SEC Company Response from Propanc Biopharma, Inc. (PPCB) (CIK 0001517681) (PPCB) — Oct 27, 2011
Propanc Biopharma, Inc. (PPCB) (CIK 0001517681)
Date: Oct. 27, 2011 · CIK: 0001517681 · Accession: 0001354488-11-003959
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-175092
Referenced dates: October 13, 2011
Letter
VIA EDGAR Securities and Exchange Commission Division of Corporation Finance Propanc Health Group Corporation Amendment No. 2 to the Registration Statement on Form S-1 Filed September 30, 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 October 13, 2011, relating to the above-captioned Registration Statement. 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 immediately thereafter. In addition, we have attached a copy of the Registration Statement on Form S-1, Amendment No. 3, which has been marked with the changes from Form S-1, Amendment No.2 filed on September 30, 2011.
Form S-1
General
Comment 1. Please confirm that the secondary offering is limited to a 90 day period beginning upon effectiveness of the registration statement.
Response: The Company is offering its common stock on a best efforts basis for up to ninety days (90) following the effectiveness of the registration statement, which period may be extended by the Company for an additional ninety (90) days. Please see the cover page and throughout the registration statement.
Cover Page
Comment 2. Please expand the discussion to describe the existence and terms of the concurrent secondary offering.
Response: We have revised the cover page to include a discussion of the existence and terms of the concurrent secondary offering. Please see the cover page.
Prospectus Summary, page 2
Comment 3. Please expand the summary to include a brief description of the plan of distribution.
Response: We have revised the Prospectus Summary to include a brief description of the plan of distribution. Please see page 1.
Comment 4. Since the primary offering is a self-underwritten offering conducted by your officers and directors who are also selling shareholders in the secondary offering, please explain in the summary how potential investors will know whether the proceeds of their purchases will be directed to the company or a selling shareholder.
Response: We have revised the Prospectus Summary to include an explanation of how potential investors will know whether the proceeds of their purchases will be directed to the company or a selling shareholder. Please see page 1.
Comment 5. We note your response to comment 5 and reissue the comment in part. Please state in the summary whether there are any minimum purchase requirements, e.g.100 shares.
Response: We have revised the Prospectus Summary to provide that there are no minimum purchase requirements. Please see page 1.
Comment 6. Please file the escrow agreement as an exhibit. In addition, the plan of distribution discussion in the summary should include the following information:
●
Whether shareholders will receive interest if their funds are returned because the minimum is not reached;
●
How soon they would receive those funds following the termination of the offering; and
●
With whom the funds for the shares would be escrowed.
Response: We have revised the Prospectus Summary to provide disclosure relative to items listed in the above comment. The Company has not identified a suitable escrow agent at this time but expects to do so shortly (and prior to the effectiveness of the registration statement). The Company will file the escrow agreement as an exhibit once it is executed.
Risk Factors
General
Comment 7. The first risk factor on page 5 and the second risk factor on page 6 are overlapping and duplicative. Please combine these risk factors under one risk factor subheading.
Response: We have combined the two risk factors into one in response to this comment. Please see page 5.
Comment 8. Please include a separate and appropriately titled risk factor explaining that shareholders who purchase shares in the secondary offering will not be assured that any additional proceeds will be received by the company from the primary offering as the offerings are occurring simultaneously and the minimum level of sales to break escrow in the public offering might not be reached.
Response: We have added an additional risk factor that shareholders who purchase shares in the secondary offering will not be assured that any additional proceeds will be received by the company from the primary offering as the offerings are occurring simultaneously and the minimum level of sales to break escrow in the public offering might not be reached. Please see page 6.
“Because pre-clinical and clinical trials required for our product candidates...,” page 7
Comment 9. We note your response to comment 14 and the reference to pre-clinical studies you conducted. Please expand the discussion to state when you conducted these pre-clinical studies and how these studies may differ from the “formal preclinical studies” required for regulatory approval.
Response: We have expanded the discussion in this risk factor to address this comment. Please see page 7.
Use of Proceeds, page 13
Comment 10. We note your response to comment 17 and your current financial condition. We also note the disclosure under “Use of Proceeds” on page 2. Please expand the discussion to indicate the approximate amount of net proceeds from the minimum offering. In addition, with respect to each level of monies raised, please indicate the dollar amount of proceeds you intend to allocate to clinical trials, research and development, expansion of business, and general working capital, respectively. In this regard, we also note the presentation in Table 2 and the $1.8 million allocated to “overhead.”
Response: In response to this comment, we have revised the Use of Proceeds section. Please see page 13.
Comment 11. Please explain what you mean by the term “expansion of business.” If you have an agreement or understanding for a particular transaction, please describe the terms of such agreement.
Response: We have provided additional disclosure in response to this comment. Please see page 13.
Comment 12. Please expand the discussion to clarify, if applicable, the extent to which offering proceeds may be used to repay existing liabilities.
Response: We have provided additional disclosure in response to this comment. Please see page 13.
Market for Common Stock, page 12
Comment 13. We note your response to comment 20 and reissue the comment. 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: We have provided additional disclosure in response to this comment. Please see page 15.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 15
Comment 14. We note your response to comment 23 and reissue the comment in part. Please provide an analysis as to why an order placed by the Dove Clinic, of which Dr. Kenyon was the Medical Director, to an entity apparently formed by Dr. Kenyon to fulfill the order, is considered to be a bona fide unsolicited order. Please expand the discussion and consider the inclusion of an additional risk factor to address 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, in the event the transaction is not considered to be in compliance with the provisions of Schedule I of the Medicines for Human Use Regulations.
Response: According to Schedule 1 of the UK’s ‘The Medicines for Human Use (Marketing Authorisations Etc.), Regulations 1994’, unlicensed medicine supply under the ‘Specials’ provision must be a bona fide unsolicited order placed with one who is qualified to supply unlicensed medicines according to the provisions set out in regulations and who must hold a Manufacturer’s “Specials” Licence granted by the Licensing Authority. In this case, the bona fide unsolicited order placed by the Dove Clinic was supplied by Mandeville Medicines Ltd, Buckinghamshire, UK who is a qualified “Specials” manufacturer. The unlicensed medicine was provided according to the requirements specified under the relevant UK and Australian regulations and thus legal and liability ramifications are not considered to be sufficient to warrant inclusion as a risk.
Comment 15. We note your response to comment 24 and reissue the comment in part. Please provide the dates corresponding to the information provided in your response. In this regard, we note the Australian predecessor to your company was incorporated in October 2007 and the discussion on page 31 indicates Dr. Kenyon was the founder of the Australian predecessor.
Response: The Dove Clinic first treated patients in April, 2007. The Opal Clinic commenced patient treatment in July, 2007.
Comment 16. We note your response to comment 24 states the company did not sell directly to the Dove Clinic because the company was not formed until after supply of the medicine was undertaken by the Dove Clinic. Please tell us when and how, specifically, the Dove Clinic acquired a supply of the medicine prior to the formation of the company. In view of the Limited Distributor Deed, it appears ENP Limited acquired the medicine from the company. Please file the Limited Distributor Deed as an exhibit.
Response: The Limited Distributor Deed has been filed as Exhibit 10.13. ENP acquired the medicine from Mandeville Medicines, in this case the UK Specials Manufacturer. The intention of the Distributor Agreement was to ensure the intellectual property and scientific know how at the time would remain within the newly formed Australian company.
Liquidity and Capital Resources, page 17
Comment 17. Please file the August 3, 2010 and September 16, 2010 agreements with Churchill & Associates as exhibits. In addition, please file the June 6, 2011 termination agreement as an exhibit.
Response: The August 3, 2010 and September 19, 2011 agreements with Churchill & Associates, as well as the termination agreement, are included as Exhibits 10.14, 10.15 and 10.16 to the Registration Statement.
Related Party Transactions, page 18
Comment 18. Please identify by name the individuals to whom you are referring in this discussion.
Response: In response to this comment, we have included the name of the entity, Ostrowski Properties Pty Ltd. Please see page 18.
Business
Overview, page 19
Comment19. We note your response to comment 27 and reissue the comment. As previously requested, the overview presentation should temper your positive conclusions with the fact that substantial additional testing will be required. The discussion should be expanded to disclose the types of additional tests you will need to conduct and that early results obtained may not be replicated in later and larger trials. In addition, your positive conclusions should be modified by either expressing them as a hope that additional testing will confirm any of the positive results you describe or, alternatively, delete the conclusions.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
Comment 20. We note your reference to the unpublished retrospective study and review, and the absence of significant data for most of the patients receiving treatment. In view of the limitations of the study, please eliminate references to the study and its purported statistical results throughout the prospectus. Instead, please revise the discussion to provide disclosure to the effect that a version of the proposed drug was previously administered to 46 patients and the data for the results of such treatment is incomplete or unavailable for most of the participants. In addition, if true, the disclosure may state that although the 2007 review of patient outcomes has limited, if any, recognized scientific value because it was not a controlled scientific study, management believes that since some of the participants lived marginally longer than anticipated by attending clinicians, further research should be conducted to determine whether the perceived increase in life expectancy or survival can be attributed to the proposed product.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
Comment 21. Please expand the discussion to state the dates you applied for and subsequently received approval from the UK and Australian authorities to treat patients with the novel suppository formulation of proenzymes and the form in which such approval was provided, e.g. written approval subsequent to a written request.
Response: It was confirmed by Dr. Kenyon and Dr. Mitchell that no prior approval prior to the treatment of patients with unlicensed medicines on compassionate grounds was needed in the UK, or Australia. However, the guidelines in the UK and Australia specify under what conditions patients may receive treatment with unlicensed medicines on a compassionate basis and these guidelines were met when The Dove Clinic and Opal Clinic treated patients with the suppository formulation, which was manufactured by Mandeville Medicines, a qualified UK Specials Manufacturer. In addition the Quality Care Commission (UK) and MHRA routinely inspect the patient records from The Dove Clinic, and Opal Clinic sent notification to the TGA of patients treated.
Comment 22. Please expand the discussion to state when the special suppository was manufactured and by whom. In addition, please state when the suppository formulation was developed by Drs. Kenyon and Mitchell.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
Comment 23. We note the discussion of milestones on page 20. Please expand the discussion to describe the pharmacological data that was presented to the MHRA in 2008. In addition, please discuss the 28 day multiple ascending dose study and the results of this study.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
Propanc’s Technology, page 20
Comment 24. We note the reference to laboratory research at the Universities of Bath and Granada. Please clarify whether this university research supports each of the bulleted points at the top of page 21concerning PRP. We may have additional comments.
Response: In response to this comment, we have revised our disclosure on our technology. Please see page 20.
PRP-DCM, page 21
Comment 25. We note the reference to the international patent application filed in late 2010. Please state whether you have the sole beneficial interest in this patent application.
Response: In response to this comment, we have disclosed that the patent application is jointly owned by the Company and the University of Bath. Please see page 21.
Comment 26. We note your comparison with Nexavar and “encouraging results” from your animal research. Please expand the discussion to also describe how your proposed product differs from Nexavar, the negative results of your animal testing, the amount of time required for regulatory approval of Nexavar, material differences in your current ability to obtain regulatory approval and that of the developers of Nexavar at the time of approval of Nexavar, and appropriate warning language that there is no assurance your proposed product will receive regulatory approval. In the alternative, please delete the paragraph favorably comparing your research and proposed product to that of Nexavar and other researchers.
Response: In response to this comment,
Show Raw Text
CORRESP
1
filename1.htm
prop_corresp.htm
October 27, 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. 2 to the Registration Statement on Form S-1
Filed September 30, 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 October 13, 2011, relating to the above-captioned Registration Statement. 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 immediately thereafter. In addition, we have attached a copy of the Registration Statement on Form S-1, Amendment No. 3, which has been marked with the changes from Form S-1, Amendment No.2 filed on September 30, 2011.
Form S-1
General
Comment 1. Please confirm that the secondary offering is limited to a 90 day period beginning upon effectiveness of the registration statement.
Response: The Company is offering its common stock on a best efforts basis for up to ninety days (90) following the effectiveness of the registration statement, which period may be extended by the Company for an additional ninety (90) days. Please see the cover page and throughout the registration statement.
Cover Page
Comment 2. Please expand the discussion to describe the existence and terms of the concurrent secondary offering.
1
Response: We have revised the cover page to include a discussion of the existence and terms of the concurrent secondary offering. Please see the cover page.
Prospectus Summary, page 2
Comment 3. Please expand the summary to include a brief description of the plan of distribution.
Response: We have revised the Prospectus Summary to include a brief description of the plan of distribution. Please see page 1.
Comment 4. Since the primary offering is a self-underwritten offering conducted by your officers and directors who are also selling shareholders in the secondary offering, please explain in the summary how potential investors will know whether the proceeds of their purchases will be directed to the company or a selling shareholder.
Response: We have revised the Prospectus Summary to include an explanation of how potential investors will know whether the proceeds of their purchases will be directed to the company or a selling shareholder. Please see page 1.
Comment 5. We note your response to comment 5 and reissue the comment in part. Please state in the summary whether there are any minimum purchase requirements, e.g.100 shares.
Response: We have revised the Prospectus Summary to provide that there are no minimum purchase requirements. Please see page 1.
Comment 6. Please file the escrow agreement as an exhibit. In addition, the plan of distribution discussion in the summary should include the following information:
●
Whether shareholders will receive interest if their funds are returned because the minimum is not reached;
●
How soon they would receive those funds following the termination of the offering; and
●
With whom the funds for the shares would be escrowed.
Response: We have revised the Prospectus Summary to provide disclosure relative to items listed in the above comment. The Company has not identified a suitable escrow agent at this time but expects to do so shortly (and prior to the effectiveness of the registration statement). The Company will file the escrow agreement as an exhibit once it is executed.
2
Risk Factors
General
Comment 7. The first risk factor on page 5 and the second risk factor on page 6 are overlapping and duplicative. Please combine these risk factors under one risk factor subheading.
Response: We have combined the two risk factors into one in response to this comment. Please see page 5.
Comment 8. Please include a separate and appropriately titled risk factor explaining that shareholders who purchase shares in the secondary offering will not be assured that any additional proceeds will be received by the company from the primary offering as the offerings are occurring simultaneously and the minimum level of sales to break escrow in the public offering might not be reached.
Response: We have added an additional risk factor that shareholders who purchase shares in the secondary offering will not be assured that any additional proceeds will be received by the company from the primary offering as the offerings are occurring simultaneously and the minimum level of sales to break escrow in the public offering might not be reached. Please see page 6.
“Because pre-clinical and clinical trials required for our product candidates...,” page 7
Comment 9. We note your response to comment 14 and the reference to pre-clinical studies you conducted. Please expand the discussion to state when you conducted these pre-clinical studies and how these studies may differ from the “formal preclinical studies” required for regulatory approval.
Response: We have expanded the discussion in this risk factor to address this comment. Please see page 7.
Use of Proceeds, page 13
Comment 10. We note your response to comment 17 and your current financial condition. We also note the disclosure under “Use of Proceeds” on page 2. Please expand the discussion to indicate the approximate amount of net proceeds from the minimum offering. In addition, with respect to each level of monies raised, please indicate the dollar amount of proceeds you intend to allocate to clinical trials, research and development, expansion of business, and general working capital, respectively. In this regard, we also note the presentation in Table 2 and the $1.8 million allocated to “overhead.”
Response: In response to this comment, we have revised the Use of Proceeds section. Please see page 13.
3
Comment 11. Please explain what you mean by the term “expansion of business.” If you have an agreement or understanding for a particular transaction, please describe the terms of such agreement.
Response: We have provided additional disclosure in response to this comment. Please see page 13.
Comment 12. Please expand the discussion to clarify, if applicable, the extent to which offering proceeds may be used to repay existing liabilities.
Response: We have provided additional disclosure in response to this comment. Please see page 13.
Market for Common Stock, page 12
Comment 13. We note your response to comment 20 and reissue the comment. 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: We have provided additional disclosure in response to this comment. Please see page 15.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 15
Comment 14. We note your response to comment 23 and reissue the comment in part. Please provide an analysis as to why an order placed by the Dove Clinic, of which Dr. Kenyon was the Medical Director, to an entity apparently formed by Dr. Kenyon to fulfill the order, is considered to be a bona fide unsolicited order. Please expand the discussion and consider the inclusion of an additional risk factor to address 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, in the event the transaction is not considered to be in compliance with the provisions of Schedule I of the Medicines for Human Use Regulations.
Response: According to Schedule 1 of the UK’s ‘The Medicines for Human Use (Marketing Authorisations Etc.), Regulations 1994’, unlicensed medicine supply under the ‘Specials’ provision must be a bona fide unsolicited order placed with one who is qualified to supply unlicensed medicines according to the provisions set out in regulations and who must hold a Manufacturer’s “Specials” Licence granted by the Licensing Authority. In this case, the bona fide unsolicited order placed by the Dove Clinic was supplied by Mandeville Medicines Ltd, Buckinghamshire, UK who is a qualified “Specials” manufacturer. The unlicensed medicine was provided according to the requirements specified under the relevant UK and Australian regulations and thus legal and liability ramifications are not considered to be sufficient to warrant inclusion as a risk.
Comment 15. We note your response to comment 24 and reissue the comment in part. Please provide the dates corresponding to the information provided in your response. In this regard, we note the Australian predecessor to your company was incorporated in October 2007 and the discussion on page 31 indicates Dr. Kenyon was the founder of the Australian predecessor.
Response: The Dove Clinic first treated patients in April, 2007. The Opal Clinic commenced patient treatment in July, 2007.
4
Comment 16. We note your response to comment 24 states the company did not sell directly to the Dove Clinic because the company was not formed until after supply of the medicine was undertaken by the Dove Clinic. Please tell us when and how, specifically, the Dove Clinic acquired a supply of the medicine prior to the formation of the company. In view of the Limited Distributor Deed, it appears ENP Limited acquired the medicine from the company. Please file the Limited Distributor Deed as an exhibit.
Response: The Limited Distributor Deed has been filed as Exhibit 10.13. ENP acquired the medicine from Mandeville Medicines, in this case the UK Specials Manufacturer. The intention of the Distributor Agreement was to ensure the intellectual property and scientific know how at the time would remain within the newly formed Australian company.
Liquidity and Capital Resources, page 17
Comment 17. Please file the August 3, 2010 and September 16, 2010 agreements with Churchill & Associates as exhibits. In addition, please file the June 6, 2011 termination agreement as an exhibit.
Response: The August 3, 2010 and September 19, 2011 agreements with Churchill & Associates, as well as the termination agreement, are included as Exhibits 10.14, 10.15 and 10.16 to the Registration Statement.
Related Party Transactions, page 18
Comment 18. Please identify by name the individuals to whom you are referring in this discussion.
Response: In response to this comment, we have included the name of the entity, Ostrowski Properties Pty Ltd. Please see page 18.
Business
Overview, page 19
Comment19. We note your response to comment 27 and reissue the comment. As previously requested, the overview presentation should temper your positive conclusions with the fact that substantial additional testing will be required. The discussion should be expanded to disclose the types of additional tests you will need to conduct and that early results obtained may not be replicated in later and larger trials. In addition, your positive conclusions should be modified by either expressing them as a hope that additional testing will confirm any of the positive results you describe or, alternatively, delete the conclusions.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
5
Comment 20. We note your reference to the unpublished retrospective study and review, and the absence of significant data for most of the patients receiving treatment. In view of the limitations of the study, please eliminate references to the study and its purported statistical results throughout the prospectus. Instead, please revise the discussion to provide disclosure to the effect that a version of the proposed drug was previously administered to 46 patients and the data for the results of such treatment is incomplete or unavailable for most of the participants. In addition, if true, the disclosure may state that although the 2007 review of patient outcomes has limited, if any, recognized scientific value because it was not a controlled scientific study, management believes that since some of the participants lived marginally longer than anticipated by attending clinicians, further research should be conducted to determine whether the perceived increase in life expectancy or survival can be attributed to the proposed product.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
Comment 21. Please expand the discussion to state the dates you applied for and subsequently received approval from the UK and Australian authorities to treat patients with the novel suppository formulation of proenzymes and the form in which such approval was provided, e.g. written approval subsequent to a written request.
Response: It was confirmed by Dr. Kenyon and Dr. Mitchell that no prior approval prior to the treatment of patients with unlicensed medicines on compassionate grounds was needed in the UK, or Australia. However, the guidelines in the UK and Australia specify under what conditions patients may receive treatment with unlicensed medicines on a compassionate basis and these guidelines were met when The Dove Clinic and Opal Clinic treated patients with the suppository formulation, which was manufactured by Mandeville Medicines, a qualified UK Specials Manufacturer. In addition the Quality Care Commission (UK) and MHRA routinely inspect the patient records from The Dove Clinic, and Opal Clinic sent notification to the TGA of patients treated.
Comment 22. Please expand the discussion to state when the special suppository was manufactured and by whom. In addition, please state when the suppository formulation was developed by Drs. Kenyon and Mitchell.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
Comment 23. We note the discussion of milestones on page 20. Please expand the discussion to describe the pharmacological data that was presented to the MHRA in 2008. In addition, please discuss the 28 day multiple ascending dose study and the results of this study.
Response: In response to this comment, we have revised our disclosure in this section. Please see the disclosure beginning on page 19.
6
Propanc’s Technology, page 20
Comment 24. We note the reference to laboratory research at the Universities of Bath and Granada. Please clarify whether this university research supports each of the bulleted points at the top of page 21concerning PRP. We may have additional comments.
Response: In response to this comment, we have revised our disclosure on our technology. Please see page 20.
PRP-DCM, page 21
Comment 25. We note the reference to the international patent application filed in late 2010. Please state whether you have the sole beneficial interest in this patent application.
Response: In response to this comment, we have disclosed that the patent application is jointly owned by the Company and the University of Bath. Please see page 21.
Comment 26. We note your comparison with Nexavar and “encouraging results” from your animal research. Please expand the discussion to also describe how your proposed product differs from Nexavar, the negative results of your animal testing, the amount of time required for regulatory approval of Nexavar, material differences in your current ability to obtain regulatory approval and that of the developers of Nexavar at the time of approval of Nexavar, and appropriate warning language that there is no assurance your proposed product will receive regulatory approval. In the alternative, please delete the paragraph favorably comparing your research and proposed product to that of Nexavar and other researchers.
Response: In response to this comment,