please note we may have comments regarding these materials.
Response: The Company will provide the Securities and Exchange Commission with all graphic, visual, or photographic information that will be included in the printed prospectus prior to its use.
Comment 2. Please note that where we provide examples to illustrate what we mean by our comments, they are examples and not complete lists. If our comments are applicable to portions of the filing that we have not cited as examples, please make the appropriate changes in accordance with our comments.
Response: The Company notes the comment above.
Comment 3. Please update the discussion in your prospectus to the most recent date practicable.
Response: The discussion in the Registration Statement has been updated to the most recent date practicable, as per the above comment.
Cover Page
Comment 4. We note the registration statement pertains to a combined primary and secondary offering of common stock, the primary offering will be conducted by the company’s officers and directors, and that these individuals are also identified as selling shareholders. Please expand the discussion on the cover page and in the plan of distribution section to clarify whether the primary offering will be completed prior to the beginning of the secondary offering. Alternatively, please consider providing two separate prospectuses or the filing of alternate pages reflecting the respective offerings in the next amendment. Regardless of the alternative you select, please identify your affiliates as underwriters. In addition, the prospectus should be updated by filing a post-effective amendment after completion of the primary offering to describe the results of the primary offering. We may have additional comments.
Response: The Registration Statement has been modified to include alternate pages reflecting the offerings. In addition, the Registration Statement has been revised to address the other comments above. Please see the cover page of the Registration Statement. The Company also undertakes to file a post-effective amendment after the completion of the primary offering.
Comment 5. Please state whether there is any minimum amount that must be raised as a result of the primary offering, whether there are any minimum purchase requirements, and whether there are any arrangements to place the funds in an escrow, trust, or similar account. If you have not made any of these arrangements, state this fact and describe the effect on investors. See Item 501(b)(8) of Regulation S-K.
Response: The Registration Statement has been revised in response to this comment. Please see the cover page of the Registration Statement.
Prospectus Summary
Our Company, page 1
Comment 6. Please include a discussion of the material terms of the exchange offer, the nature of your operations prior to the exchange offer, the approximate percentage ownership the 64.7 million shares represented on the date of the exchange, and the affiliation, if any, between Propanc Pty Ltd. and you prior to the exchange offer.
Response: The Registration Statement has been revised in response to this comment. Please see page 1 of the Registration Statement.
The Offering, page 2
Comment 7. Please expand the presentation to include a line item for the number of shares to be offered by the company.
Response: The Registration Statement has been revised in response to this comment. Please see page 2 of the Registration Statement.
Comment 8. Please reconcile the number of shares outstanding prior to the offering with the number of shares reflected on your financial statements and the section entitled “Recent Sales of Unregistered Securities.” We may have additional comments.
Response: The Registration Statement has been revised in response to this comment. Please see page 2 and page II-2 of the Registration Statement.
9. We note you indicate the number of shares outstanding prior to the offering is the same as the number of shares outstanding immediately following the offering which includes up to five million shares on a best efforts basis. Please advise or revise.
Response: The Registration Statement has been revised in response to this comment. Please see page 2 of the Registration Statement.
Risk Factors – General
10. Please expand the risk factor section to include risk factors specifically addressing:
●
Your accountant’s going concern opinion;
●
Potential product liability claims; and
●
The lack of independent directors and related corporate governance issues and potential risks to shareholders.
Response: The Registration Statement has been revised to include the risk factors requested. Please see pages 6 and 10 of the Registration Statement.
11. We note you may be substantially dependent upon one or more third parties to conduct your research and clinical studies. If you are, please add a risk factor to address this fact. Also, please file copies of these agreements as exhibits and discuss them in greater detail in your business section. If you do not believe that you are substantially dependent upon these agreements, please provide an analysis supporting your determination. See Item 601(b)(10)(ii)(B) of Regulation S-K.
Response: The Company is not substantially dependent on any one particular third party to carry out its research and clinical studies, as it follows a standard outsourcing model which involves outsourcing a number of its key research and development activities. It is not reliant on any one particular company to carry out all of its activities. As such, we believe that the requested risk factor is not necessary.
“Our ability to continue as a going concern…,” page 4
Comment 12. Please expand the discussion to quantify the amount of losses you have incurred in each of the past two years and the amount of your accumulated deficit. In addition, please disclose that as of March 31, 2011, you only had $54 in cash.
Response: The relevant risk factor has been revised in response to this comment. Please see page 5 of the Registration Statement.
“Because we will need to finance our future cash needs through securities offerings…,” page 4
Comment 13. We note your belief that “the net proceeds from our prior private equity offerings and existing cash will be sufficient to enable us to fund our projected operating requirements for the next twelve (12) months….” Please reconcile this statement with the fact that as of March 31, 2011 your available cash resources apparently consisted of $54 in cash and a receivable for $2608, and the statement at the bottom of page 14 “therefore, we do not have enough available cash to meet our obligations over the next 12 months.” We may have additional comments.
Response: The relevant risk factor has been revised to in response to this comment. Please see page 5 of the Registration Statement.
“Because pre-clinical and clinical trials required for our product candidates…,” page 5
Comment 14. Please expand the discussion to briefly discuss whether and the extent to which you have conducted pre-clinical and clinical trials.
Response: The relevant risk factor has been revised to in response to this comment. Please see page 7 of the Registration Statement.
“If we are unable to obtain sufficient and adequate supplies necessary for the manufacturing of our product…,” page 6
Comment 15. It is unclear from the discussion whether there is, in fact, a sole source supplier for the components of your product. If you are substantially dependent on any of your raw material or component suppliers, please identify them here and identify the products that are materially dependent on the raw materials or components. Also, please file copies of these agreements as exhibits and discuss them in greater detail in your business section. If you do not believe you are substantially dependent upon these agreements, please provide an analysis supporting your determination. See Item 601(b)(10)(ii)(B) of Regulation S-K.
Response: The Company is of the opinion that it is not reliant on any sole supplier for its key components of its lead formulation. Such determination is based on the fact that the raw materials it requires are readily available from a variety of suppliers. In order to minimize any potential risk, the Company intends to source its key components from at least two suppliers at any given time.
“If we lose key management or scientific personnel…,” page 8
Comment 16. Please expand the discussion to state the extent to which you have employment agreements with your key personnel. If applicable, please file these employment agreements as exhibits.
Response: The relevant risk factor has been revised to in response to this comment. Please see page 10 of the Registration Statement. In addition, the letters of Appointment for Drs. Julian Kenyon and Douglas Mitchell have been included as Exhibits 10.10 and 10.11, respectively.
Use of Proceeds, page 11
Comment 17. Please revise the disclosure to indicate the order of priority and the amount allocated for each specified purpose and discuss your plans if substantially less than the maximum amount of proceeds is obtained. The disclosure should quantify the amount to be used for each purpose at different levels of offering proceeds. For example, disclose how proceeds will be allocated if 100%, 50%, 25%, and 10% of the total maximum amount of proceeds are received.
Response: The Use of Proceeds section of the Registration Statement has been revised to include the disclosure requested. Please see page 13 of the Registration Statement.
Comment 18. Please describe what stage of development you expect to achieve for each indication for your product candidates using the proceeds from the offering.
Response: The Registration Statement has been revised in response to this comment. Please see page 13 of the Registration Statement.
Comment 19. We note the discussion under “Liquidity and Capital Resources” concerning the $400,000 “down payment toward prospective acquisitions.” We also note the terms of Section 2 of Exhibit 10.7. If proceeds of the offering will be used for acquisitions, the use of proceeds discussion should be expanded accordingly. See also Instruction 6 to Item 504 of Regulation S-K. We may have additional comments.
Response: Proceeds from the best efforts offering will not be used for prospective acquisitions but will be used solely as set forth in the Use of Proceeds section. Please see page 13 of the Registration Statement.
Market for Common Stock, page 12
Comment 20. Please expand the discussion to describe the criteria that must be satisfied for acceptance of an application for quotation on the OTC Bulletin Board.
Response: The Registration Statement has been revised in response to this comment. Please see page 15 of the Registration Statement.
Comment 21. Please expand the discussion to provide the dates of availability and the number of shares that may be sold by affiliates in accordance with Rule 144.
Response: The Registration Statement has been revised in response to this comment to state the number of shares that may be sold by affiliates and to state that such affiliates may sell their shares after the six-month holding period. Please see page 15 of the Registration Statement.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 13
Comment 22. You state that the discussion relates to your subsidiary, Propanc Pty Ltd. Please revise to discuss the results of operations for the consolidated entity, Propanc Health Group Corporation.
Response: The Registration Statement has been revised in response to this comment. Please see page 15 of the Registration Statement.
For the Year Ended June 30, 2010 compared to the Year ended June 30, 2009
Revenue, page 13
Comment 23. Please expand the discussion to explain the significance, if any, of your supply of unlicensed medicine to treat patients at the Dove Clinic, including potential legal and liability ramifications, if any.
Response: The Registration Statement has been revised to state that the Company’s management believes that there will be no ramifications from the supply of unlicensed medicine to the Dove Clinic. In the United Kingdom, an unlicensed relevant medicinal product may only be supplied in accordance with the provisions of Schedule 1 of the The Medicines for Human Use (Marketing Authorisations) Regulations 1994 [SI 1994/3144], (the MA Regs.). Schedule 1 exempts relevant medicinal product which is supplied to fill a "special need" from the need for a marketing authorization, provided that such supply is in response to a bona fide unsolicited order, formulated in accordance with the specification of a doctor, dentist or supplementary prescriber and for use by his individual patients on his direct responsibility. The supply of the unlicensed medicine to the Dove Clinic was in compliance with Schedule 1. Please see page 16 of the Registration Statement.
Comment 24. Since Dr. Kenyon is the Medical Director of the Dove Clinic, please tell us why you did not sell the medicine directly to the Dove Clinic.
Response: The Company did not sell the medicine directly to The Dove Clinic Limited because the Company was formed after supply of the medicine was undertaken by the Dove Clinic. The supply of the unlicensed medicine to patients continued over a period of eighteen months. During this period, the Company was formed on the basis that it would develop and commercialize the technology based on the clinic results observed by Dr. Kenyon at the Dove Clinic after treating a number of advanced cancer patients in his clinic under the UK Specials License Scheme.
For the Year Ended June 30, 2010 Compared to the Year Ended June 30, 2009
Administration Expense, page 14
Comment 25. Please revise your discussion to explain why your stock based expense was much higher during the fiscal year ended 2010.
Response: The Registration Statement has been revised to include the disclosure requested. Please see page 16 of the Registration Statement.
Liquidity and Capital Resources, page 14
Comment 26. Please tell us whether you are affiliated with Churchill and Associates. We may have additional comments.
Response: The Company had entered into certain agreements with Churchill and Associates in August 2010. The Company has terminated its agreements with Churchill and Associates and has re
Show Raw Text
CORRESP
1
filename1.htm
prop_corresp.htm
August 18, 2011
VIA EDGAR
Mr. John Krug
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Mail Stop 4720
Washington, DC 20549
Re:
Propanc Health Group Corporation
Amendment No. 1 to the Registration Statement on Form S-1
Filed June 23, 2011
File No. 333-175092
Dear Mr. Krug:
We are counsel to Propanc Health Group Corporation (“Propanc,” the “Company” or “our client”). On behalf of our client, we respond as follows to the Staff’s comments dated July 19, 2011, relating to the above-captioned Registration Statement. Captions and section headings herein will correspond to those set forth in Amendment No. 1 to the Registration Statement on Form S-1, a copy of which has been marked with the changes from the initial filing and is enclosed herein. Please note that for the Staff’s convenience, we have recited each of the Staff’s comments and provided the Company’s response to each comment in italics immediately thereafter.
Form S-1
General
Comment 1. Please provide us proofs of all graphic, visual, or photographic information you will provide in the printed prospectus prior to its use, for example in a preliminary prospectus. Please note we may have comments regarding these materials.
Response: The Company will provide the Securities and Exchange Commission with all graphic, visual, or photographic information that will be included in the printed prospectus prior to its use.
Comment 2. Please note that where we provide examples to illustrate what we mean by our comments, they are examples and not complete lists. If our comments are applicable to portions of the filing that we have not cited as examples, please make the appropriate changes in accordance with our comments.
Response: The Company notes the comment above.
Comment 3. Please update the discussion in your prospectus to the most recent date practicable.
Response: The discussion in the Registration Statement has been updated to the most recent date practicable, as per the above comment.
1
Cover Page
Comment 4. We note the registration statement pertains to a combined primary and secondary offering of common stock, the primary offering will be conducted by the company’s officers and directors, and that these individuals are also identified as selling shareholders. Please expand the discussion on the cover page and in the plan of distribution section to clarify whether the primary offering will be completed prior to the beginning of the secondary offering. Alternatively, please consider providing two separate prospectuses or the filing of alternate pages reflecting the respective offerings in the next amendment. Regardless of the alternative you select, please identify your affiliates as underwriters. In addition, the prospectus should be updated by filing a post-effective amendment after completion of the primary offering to describe the results of the primary offering. We may have additional comments.
Response: The Registration Statement has been modified to include alternate pages reflecting the offerings. In addition, the Registration Statement has been revised to address the other comments above. Please see the cover page of the Registration Statement. The Company also undertakes to file a post-effective amendment after the completion of the primary offering.
Comment 5. Please state whether there is any minimum amount that must be raised as a result of the primary offering, whether there are any minimum purchase requirements, and whether there are any arrangements to place the funds in an escrow, trust, or similar account. If you have not made any of these arrangements, state this fact and describe the effect on investors. See Item 501(b)(8) of Regulation S-K.
Response: The Registration Statement has been revised in response to this comment. Please see the cover page of the Registration Statement.
Prospectus Summary
Our Company, page 1
Comment 6. Please include a discussion of the material terms of the exchange offer, the nature of your operations prior to the exchange offer, the approximate percentage ownership the 64.7 million shares represented on the date of the exchange, and the affiliation, if any, between Propanc Pty Ltd. and you prior to the exchange offer.
Response: The Registration Statement has been revised in response to this comment. Please see page 1 of the Registration Statement.
The Offering, page 2
Comment 7. Please expand the presentation to include a line item for the number of shares to be offered by the company.
Response: The Registration Statement has been revised in response to this comment. Please see page 2 of the Registration Statement.
Comment 8. Please reconcile the number of shares outstanding prior to the offering with the number of shares reflected on your financial statements and the section entitled “Recent Sales of Unregistered Securities.” We may have additional comments.
2
Response: The Registration Statement has been revised in response to this comment. Please see page 2 and page II-2 of the Registration Statement.
9. We note you indicate the number of shares outstanding prior to the offering is the same as the number of shares outstanding immediately following the offering which includes up to five million shares on a best efforts basis. Please advise or revise.
Response: The Registration Statement has been revised in response to this comment. Please see page 2 of the Registration Statement.
Risk Factors – General
10. Please expand the risk factor section to include risk factors specifically addressing:
●
Your accountant’s going concern opinion;
●
Potential product liability claims; and
●
The lack of independent directors and related corporate governance issues and potential risks to shareholders.
Response: The Registration Statement has been revised to include the risk factors requested. Please see pages 6 and 10 of the Registration Statement.
11. We note you may be substantially dependent upon one or more third parties to conduct your research and clinical studies. If you are, please add a risk factor to address this fact. Also, please file copies of these agreements as exhibits and discuss them in greater detail in your business section. If you do not believe that you are substantially dependent upon these agreements, please provide an analysis supporting your determination. See Item 601(b)(10)(ii)(B) of Regulation S-K.
Response: The Company is not substantially dependent on any one particular third party to carry out its research and clinical studies, as it follows a standard outsourcing model which involves outsourcing a number of its key research and development activities. It is not reliant on any one particular company to carry out all of its activities. As such, we believe that the requested risk factor is not necessary.
“Our ability to continue as a going concern…,” page 4
Comment 12. Please expand the discussion to quantify the amount of losses you have incurred in each of the past two years and the amount of your accumulated deficit. In addition, please disclose that as of March 31, 2011, you only had $54 in cash.
Response: The relevant risk factor has been revised in response to this comment. Please see page 5 of the Registration Statement.
“Because we will need to finance our future cash needs through securities offerings…,” page 4
Comment 13. We note your belief that “the net proceeds from our prior private equity offerings and existing cash will be sufficient to enable us to fund our projected operating requirements for the next twelve (12) months….” Please reconcile this statement with the fact that as of March 31, 2011 your available cash resources apparently consisted of $54 in cash and a receivable for $2608, and the statement at the bottom of page 14 “therefore, we do not have enough available cash to meet our obligations over the next 12 months.” We may have additional comments.
Response: The relevant risk factor has been revised to in response to this comment. Please see page 5 of the Registration Statement.
“Because pre-clinical and clinical trials required for our product candidates…,” page 5
3
Comment 14. Please expand the discussion to briefly discuss whether and the extent to which you have conducted pre-clinical and clinical trials.
Response: The relevant risk factor has been revised to in response to this comment. Please see page 7 of the Registration Statement.
“If we are unable to obtain sufficient and adequate supplies necessary for the manufacturing of our product…,” page 6
Comment 15. It is unclear from the discussion whether there is, in fact, a sole source supplier for the components of your product. If you are substantially dependent on any of your raw material or component suppliers, please identify them here and identify the products that are materially dependent on the raw materials or components. Also, please file copies of these agreements as exhibits and discuss them in greater detail in your business section. If you do not believe you are substantially dependent upon these agreements, please provide an analysis supporting your determination. See Item 601(b)(10)(ii)(B) of Regulation S-K.
Response: The Company is of the opinion that it is not reliant on any sole supplier for its key components of its lead formulation. Such determination is based on the fact that the raw materials it requires are readily available from a variety of suppliers. In order to minimize any potential risk, the Company intends to source its key components from at least two suppliers at any given time.
“If we lose key management or scientific personnel…,” page 8
Comment 16. Please expand the discussion to state the extent to which you have employment agreements with your key personnel. If applicable, please file these employment agreements as exhibits.
Response: The relevant risk factor has been revised to in response to this comment. Please see page 10 of the Registration Statement. In addition, the letters of Appointment for Drs. Julian Kenyon and Douglas Mitchell have been included as Exhibits 10.10 and 10.11, respectively.
Use of Proceeds, page 11
Comment 17. Please revise the disclosure to indicate the order of priority and the amount allocated for each specified purpose and discuss your plans if substantially less than the maximum amount of proceeds is obtained. The disclosure should quantify the amount to be used for each purpose at different levels of offering proceeds. For example, disclose how proceeds will be allocated if 100%, 50%, 25%, and 10% of the total maximum amount of proceeds are received.
Response: The Use of Proceeds section of the Registration Statement has been revised to include the disclosure requested. Please see page 13 of the Registration Statement.
Comment 18. Please describe what stage of development you expect to achieve for each indication for your product candidates using the proceeds from the offering.
Response: The Registration Statement has been revised in response to this comment. Please see page 13 of the Registration Statement.
Comment 19. We note the discussion under “Liquidity and Capital Resources” concerning the $400,000 “down payment toward prospective acquisitions.” We also note the terms of Section 2 of Exhibit 10.7. If proceeds of the offering will be used for acquisitions, the use of proceeds discussion should be expanded accordingly. See also Instruction 6 to Item 504 of Regulation S-K. We may have additional comments.
4
Response: Proceeds from the best efforts offering will not be used for prospective acquisitions but will be used solely as set forth in the Use of Proceeds section. Please see page 13 of the Registration Statement.
Market for Common Stock, page 12
Comment 20. Please expand the discussion to describe the criteria that must be satisfied for acceptance of an application for quotation on the OTC Bulletin Board.
Response: The Registration Statement has been revised in response to this comment. Please see page 15 of the Registration Statement.
Comment 21. Please expand the discussion to provide the dates of availability and the number of shares that may be sold by affiliates in accordance with Rule 144.
Response: The Registration Statement has been revised in response to this comment to state the number of shares that may be sold by affiliates and to state that such affiliates may sell their shares after the six-month holding period. Please see page 15 of the Registration Statement.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 13
Comment 22. You state that the discussion relates to your subsidiary, Propanc Pty Ltd. Please revise to discuss the results of operations for the consolidated entity, Propanc Health Group Corporation.
Response: The Registration Statement has been revised in response to this comment. Please see page 15 of the Registration Statement.
For the Year Ended June 30, 2010 compared to the Year ended June 30, 2009
Revenue, page 13
Comment 23. Please expand the discussion to explain the significance, if any, of your supply of unlicensed medicine to treat patients at the Dove Clinic, including potential legal and liability ramifications, if any.
Response: The Registration Statement has been revised to state that the Company’s management believes that there will be no ramifications from the supply of unlicensed medicine to the Dove Clinic. In the United Kingdom, an unlicensed relevant medicinal product may only be supplied in accordance with the provisions of Schedule 1 of the The Medicines for Human Use (Marketing Authorisations) Regulations 1994 [SI 1994/3144], (the MA Regs.). Schedule 1 exempts relevant medicinal product which is supplied to fill a "special need" from the need for a marketing authorization, provided that such supply is in response to a bona fide unsolicited order, formulated in accordance with the specification of a doctor, dentist or supplementary prescriber and for use by his individual patients on his direct responsibility. The supply of the unlicensed medicine to the Dove Clinic was in compliance with Schedule 1. Please see page 16 of the Registration Statement.
Comment 24. Since Dr. Kenyon is the Medical Director of the Dove Clinic, please tell us why you did not sell the medicine directly to the Dove Clinic.
Response: The Company did not sell the medicine directly to The Dove Clinic Limited because the Company was formed after supply of the medicine was undertaken by the Dove Clinic. The supply of the unlicensed medicine to patients continued over a period of eighteen months. During this period, the Company was formed on the basis that it would develop and commercialize the technology based on the clinic results observed by Dr. Kenyon at the Dove Clinic after treating a number of advanced cancer patients in his clinic under the UK Specials License Scheme.
5
For the Year Ended June 30, 2010 Compared to the Year Ended June 30, 2009
Administration Expense, page 14
Comment 25. Please revise your discussion to explain why your stock based expense was much higher during the fiscal year ended 2010.
Response: The Registration Statement has been revised to include the disclosure requested. Please see page 16 of the Registration Statement.
Liquidity and Capital Resources, page 14
Comment 26. Please tell us whether you are affiliated with Churchill and Associates. We may have additional comments.
Response: The Company had entered into certain agreements with Churchill and Associates in August 2010. The Company has terminated its agreements with Churchill and Associates and has re