SEC Company Response from BiomX Inc. (PHGE) (CIK 0001739174) (HLSQ) — Aug 22, 2019
BiomX Inc. (PHGE) (CIK 0001739174)
Date: Aug. 22, 2019 · CIK: 0001739174 · Accession: 0001213900-19-016538
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-38762
Referenced dates: August 14, 2019
Letter
Via Edgar Division of Corporation Finance Office of Healthcare & Insurance Re: Chardan Healthcare Acquisition Corp Preliminary Proxy Statement on Schedule 14A Filed July 17, 2019 File No. 001-38762
Dear Mr. Gabor:
On behalf of our client, Chardan Healthcare Acquisition Corp (the “Company”), we hereby provide a response to the comments issued in a letter dated August 14, 2019 (the “Staff’s Letter”) regarding the Company’s Preliminary Proxy Statement on Schedule 14A (the “Preliminary Proxy Statement”). Contemporaneously, we are submitting the amended Preliminary Proxy Statement via Edgar (the “Amended Preliminary Proxy Statement”).
In order to facilitate the review by the Commission’s staff (the “Staff”) of the Amended Proxy Statement, we have responded, on behalf of the Company, to the comments set forth in the Staff’s Letter on a point-by-point basis. The numbered paragraphs set forth below respond to the Staff’s comments and correspond to the numbered paragraph in the Staff’s Letter.
Los Angeles New York Chicago Nashville Washington, DC Beijing Hong Kong www.loeb.com
A limited liability partnership including professional corporations
Jeffrey Gabor
August 22, 2019
Page
Preliminary proxy filed July 17, 2019
Questions and Answers about the Proposals for CHAC Stockholders, page 1
1. Please revise pages 1-2 to add a question and answer that highlights the relative equity ownership percentage split. Also include the pro-forma valuation of the combined company and the value of the equity to be issued to the BiomX shareholders. In regards to the pro-forma valuation, we refer to the "Transaction Overview" section contained in your July 2019 investor presentation.
Response: The disclosure on page 2 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Q. Who may vote at the special meeting of stockholders?, page 2
2. With reference to the multiple voting agreements discussed on pages 3 and 8, please revise to indicate: (i) the total number of shares that are subject to voting agreements and (ii) the number of shares that are not subject to voting agreements, including the number of these shares that must be voted in favor of each proposal in order to earn approval.
Response: The disclosure on page 2 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Do I have redemption rights?, page 3
3. With reference to the disclosure in the penultimate paragraph on page 77, please revise the disclosure on page 3 to clarify, it true, that redemption payments will only be made in the event that the proposed Business Combination is consummated.
Response: The disclosure on page 3 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Shareholder Agreements, page 8
4. Please revise to highlight the earn-out provisions in your question and answer section. With reference to page 6 of your July 2019 investor presentation, also explain that you potentially could issue 2.1 million additional shares to CHAC public shareholders in the event that you issue earn-out shares to certain BiomX holders. In your disclosure, explain why you have undertaken the obligation to potentially issue additional shares to CHAC shareholders and explain how you will determine which CHAC shareholders would be entitled to receive the additional shares.
Response: The disclosure on page 2 of the Amended Proxy Statement has been revised to disclose the earn-out provisions.
The investor presentation does not indicate that an additional 2.1 million shares might be issued to the Company’s current stockholders. As indicated in footnote 1 to the table on page 6 of the investor presentation, the share numbers reflect outstanding warrants having an exercise price of $11.50 per share using the treasury method. The up to 2.1 million additional shares reflects the outstanding warrants.
Jeffrey Gabor
August 22, 2019
Page
CHAC will be required to meet the initial listing standards…, page 61
5. According to your disclosure on page 98, the closing of the merger is conditioned upon NYSE American Stock Exchange's approval of the initial listing application. Accordingly, please tell us why the risks listed in the bullet points are applicable.
Response: The disclosure on page 61 of the Amended Proxy Statement has been revised to clarify that the risks are applicable if the combined company meets the initial listing requirements but is subsequently delisted.
Special Meeting of CHAC Stockholders, page 73
6. Please revise to include a brief discussion of the material tax consequences to current CHAC holders or advise.
Response: A brief discussion of the consequences of redeeming the shares has been added to page 77 of the Amended Proxy Statement.
Voting Your Shares, page 74
7. Your disclosure on page 4 indicates that your proxy card will also be used for purposes of exercising share redemption rights. With reference to your disclosures on pages 74 and 75 concerning the treatment of signed cards that lack voting indications, please tell us whether the proxy card must be signed in order for shareholders to redeem their shares. Also, tell us whether the board's treatment of signed cards that lack voting indications is consistent with the disclosure on page 34 of the IPO prospectus which states that a public stockholder who fails to vote either in favor of or against a proposed business combination will not be able to have his shares redeemed for cash. To help us assess your response, please also provide us with a form of the proxy card.
Response: The disclosure on pages 74 and 75 of the Amended Proxy Statement has been revised to clarify that a shareholder may validly elect to redeem by either providing an indication on the proxy card or separately sending request. While not requiring a stockholder to vote for or against a proposed transaction is not consistent with the Company’s IPO prospectus, this liberalization of the methodology for stockholders to seek redemption rights is a benefit to stockholders in that they may elect redemption in whatever method best suits them. A form of proxy card has been included with the Amended Proxy Statement.
Jeffrey Gabor
August 22, 2019
Page
Redemption Rights, page 75
8. Please revise the disclosure and heading here and on page 3, as applicable, to clarify whether shareholders may demand redemption at any time or whether this rights is only in connection with a proposed business combination.
Response: The disclosure on pages 3 and 75 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Background of the Business Combination, page 79
9. With reference to your disclosure on page 80, please revise to explain the transaction criteria used in your search for target companies.
Response: The disclosure on page 80 has been revised in accordance with the Staff’s comments. The disclosure now provides additional detail on the transaction screening criteria employed by the Company.
10. Please revise pages 81-82 concerning the preliminary proposals that you submitted to the eight target candidates by disclosing all material proposal terms, including transaction structure, valuation and equity split distribution. Also revise to indicate whether each candidate was commercial, clinical, pre-clinical or discovery stage.
Response: The disclosures on pages 81 and 82 have been revised in accordance with the Staff’s comments.
11. Please revise to provide greater detail concerning the material issues discussed and key terms negotiated with BiomX. In this regard, please disclose the terms of your March 6 letter of intent and disclose how, when, and why the material terms proposed by the parties evolved over the next four months.
Response: The disclosures on pages 82, 83 and 84 have been revised in accordance with the Staff’s comments.
12. With reference to your disclosure on page 11 and elsewhere, please revise to explain in greater detail the various industry and financial data and the due diligence and evaluation materials that BiomX provided to your management.
Response: The disclosure on pages 11 and 89 has been revised in accordance with the Staff’s comments. Please note that the Company did not materially rely on industry reports provided by BiomX Ltd. to perform its financial analysis or to evaluate the financial condition of BiomX Ltd.
Jeffrey Gabor
August 22, 2019
Page
CHAC’s Board of Directors’ Reasons for the Approval of the Business Combination, page 85
13. Your disclosures on pages 85 and 86 state and/or suggest that the target company's proposed drug product candidates will be safe. Please note that determinations as to safety are within the sole authority of the FDA or comparable foreign regulatory authorities. With respect to your disclosure on page 85, we further note that it is not clear to us that the use of unspecified phage cocktails in food additives indicates that any future phage drugs developed by the target company will be safe, particularly if high dosages will be required to have therapeutic impact such that FDA will deem them effective to treat a specific medical indication. Please revise or advise, as appropriate.
Response: The disclosures on pages 85 and 86 have been revised in accordance with the Staff’s comments.
Summary of CHAC Financial Analysis, page 88
14. Please revise to explain how the Board derived the $10.00 per share valuation for the post-merger CHAC shares, including all material assumptions necessary to this calculation.
Response: The disclosure on page 87 has been revised to clarify that the merger price per share, along with all the other terms of the Merger Agreement, was arrived at through negotiations between the Company and BiomX Ltd. The Board considered the analysis presented in Summary of CHAC Financial Analysis regarding the potential valuation of the Company’s shares, as well as the risks inherent in the transaction, in comparison to the $10.00 negotiated merger price.
15. Your disclosures on pages 89-91 indicate that you reviewed certain financial information of BiomX for purposes of preparing the analyses. Please revise your filing to disclose this financial information, including the 2019 to 2022 expense projections provide by BiomX.
Response: The disclosure on page 89 has been revised in accordance with the Staff’s comments.
16. Given the pre-clinical nature of the target's operations, please revise to disclose why you selected three clinical stage companies for purposes of your financial analyses, and did not select any pre-clinical ones. Also explain the statement on page 89 that the related companies had "comparable clinical stage assets."
Response: The disclosure on page 89 has been revised in accordance with the Staff’s comments.
17. Please revise your disclosure concerning each of the three analyses to illustrate how you determined the implied per share equity figures. For example, and without limitation, we note that you do not provide the revenue multiples used in the selected companies analysis or the BiomX enterprise value used in your discounted cash flow model. Please also add BiomX's information to the IPO Market Analysis table on page 90 or provide an additional table that provides comparable information.
Response: The disclosure on page 90 has been revised to add BiomX Ltd.’s information to the IPO Market Analysis Table and clarify how the implied equity per share value from comparable initial public offerings was derived. The disclosure on page 91 has been revised to add a revenue multiple table for the selected comparable initial public offerings, as well as how the implied equity per share value from comparable initial public offerings was derived.
Jeffrey Gabor
August 22, 2019
Page
Certain CHAC Forecasts, page 92
18. Please revise your disclosure in this section to identify the commercial outcomes represented by Forecasts A, B, and C and identify all significant factors and assumptions. From your disclosure it should be clear whether each forecast assumes commercialization of pharmaceutical and/or cosmetic products. To the extent that a given forecast assumes both types of revenues, revise to indicate the revenues attributable to each of these two business segments.
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CORRESP
1
filename1.htm
Giovanni Caruso
Partner
345 Park Avenue
Direct 212.407.4866
New York, NY 10154
Main 212.407.4000
Fax 212.937.3943
gcaruso@loeb.com
Via
Edgar
August
22, 2019
Mr.
Jeffery Gabor
Division of Corporation Finance Office of Healthcare & Insurance
U.S. Securities & Exchange Commission
100
F Street, NE
Washington,
D.C. 20549
Re: Chardan
Healthcare Acquisition Corp
Preliminary Proxy Statement on Schedule 14A
Filed July 17, 2019
File No. 001-38762
Dear
Mr. Gabor:
On
behalf of our client, Chardan Healthcare Acquisition Corp (the “Company”), we hereby provide a response to the comments
issued in a letter dated August 14, 2019 (the “Staff’s Letter”) regarding the Company’s Preliminary Proxy
Statement on Schedule 14A (the “Preliminary Proxy Statement”). Contemporaneously, we are submitting the amended Preliminary
Proxy Statement via Edgar (the “Amended Preliminary Proxy Statement”).
In
order to facilitate the review by the Commission’s staff (the “Staff”) of the Amended Proxy Statement, we have
responded, on behalf of the Company, to the comments set forth in the Staff’s Letter on a point-by-point basis. The numbered
paragraphs set forth below respond to the Staff’s comments and correspond to the numbered paragraph in the Staff’s
Letter.
Los
Angeles New York Chicago Nashville Washington,
DC Beijing Hong Kong www.loeb.com
A
limited liability partnership including professional corporations
Jeffrey
Gabor
August 22, 2019
Page
2
Preliminary
proxy filed July 17, 2019
Questions
and Answers about the Proposals for CHAC Stockholders, page 1
1. Please
revise pages 1-2 to add a question and answer that highlights the relative equity ownership percentage split. Also include the
pro-forma valuation of the combined company and the value of the equity to be issued to the BiomX shareholders. In regards to
the pro-forma valuation, we refer to the "Transaction Overview" section contained in your July 2019 investor presentation.
Response:
The disclosure on page 2 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Q.
Who may vote at the special meeting of stockholders?, page 2
2. With
reference to the multiple voting agreements discussed on pages 3 and 8, please revise
to indicate: (i) the total number of shares that are subject to voting agreements and
(ii) the number of shares that are not subject to voting agreements, including the number
of these shares that must be voted in favor of each proposal in order to earn approval.
Response:
The disclosure on page 2 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Do
I have redemption rights?, page 3
3. With
reference to the disclosure in the penultimate paragraph on page 77, please revise the
disclosure on page 3 to clarify, it true, that redemption payments will only be made
in the event that the proposed Business Combination is consummated.
Response:
The disclosure on page 3 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Shareholder
Agreements, page 8
4. Please
revise to highlight the earn-out provisions in your question and answer section. With
reference to page 6 of your July 2019 investor presentation, also explain that you potentially
could issue 2.1 million additional shares to CHAC public shareholders in the event that
you issue earn-out shares to certain BiomX holders. In your disclosure, explain why you
have undertaken the obligation to potentially issue additional shares to CHAC shareholders
and explain how you will determine which CHAC shareholders would be entitled to receive
the additional shares.
Response:
The disclosure on page 2 of the Amended Proxy Statement has been revised to disclose the earn-out provisions.
The
investor presentation does not indicate that an additional 2.1 million shares might be issued to the Company’s current stockholders.
As indicated in footnote 1 to the table on page 6 of the investor presentation, the share numbers reflect outstanding warrants
having an exercise price of $11.50 per share using the treasury method. The up to 2.1 million additional shares reflects the outstanding
warrants.
Jeffrey
Gabor
August 22, 2019
Page
3
CHAC
will be required to meet the initial listing standards…, page 61
5. According
to your disclosure on page 98, the closing of the merger is conditioned upon NYSE American
Stock Exchange's approval of the initial listing application. Accordingly, please tell
us why the risks listed in the bullet points are applicable.
Response:
The disclosure on page 61 of the Amended Proxy Statement has been revised to clarify that the risks are applicable if the combined
company meets the initial listing requirements but is subsequently delisted.
Special
Meeting of CHAC Stockholders, page 73
6. Please
revise to include a brief discussion of the material tax consequences to current CHAC
holders or advise.
Response:
A brief discussion of the consequences of redeeming the shares has been added to page 77 of the Amended Proxy Statement.
Voting
Your Shares, page 74
7. Your
disclosure on page 4 indicates that your proxy card will also be used for purposes of
exercising share redemption rights. With reference to your disclosures on pages 74 and
75 concerning the treatment of signed cards that lack voting indications, please tell
us whether the proxy card must be signed in order for shareholders to redeem their shares.
Also, tell us whether the board's treatment of signed cards that lack voting indications
is consistent with the disclosure on page 34 of the IPO prospectus which states that
a public stockholder who fails to vote either in favor of or against a proposed business
combination will not be able to have his shares redeemed for cash. To help us assess
your response, please also provide us with a form of the proxy card.
Response:
The disclosure on pages 74 and 75 of the Amended Proxy Statement has been revised to clarify that a shareholder may validly elect
to redeem by either providing an indication on the proxy card or separately sending request. While not requiring a stockholder
to vote for or against a proposed transaction is not consistent with the Company’s IPO prospectus, this liberalization of
the methodology for stockholders to seek redemption rights is a benefit to stockholders in that they may elect redemption in whatever
method best suits them. A form of proxy card has been included with the Amended Proxy Statement.
Jeffrey
Gabor
August 22, 2019
Page
4
Redemption
Rights, page 75
8. Please
revise the disclosure and heading here and on page 3, as applicable, to clarify whether
shareholders may demand redemption at any time or whether this rights is only in connection
with a proposed business combination.
Response:
The disclosure on pages 3 and 75 of the Amended Proxy Statement has been revised in accordance with the Staff’s comments.
Background
of the Business Combination, page 79
9. With
reference to your disclosure on page 80, please revise to explain the transaction criteria
used in your search for target companies.
Response:
The disclosure on page 80 has been revised in accordance with the Staff’s comments. The disclosure now provides additional
detail on the transaction screening criteria employed by the Company.
10. Please
revise pages 81-82 concerning the preliminary proposals that you submitted to the eight
target candidates by disclosing all material proposal terms, including transaction structure,
valuation and equity split distribution. Also revise to indicate whether each candidate
was commercial, clinical, pre-clinical or discovery stage.
Response:
The disclosures on pages 81 and 82 have been revised in accordance with the Staff’s comments.
11. Please
revise to provide greater detail concerning the material issues discussed and key terms
negotiated with BiomX. In this regard, please disclose the terms of your March 6 letter
of intent and disclose how, when, and why the material terms proposed by the parties
evolved over the next four months.
Response:
The disclosures on pages 82, 83 and 84 have been revised in accordance with the Staff’s comments.
12. With
reference to your disclosure on page 11 and elsewhere, please revise to explain in greater
detail the various industry and financial data and the due diligence and evaluation materials
that BiomX provided to your management.
Response:
The disclosure on pages 11 and 89 has been revised in accordance with the Staff’s comments. Please note that the Company
did not materially rely on industry reports provided by BiomX Ltd. to perform its financial analysis or to evaluate the financial
condition of BiomX Ltd.
Jeffrey
Gabor
August 22, 2019
Page
5
CHAC’s
Board of Directors’ Reasons for the Approval of the Business Combination, page 85
13. Your
disclosures on pages 85 and 86 state and/or suggest that the target company's proposed
drug product candidates will be safe. Please note that determinations as to safety are
within the sole authority of the FDA or comparable foreign regulatory authorities. With
respect to your disclosure on page 85, we further note that it is not clear to us that
the use of unspecified phage cocktails in food additives indicates that any future phage
drugs developed by the target company will be safe, particularly if high dosages will
be required to have therapeutic impact such that FDA will deem them effective to treat
a specific medical indication. Please revise or advise, as appropriate.
Response:
The disclosures on pages 85 and 86 have been revised in accordance with the Staff’s comments.
Summary
of CHAC Financial Analysis, page 88
14. Please
revise to explain how the Board derived the $10.00 per share valuation for the post-merger
CHAC shares, including all material assumptions necessary to this calculation.
Response:
The disclosure on page 87 has been revised to clarify that the merger price per share, along with all the other terms of the Merger
Agreement, was arrived at through negotiations between the Company and BiomX Ltd. The Board considered the analysis presented
in Summary of CHAC Financial Analysis regarding the potential valuation of the Company’s shares, as well as the risks
inherent in the transaction, in comparison to the $10.00 negotiated merger price.
15. Your
disclosures on pages 89-91 indicate that you reviewed certain financial information of
BiomX for purposes of preparing the analyses. Please revise your filing to disclose this
financial information, including the 2019 to 2022 expense projections provide by BiomX.
Response:
The disclosure on page 89 has been revised in accordance with the Staff’s comments.
16. Given
the pre-clinical nature of the target's operations, please revise to disclose why you
selected three clinical stage companies for purposes of your financial analyses, and
did not select any pre-clinical ones. Also explain the statement on page 89 that the
related companies had "comparable clinical stage assets."
Response:
The disclosure on page 89 has been revised in accordance with the Staff’s comments.
17. Please
revise your disclosure concerning each of the three analyses to illustrate how you determined
the implied per share equity figures. For example, and without limitation, we note that
you do not provide the revenue multiples used in the selected companies analysis or the
BiomX enterprise value used in your discounted cash flow model. Please also add BiomX's
information to the IPO Market Analysis table on page 90 or provide an additional table
that provides comparable information.
Response:
The disclosure on page 90 has been revised to add BiomX Ltd.’s information to the IPO Market Analysis Table and clarify
how the implied equity per share value from comparable initial public offerings was derived. The disclosure on page 91 has been
revised to add a revenue multiple table for the selected comparable initial public offerings, as well as how the implied equity
per share value from comparable initial public offerings was derived.
Jeffrey
Gabor
August 22, 2019
Page
6
Certain
CHAC Forecasts, page 92
18. Please
revise your disclosure in this section to identify the commercial outcomes represented
by Forecasts A, B, and C and identify all significant factors and assumptions. From your
disclosure it should be clear whether each forecast assumes commercialization of pharmaceutical
and/or cosmetic products. To the extent that a given forecast assumes both types of revenues,
revise to indicate the revenues attributable to each of these two business segments.