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Re:
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Access
Pharmaceuticals, Inc. – File No.
333-149633
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the
total possible profit the selling shareholders could realize as a result
of the conversion discount for the securities underlying the preferred
stock and convertible warrants, presented in a table with the following
information disclosed separately:
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As
noted in Table 1 in response to Comment 1 above, only the Series A
Preferred Stock issued November 9, 2007 was issued at a discount to the
then market price. All of the warrants issued in connection
with the Series A Preferred Stock financing, have an exercise price
greater than the fair market value of the Company’s common stock on the
date of grant. The exercise price of the warrants is $3.50 per
share and the fair market value of the common stock on the date of
issuance was $3.11 for the warrants issued on November 9, 2007 and $2.80
for the warrants issued on February 4,
2008.
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As
noted in Table 1 in response to Comment 1 above, the Company also seeks to
register 772,728 shares of Company common stock underlying previously
issued convertible warrants. Of the warrants to purchase
772,728 shares of the Company’s common stock, 386,364 were issued on
October 24, 2006 and 386,364 were issued on December 6,
2006. Both of these warrants have an exercise price of $1.32
per share. On the date of issuance the fair market value of the
Company’s common stock was $1.10 per share on October 24, 2006 and $1.80
per share on December 6, 2006. As a result, the warrant issued
on December 6, 2006 was issued at a discount of $0.48 per share, for an
aggregate discount of $185,455.
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the
market price per share of the securities underlying the preferred stock
and convertible warrants;
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Please
see Table 1 in response to Comment 1
above.
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the
conversion price per share of the underlying securities on the date of the
sale of the preferred stock and convertible warrants, calculated as
follows:
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if
the conversion price is set at a fixed price, use the price per share
established in the purchase and sale agreement;
and
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Please
see Table 1 in response to Comment 1 above. Please note that
except as stated below in response to this Comment 3, the conversion price
per share is fixed for the Series A Convertible Preferred Stock and
warrants. The dividends being registered do not have a
conversion price.
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if
the conversion price per share is not set at a fixed price and, instead,
is set at a floating rate in relationship to the market price of the
underlying security, use the conversion discount rate and the market rate
per share on the date of the sale of the preferred stock and convertible
warrants and determine the conversion price per share as of that
date;
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Except
as noted below in response to this Comment 3, the conversion price of the
Series A Preferred Stock and warrants is
fixed.
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the
total possible shares underlying the preferred stock and convertible
warrants (assuming no cash dividend payments, complete conversion of the
shares of preferred stock and convertible
warrants);
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As
noted in Table 1 in response to Comment 1 above (but subject to the
disclosure below), the total possible shares underlying the Series A
Preferred Stock and associated convertible warrants is
15,815,659. In addition, the Company may at its option and
under certain circumstances issue common stock dividends in lieu of cash
dividends on the Series A Preferred
Stock.
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the
combined market price of the total number of shares underlying the
preferred stock and convertible warrants, calculated by using the market
price per share on the date of the sale of the preferred stock and
convertible warrants and the total possible shares underlying the
preferred stock and convertible
warrants;
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Please
see Table 1 in response to Comment 1
above.
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the
total possible shares the selling shareholders may receive and the
combined conversion price of the total number of shares underlying the
preferred stock and convertible warrants calculated by using the
conversion price on the date of the sale of the preferred stock and
convertible warrants and the total possible number of shares selling
shareholders may receive; and
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Please
see Table 1 in response to Comment 1
above.
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the
total possible discount to the market price as of the date of the sale of
the preferred stock and convertible warrants, calculated by subtracting
the total conversion price on the date of the sale of the preferred stock
and convertible warrants from the combined market price of the total
number of shares underlying the preferred stock and convertible warrants
on that date.
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Please
see Table 1 in response to Comment 1
above.
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the
total possible profit to be realized as a result of any conversation
discounts for securities underlying any other warrants, options notes or
other securities of the issuers that are held by the selling shareholders
or any affiliates of the selling shareholders, presented in a table with
the following information disclosed
separately:
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market
price per share of the underlying securities on the date of the sale of
that security;
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the
conversion/exercise price per share as of the date of the sale of that
other security, calculated as
follows:
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if
the conversion/exercise price per share is set at a fixed price, use the
price per share on the date of the sale of that other security;
and
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if
the conversion/exercise price per share is not set at a fixed price and,
instead, is set at a floating rate in relationship to the market price of
the underlying security, use the conversion/exercise discount rate and the
market rate per share on the date of the sale of that other security and
determine the conversion price per share as of that
date;
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the
total possible shares to be received under the particular securities
(assuming complete
conversion/exercise);
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the
combined market price of the total number of underlying shares, calculated
by using the market price per share on the date of the sale of that other
security and the total possible shares to be
received;
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the
gross proceeds paid or payable to the issuer in the private placement
transaction;
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As
noted in Table 1 prepared in response to Comment 1 above, the Company
received gross proceeds of $33,733,928 from its issuance of Series A
Preferred Stock and warrants. These proceeds include proceeds
from convertible notes with an outstanding principal and accrued interest
balance of $21,468,927 which were exchanged for shares of Series A
Preferred Stock and warrants, but do not include any proceeds relating to
possible exercise of warrants.
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all
payments that have been made or that may he required to be made by the
issuer that are disclosed in response to comment
2;
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Please
see the response to comment 2
above.
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the
resulting net proceeds to the issuer;
and
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As
noted in Table 1 in response to comment 1 above, the net proceeds (net of
placement agent fees) received by the
Company
were
$11,351,457.
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the
combined total possible profit to be realized as a result of any
conversion discounts regarding the securities underlying the preferred
stock and convertible warrants issued in the private placement and any
other warrants, options, notes, or other securities of the issuer that are
held by the selling shareholders or any affiliates of the selling
shareholders that is disclosed in response to comments 3 and
4.
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Please
see the response to Comment 1
above.
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the
date of the transaction;
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the
number of shares of the class of securities subject to the transaction
that were outstanding prior to the
transaction;
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the
number of shares of the class of securities subject to the transaction
that were outstanding prior to the transaction and held by persons other
than the selling shareholder, affiliates of the company, or affiliates of
the selling shareholder;
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the
number of shares of the class of securities subject to the transaction
that were issued or issuable in connection with the
transaction;
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the
percentage of total issued and outstanding securities that were issued or
issuable in the transaction (assuming full issuance), with the percentage
calculated by taking the number of shares issued and outstanding prior to
the applicable transaction and held by persons other than the selling
shareholders, affiliates of the company, or affiliates of the selling
shareholders, and dividing that number by the number of shares issued or
issuable in connection with the applicable
transaction;
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the
market price per share of the class of securities subject to the
transaction immediately prior to the transaction (reverse split adjusted,
if necessary); and
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the
current market price per share of the class of securities subject to the
transaction (reverse split adjusted, if
necessary).
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7. Please
provide us, with a view toward disclosure in the prospectus, with tabular
disclosure comparing:
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the
number of shares outstanding prior to the private placement transaction
that are held by persons other than the selling shareholders, affiliates
of the company, and affiliates of the selling
shareholders;
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the
number of shares registered for resale by the selling shareholders or
affiliates of the selling shareholders in prior registration
statements;
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the
number of shares registered for resale by the selling shareholders or
affiliates of the selling shareholders that continue to be held by the
selling shareholders or affiliates of the selling
shareholders;
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the
number of shares that have been sold in registered resale transactions by
the selling shareholders or affiliates of the selling shareholders;
and
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the
number of shares registered for resale on behalf of the selling
shareholders or affiliates of the selling shareholders in the current
transaction.
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8. Please
provide us, with a view toward disclosure in the prospectus, with the
following information:
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whether the
issuer has the intention, and a reasonable basis to believe that it will
have the financial ability, to make all payments and dividends on the
overlying securities;
and
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The Company
has received adequate financing to pay all required cash dividends over
the next twelve months. However, in an effort to maximize the
amount of funds available for working capital the Company anticipates
issuing shares of Common Stock in lieu of cash dividends over the near
term.
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whether –
based on information obtained from the selling shareholders – any of the
selling shareholders have an existing short position in the company's
common stock and, if any of the selling shareholders have an existing
short position in the company's stock, the following additional
information:
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The Company
has submitted investor questionnaires to its Selling
Stockholders. Upon receipt of the questionnaires, the Company
will be able to respond to questions regarding short sales of the
Company’s common stock by Selling Stockholders. To date no Selling
Stockholder has indicated that it has a short position in the Company’s
common stock.
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the
date on which each such selling shareholder entered into that short
position; and
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the
relationship of the date on which each such selling shareholder entered
into that short position to the date of the announcement of the private
placement transaction and the filing of the registration statement (e.g., before or after
the announcement of the private placement transaction, before the filing
or after the filing of the registration statement,
etc.).
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9. Please
provide us, with a view toward disclosure in the prospectus,
with:
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a
materially complete description of the relationships and arrangements that
have existed in the past three years or are to be performed in the future
between the issuer (or any of its predecessors) and the selling
shareholders, any affiliates of the selling shareholders, or any person
with whom any selling shareholder has a contractual relationship regarding
the transaction (or any predecessors of those persons) – the information
provided should include, in reasonable detail, a complete description of
the rights and obligations of the parties in connection with the sale of
the preferred stock and convertible notes;
and
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Relationships
between the Company and Selling Stockholders are described in the sections
titled “Transactions With Related Persons, Promoters and Certain Control
Persons” and “Selling Stockholders” on pages 76 and 21, respectively, of
the Registration Statement filed on Form S-1. For your
convenience a copy of these sections is attached as Exhibit A
hereto.
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In
addition to the relationships described in the Form S-1 (as referred to
above), the Company is a party to a management consulting agreement with
SCO Financial Group LLC (“SCO”) pursuant to which SCO provides certain
consulting services to the Company in exchange for a monthly fee of
$12,500. The Company also agrees to pay SCO a success fee of 7% (plus
warrant coverage of 10% with exercise price equal to purchaser’s warrants)
of the aggregate value of the proceeds received by the Company pursuant to
its issuance Preferred Stock. SCO agreed to waive its right to
this 7% fee with respect to any proceeds received by the Company as a
result of the efforts of other placement
agents.
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copies
of all agreements between the issuer (or any of its predecessors) and the
selling shareholders, any affiliates of the selling shareholders, or any
person with whom the any selling shareholder has a contractual
relationship regarding the transaction (or any predecessors of those
persons) in connection with the sale of the preferred stock and
convertible warrants.
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Except
as noted below, all agreements with Selling Stockholders (as referred to
above) have been previously provided to the Securities and Exchange
Commission as exhibits to the Company’s periodic filings with the
Securities and Exchange Commission. For the conveyance of the staff each
of these agreements is included at Exhibit C
attached hereto.
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10.17
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Form
of Warrant, dated February 16, 2006, issued by us to certain Purchasers
(1)
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10.18
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Form
of Warrant, dated October 24, 2006, issued by us to certain Purchasers
(2)
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10.19
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Form
of Warrant, December 6, 2006, issued by us to certain Purchasers
(2)
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10.22
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Preferred
Stock and Warrant Purchase Agreement, dated November 7, 2007, between us
and certain Purchasers (3)
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10.23
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Investor
Rights Agreement, dated November 10, 2007, between us and certain
Purchasers (3)
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10.24
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Form
of Warrant Agreement dated November 10, 2007, between us and certain
Purchasers (3)
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10.25
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Board
Designation Agreement, dated November 15, 2007, between us and SCO Capital
Partners LLC (3)
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10.26
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Amendment
and Restated Purchase Agreement, dated February 4, 2008 between us and
certain Purchasers (3)
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10.27
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Amended
and Restated Investor Rights Agreement, dated February 4, 2008 between us
and certain Purchasers (3)
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(1)
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Incorporated
by reference to our Form 10-Q for the quarter ended March 31,
2006.
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(2)
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Incorporated
by reference to our Form 10-K for the year ended December 31,
2006.
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(3)
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Incorporated
by reference to our Form S-1,
333-149633.
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In
addition to the agreements previously disclosed above, the Company is a
party to a Consulting Services Agreement, dated February 15, 2006 by and
between the Company and SCO Financial Group LLC. For the
conveyance of the staff a copy of the agreement is included at Exhibit C
attached hereto.
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1.
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Oracle
Partners and affiliates,
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2.
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Lake
End Capital LLC and affiliates, and
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3.
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SCO
Capital Partners and affiliates.
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The
number of selling shareholders and the percentage of overall offering made
by each shareholder.
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The
total number of selling shareholders is 25. Please see attached
Table 5 in response to the percentage of overall offering made by each
shareholder.
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The
date on which and the manner in which each selling shareholder received
the shares and/or the overlying
securities;
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See
response to Comment 1 above for date and manner in which each selling
stockholder received shares and/or the underlying
securities.
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The
relationship of each selling shareholder with the company, including an
analysis of whether the selling shareholder is an affiliate of the
company;
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See
response to Comment 9 above for a description of selling stockholder
relationships with the Company.
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Any
relationship among the selling
shareholders;
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The
Company understands that there is a relationship between Lake End Capital
LLC and SCO Securities LLC. This relationship is more fully
described in “Transactions With Related Persons, Promoters and Certain
Control Persons” of our Registration Statement filed on Form
S-1. The Company is not currently aware of any other
relationships between the Selling
Stockholders.
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The
dollar value of the shares registered in relation to the proceeds that the
company received from the selling shareholders for the securities,
excluding amounts of proceeds that were returned (or will be returned) to
the selling shareholders and/or its affiliates in fees or other
payments;
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We note that
the Company received a total of $14,254,800 cash proceeds from the sale of
Series A Preferred Stock and warrants. In addition, the Company
canceled debt and accrued interest of $19,479,128 in exchange for Series A
Preferred Stock and warrants. We kindly direct your attention
to Table 1 in response to Comment 1 for a more complete description of
proceeds received. Please also see response to Comment 3
above.
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The
discount at which the shareholders will purchase the common stock
underlying the preferred stock and warrants (or any related security, such
as an option) upon conversion or exercise;
and
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Our
shares of Series A Preferred Stock are currently convertible at a price of
$3.00 per share and the warrants issued in conjunction therewith are
exercisable at a price of $3.50 per share. As of July 1, 2008,
the closing price of our common stock was $3.00 per share and therefore
neither the conversion of the Series A Preferred Stock nor the warrants
would be at a discount as of that date. However, the discount,
if any, at which a Selling Stockholder may purchase shares of our common
stock is dependant upon the market price of our common stock on any given
day. In addition, any dividends issued by the Company in lieu of cash
dividends will be at a value equal to the twenty (20) day average closing
market price of the common stock on the date of
grant.
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As
noted in response to Comment 3 above, we issued a warrant on December 6,
2006. That warrant is exercisable for an aggregate 386,364
shares of our common stock at an exercise price of $1.35 per
share. At the time of issuance our common stock was trading at
$1.80 per share for an aggregate discount of
$173,864.
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Whether
or not any of the selling stockholders is in the business of buying and
selling securities.
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We
understand that certain of the stockholders are in the business of buying
and selling securities as indicated by footnote in Table 5 attached
hereto.
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We
respectfully submit that as requested, the Executive Compensation section
in the to be filed Form S-1/A will be updated to reflect executive
compensation for the fiscal year ended December 31, 2007, which disclosure
was previously included in the Company’s proxy statement dated April 22,
2008.
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We
respectfully submit that as requested the financial statements in the to
be filed Form S-1/A will be updated to include the financial statements
for the fiscal year ended December 31, 2007, which financial statements
were previously included in the Company’s Form 10-K for the period ended
December 31, 2007.
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We
respectfully submit that as requested, the signatures of our Chief
Executive Officer and Principal Accounting Officer will be included in the
Form S-1/A.
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Very truly yours, |
/s/ John. J Concannon |
John J. Concannon III, Esq. |
Bingham McCutchen, LLP |