Correspondence 0001213900-23-095295 from CERO THERAPEUTICS HOLDINGS, INC. (CERO)
CERO THERAPEUTICS HOLDINGS, INC.
Date: Dec. 13, 2023 · CIK: 0001870404 · Accession: 0001213900-23-095295
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-272467
Letter
Goodwin Procter
The New York Times Building
620 Eighth Avenue
New York, NY 10018
VIA EDGAR
December 13, 2023
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
100 F Street, N.E.
Washington, D.C. 20549-3628
Attention: Ibolya Ignat, Lynn Dicker, Dillon Hagius and Alan Campbell
Re: Phoenix Biotech Acquisition Corp.
Preliminary Proxy Statement on Schedule 14A
Filed November 27, 2023
Amendment No. 2 to Registration Statement on Form S-4
Filed August 14, 2023
File No. 333-272467
Ladies and Gentlemen,
On behalf of Phoenix Biotech Acquisition Corp. (the “Company”), we are submitting this letter to the Securities and Exchange Commission (the “SEC”) via EDGAR in response to a comment from the staff of the SEC (the “Staff”) raised during conversations between members of the Staff and the undersigned on December 5, 2023, December 7, 2023 and December 13, 2023 (the “Conversation”), pertaining to the Company’s above-referenced Preliminary Proxy Statement on Schedule 14A (the “Proxy Statement”) and the Registration Statement on Form S-4 for the Company’s proposed business combination, as amended (the “Registration Statement”).
During the Conversations, you noted the uncertainty regarding the status of a special purpose acquisition company as an “investment company” under Section 3(a)(1)(A) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), during the period after the 24-month anniversary of the effectiveness of the registration statement under the Securities Act of 1933, as amended, for its initial public offering and the completion of its initial business combination. The Company’s initial public offering was completed in October 2021. You requested that the Company include disclosure in the Proxy Statement and in the next amendment to the Registration Statement indicating how the funds in the Company’s trust account are invested, whether such investment may result in the Company being deemed an “investment company” under the Investment Company Act and the consequences of being deemed an “investment company”, including the potential early liquidation of the trust account, dissolution of the Company and expiration of the Company’s outstanding warrants as worthless. We have confirmed with the Company that the funds in the trust account are invested in money market funds that invest in government securities. Accordingly, we propose to add the following disclosure to the Proxy Statement and Registration Statement, with an additional sentence not included in the version that we sent to you on December 11, 2023, reflecting our Conversation on December 13, 2023 (the additional sentence is underlined for your ease of review):
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
December 13, 2023
Page 2
As of November 24, 2023, there was approximately $8.4 million of funds held in the Trust Account. The funds held in the Trust Account are held in money market funds that invest in U.S. Treasury securities. There is uncertainty under the Investment Company Act of 1940, as amended (the “Investment Company Act”), whether certain special purpose acquisition companies, or “SPACs,” with trust account assets held in securities would fall under the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act provides that an “investment company” includes any issuer that “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities.” Although the Company believes that it does not meet the definition of “investment company” because it does not hold itself out as an investment company, there is substantial uncertainty as to whether the Company’s investment of the funds held in the Trust Account may be deemed to cause the Company to “engage primarily, in the business of investing” in securities. The registration statement for the Company’s initial public offering became effective on October 5, 2021. Accordingly, the funds held in the Trust Account have been invested by the Company in cash or various securities from time to time during the past 26 months, including the current investment thereof in money market funds that invest in U.S. Treasury securities. The risk of being considered to be primarily engaged in investing in securities may increase as the period of time during which the funds held in the Trust Account are invested in securities becomes longer. Additionally, the Company does not believe that it is an “investment company” under Section 3(a)(1)(C) of the Investment Company Act because it does not own “investment securities” having a value exceeding 40% of its total assets. Rather, the Company has invested the funds held in the Trust Account in money market funds that seek to maintain a stable net asset value of $1 per share. Although many other SPACs have determined to mitigate the risk of being deemed an “investment company” by investing the funds held in their trust accounts solely in cash, the Company does not currently intend to withdraw such funds from the money market funds and reinvest such funds in cash. The Company’s decision to continue investing such funds in money market funds rather than in cash creates a greater risk that the Company will be deemed an “investment company” than if the Company reinvested such funds in cash.
Nevertheless, if the Company were to meet the definition of investment company, the Company would be required to register under Investment Company Act. Registration would subject the Company to substantial regulation and restrictions with respect to, among other things, its capital structure, management, operations, transactions and portfolio composition. The Company would also be subject to significant compliance and disclosure requirements. This would adversely impact its ability to operate in accordance with its business plan. If, as a result of such challenges, the Company were to abandon its efforts to complete the Business Combination, the Company would be required to redeem the public shares, liquidate the Trust Account and dissolve. Such liquidation and dissolution would cause the holders of public shares to lose the investment opportunity associated with an investment in the combined company, including any potential price appreciation of its securities. Upon such dissolution, the warrants would expire worthless.
The Company proposes to add the above disclosure in the Proxy Statement in the following locations:
(i) The Chairman’s letter following the paragraph beginning with the sentence, “For illustrative purposes, based on funds in the Trust Account of approximately $8.4 million on November 24, 2023, the estimated per-share conversion price would have been approximately $10.95.”
(ii) On page 16 following the paragraph, “The withdrawal of funds from the Trust Account in connection with the Election will reduce the amount held in the Trust Account following the redemption, and the amount remaining in the Trust Account may be significantly reduced from the approximately $8.4 million that was in the Trust Account as of November 24, 2023”; and
(iii) On page 30 following the paragraph beginning with the sentence, “As of November 24, 2023, there was approximately $8.4 million in the Trust Account.”
The Company intends to make parallel additions of such disclosure to the Registration Statement in the next amendment thereto, including in the section of the Registration Statement captioned “Risk Factors”.
*****
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
December 13, 2023
Page 3
Please contact the undersigned at (212) 459-7203 or via email at jletalien@goodwinlaw.com if you have any questions with respect to the foregoing.
Very truly yours,
/s/ Jeffrey A. Letalien
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filename1.htm
Goodwin Procter
The New York Times Building
620 Eighth Avenue
New York, NY 10018
VIA EDGAR
December 13, 2023
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
100 F Street, N.E.
Washington, D.C. 20549-3628
Attention: Ibolya Ignat, Lynn Dicker, Dillon Hagius and Alan Campbell
Re:
Phoenix Biotech Acquisition Corp.
Preliminary Proxy Statement on Schedule 14A
Filed November 27, 2023
Amendment No. 2 to Registration Statement on Form S-4
Filed August 14, 2023
File No. 333-272467
Ladies and Gentlemen,
On behalf of Phoenix Biotech Acquisition Corp. (the “Company”),
we are submitting this letter to the Securities and Exchange Commission (the “SEC”) via EDGAR in response to a comment
from the staff of the SEC (the “Staff”) raised during conversations between members of the Staff and the undersigned
on December 5, 2023, December 7, 2023 and December 13, 2023 (the “Conversation”), pertaining to the Company’s
above-referenced Preliminary Proxy Statement on Schedule 14A (the “Proxy Statement”) and the Registration Statement
on Form S-4 for the Company’s proposed business combination, as amended (the “Registration Statement”).
During the Conversations, you noted the uncertainty regarding the status
of a special purpose acquisition company as an “investment company” under Section 3(a)(1)(A) of the Investment Company Act
of 1940, as amended (the “Investment Company Act”), during the period after the 24-month anniversary of the effectiveness
of the registration statement under the Securities Act of 1933, as amended, for its initial public offering and the completion of its
initial business combination. The Company’s initial public offering was completed in October 2021. You requested that the Company
include disclosure in the Proxy Statement and in the next amendment to the Registration Statement indicating how the funds in the Company’s
trust account are invested, whether such investment may result in the Company being deemed an “investment company” under the
Investment Company Act and the consequences of being deemed an “investment company”, including the potential early liquidation
of the trust account, dissolution of the Company and expiration of the Company’s outstanding warrants as worthless. We have confirmed
with the Company that the funds in the trust account are invested in money market funds that invest in government securities. Accordingly,
we propose to add the following disclosure to the Proxy Statement and Registration Statement, with an additional sentence not included
in the version that we sent to you on December 11, 2023, reflecting our Conversation on December 13, 2023 (the additional sentence is
underlined for your ease of review):
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
December 13, 2023
Page 2
As of November 24, 2023, there was approximately $8.4 million of funds
held in the Trust Account. The funds held in the Trust Account are held in money market funds that invest in U.S. Treasury securities.
There is uncertainty under the Investment Company Act of 1940, as amended (the “Investment Company Act”), whether certain
special purpose acquisition companies, or “SPACs,” with trust account assets held in securities would fall under the definition
of “investment company” under Section 3(a)(1)(A) of the Investment Company Act. Section 3(a)(1)(A) of the Investment
Company Act provides that an “investment company” includes any issuer that “is or holds itself out as being engaged
primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities.” Although the Company
believes that it does not meet the definition of “investment company” because it does not hold itself out as an investment
company, there is substantial uncertainty as to whether the Company’s investment of the funds held in the Trust Account may be deemed
to cause the Company to “engage primarily, in the business of investing” in securities. The registration statement for the
Company’s initial public offering became effective on October 5, 2021. Accordingly, the funds held in the Trust Account have been
invested by the Company in cash or various securities from time to time during the past 26 months, including the current investment thereof
in money market funds that invest in U.S. Treasury securities. The risk of being considered to be primarily engaged in investing in securities
may increase as the period of time during which the funds held in the Trust Account are invested in securities becomes longer. Additionally,
the Company does not believe that it is an “investment company” under Section 3(a)(1)(C) of the Investment Company Act because
it does not own “investment securities” having a value exceeding 40% of its total assets. Rather, the Company has invested
the funds held in the Trust Account in money market funds that seek to maintain a stable net asset value of $1 per share. Although many
other SPACs have determined to mitigate the risk of being deemed an “investment company” by investing the funds held in their
trust accounts solely in cash, the Company does not currently intend to withdraw such funds from the money market funds and reinvest such
funds in cash. The Company’s decision to continue investing such funds in money market funds rather than in cash creates a greater
risk that the Company will be deemed an “investment company” than if the Company reinvested such funds in cash.
Nevertheless, if the Company were to
meet the definition of investment company, the Company would be required to register under Investment Company Act. Registration would
subject the Company to substantial regulation and restrictions with respect to, among other things, its capital structure, management,
operations, transactions and portfolio composition. The Company would also be subject to significant compliance and disclosure requirements.
This would adversely impact its ability to operate in accordance with its business plan. If, as a result of such challenges,
the Company were to abandon its efforts to complete the Business Combination, the Company would be required to redeem the public shares,
liquidate the Trust Account and dissolve. Such liquidation and dissolution would cause the holders of public shares to lose the investment
opportunity associated with an investment in the combined company, including any potential price appreciation of its securities. Upon
such dissolution, the warrants would expire worthless.
The Company proposes to add the above disclosure
in the Proxy Statement in the following locations:
(i) The Chairman’s letter following
the paragraph beginning with the sentence, “For illustrative purposes, based on funds in the Trust Account of approximately $8.4 million
on November 24, 2023, the estimated per-share conversion price would have been approximately $10.95.”
(ii) On page 16 following the paragraph,
“The withdrawal of funds from the Trust Account in connection with the Election will reduce the amount held in the Trust Account
following the redemption, and the amount remaining in the Trust Account may be significantly reduced from the approximately $8.4 million
that was in the Trust Account as of November 24, 2023”; and
(iii) On page 30 following the paragraph
beginning with the sentence, “As of November 24, 2023, there was approximately $8.4 million in the Trust Account.”
The Company intends to make parallel additions
of such disclosure to the Registration Statement in the next amendment thereto, including in the section of the Registration Statement
captioned “Risk Factors”.
*****
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
December 13, 2023
Page 3
Please contact the undersigned at (212) 459-7203
or via email at jletalien@goodwinlaw.com if you have any questions with respect to the foregoing.
Very truly yours,
/s/ Jeffrey A. Letalien
Jeffrey A. Letalien
Goodwin Procter LLP
cc:
Chris Ehrlich, Phoenix Biotech Acquisition Corp.
Stephen M. Davis, Goodwin Procter LLP
Adam C. Berkaw, Ellenoff Grossman & Schole LLP