Accentia Biopharmaceuticals (ABPI) Inactive
Filed: 21 Aug 08, 12:00am
August 21, 2008
Via EDGAR
Mr. Jeffrey P. Riedler
United States Securities and Exchange Commission
Department of Corporate Finance
Mail Stop 6010
100 F Street, NE
Washington, DC 20549
| Re: | Accentia Biopharmaceuticals, Inc. |
Registration Statement on Form S-3 Filed July 3, 2008
File No. 333-152148
Dear Mr. Riedler:
On behalf of Accentia Biopharmaceuticals, Inc. (the“Company” or“we”), we submit for review by the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), this letter in response to the Staff’s comments to registration statement on Form S-3 of the Company (the “Registration Statement”). The Staff’s comments are set forth in a letter dated August 6, 2008. For your convenience, we have recited the comments from the Staff in bold and have followed each comment with our response.
Payment to the investor and affiliates
| 1. | Please provide disclosure of the net proceeds to the issuer from the sale of the convertible debentures and the total possible payments to all selling shareholders and any of their affiliates in the first year following the sale of convertible debentures. |
Response:
The total possible payments to all selling shareholders and any of their affiliates in the first year following the sale of convertible debentures are as follows:
Selling Security Holder | Net Proceeds to the Issuer from the convertible debentures | First year of possible payments to Selling Security Holders | ||||
Midsummer Investment, Ltd. | $ | 1,500,000 | $ | 6,668,354.80 | ||
Lloyd I. Miller | $ | 303,573 | $ | 1,349,682.10 | ||
Whitebox Convertible Arbitrage Partners, LP | $ | 922,000 | $ | 4,098,980.69 | ||
Whitebox Hedged High Yield Partners, LP | $ | 1,313,000 | $ | 5,837,230.65 | ||
Whitebox Intermarket Partners, LP | $ | 219,000 | $ | 973,440.67 | ||
Pandora Select Partners, LP | $ | 306,000 | $ | 1,360,335.71 | ||
Whitebox Special Opportunities Fund, Ltd. | $ | 390,000 | $ | 1,733,753.57 | ||
GPC LIX, LLC | $ | 219,000 | $ | 973,440.67 | ||
Guggenheim Portfolio Company XXXI, LLC | $ | 131,000 | $ | 582,414.25 | ||
UBS O’Connor LLC fbo O’Connor PIPES Corporate Strategies Master Limited | $ | 325,000 | $ | 1,444,977.00 | ||
Cranshire Capital, L.P. | $ | 392,432 | $ | 1,744,773.26 | ||
BridgePointe Master Fund Ltd. | $ | 167,000 | $ | 742,339.33 | ||
BAM Opportunity Fund LP | $ | 1,500,000 | $ | 6,668,354.80 | ||
RRC Bio Fund, LP | $ | 105,600 | $ | 469,528.51 | ||
Hudson Bay Fund, LP | $ | 12,550 | $ | 55,664.26 | ||
Hudson Bay Overseas Fund, LTD | $ | 20,460 | $ | 90,817.82 | ||
Diamond Opportunity Fund, LLC | $ | 10,000 | $ | 44,562.91 | ||
GCA Strategic Investment Fund Limited | $ | 200,000 | $ | 889,164.24 | ||
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Selling Security Holder | Net Proceeds to the Issuer from the convertible debentures | First year of possible payments to Selling Security Holders | ||||
Rosalind Capital Partners L.P. | $ | 26,000 | $ | 49,059.30 | ||
BioHedge Holdings Limited | $ | 11,000 | $ | 115,727.17 | ||
Rockmore Investment Master Fund Ltd. | $ | 20,000 | $ | 88,772.82 | ||
Crescent International, Ltd. | $ | 100,000 | $ | 444,582.12 | ||
Total | $ | 8,238,615.00 | $ | 36,425,956.65 | ||
Based on the above, in the first year following the Private Placement, we could be required to pay to the Selling Shareholders an aggregate of $36,425,956.65 if we do not fulfill certain provisions of the Securities Purchase Agreement and Registration Rights Agreement, respectively and make six months worth of principal payments beginning January 1, 2009.
The above referenced amounts do not include the following potential payments:
| • | If we fail to cause our transfer agent to transmit to each selling stockholder a certificate or certificates representing the common stock issuable upon conversion of the Debenture and exercise of Warrants, and if after such date such selling stockholder is required by its broker to purchase (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by the selling stockholder of common stock which the selling stockholder anticipated receiving in the form required (a “Buy-In”), then we shall pay in cash to such selling stockholder the amount by which (x) such selling stockholder’s total purchase price (including brokerage commissions, if any) for the shares of common stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed. A similar provision exists with respect to the common stock underlying each of the warrants issued to the selling stockholders. We do not anticipate having to pay any amounts pursuant to this provision, but we are unable to estimate at this time if any such payments will be payable, or, if payable, the amount of such payments. |
| • | If any selling stockholder becomes involved in any proceeding by or against any person who is a stockholder (except as a result of sales, pledges, margin sales and similar transactions by such selling stockholder to or with any other stockholder), solely as a result of such selling stockholder’s acquisition of our securities, we will reimburse such selling stockholder for its legal and other expenses (including the cost of any investigation preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. We do not anticipate having to pay any amounts pursuant to this provision, but we are unable to estimate at this time if any such payments will be payable, or, if payable, the amount of such payments. |
| • | We have agreed to indemnify the selling stockholders for any losses they may incur as a result of any breach of any of the representations, warranties, covenants or agreements made by us in any of the transaction documents in the private placement or as a result of any action instituted against a selling stockholder with respect to the private placement, unless such action is based upon a breach of such selling stockholder’s obligations or any violations by the selling stockholder of state or federal securities laws or fraud, gross negligence, willful misconduct or malfeasance. We do not anticipate having to pay any amounts pursuant to this provision, but we are unable to estimate at this time if any such payments will be payable, or, if payable, the amount of such payments. |
| • | If at anytime during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the shares of common stock underlying the Debentures and Warrants may be sold without the requirement for the Company to be in compliance with Rule 144, and the company fails to satisfy the public information requirement of Rule 144, the Company will be required to pay to the investors an aggregate of 2% of such investors subscription amount on such date and on every thirtieth date thereafter. |
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Comparison of issuer proceeds to potential investor profit
| 2. | We note your response to our prior comment 5 and reissue that comment in part. Please provide – as a percentage- the total amount of all possible payments as disclosed in response to our prior Comment 2 divided by the net proceeds to the issuer from the sale of the convertible debentures, as well as, the amount of that resulting percentage averaged over the term of the convertible debentures. |
Response:
Percentage of the total amount of all possible payments divided by the net proceeds to the issuer from the sale of the convertible debentures | 1,033 | % | |
Percentage total amount of all possible payments divided by the net proceeds to the issuer from the sale of the convertible debentures averaged over the term of the convertible debentures | 344 | % |
Prior transactions between the issuer and the selling shareholders
| 3. | We note your response to our prior comment 6 and reissue that comment in part. Please revise your disclosure to provide the disclosure in tabular format as requested |
Response:
Selling Security Holder | May 2006 PIPE (1) | September 2006 Debenture (2) | February 2007 Debenture (3) | January 2008 Preferred PIPE (4) | ||||
Midsummer Investment, Ltd. | X | X | ||||||
Lloyd I. Miller | X | |||||||
Whitebox Convertible Arbitrage Partners, LP | X | X | ||||||
Whitebox Hedged High Yield Partners, LP | X | X | ||||||
Whitebox Intermarket Partners, LP | X | X | ||||||
Pandora Select Partners, LP | X | X | ||||||
Whitebox Special Opportunities Fund, Ltd. | X | |||||||
GPC LIX, LLC | X | X | ||||||
Guggenheim Portfolio Company XXXI, LLC | X | X | ||||||
UBS O’Connor LLC fbo O’Connor PIPES Corporate Strategies Master Limited | X | X | ||||||
Cranshire Capital, L.P. | X | X | X | |||||
BridgePointe Master Fund Ltd. | X | X | ||||||
BAM Opportunity Fund LP | X | |||||||
RRC Bio Fund, LP | X | |||||||
Hudson Bay Fund, LP | X | |||||||
Hudson Bay Overseas Fund, LTD | X | |||||||
Diamond Opportunity Fund, LLC | X | X | X | |||||
GCA Strategic Investment Fund Limited | X | X | ||||||
Rosalind Capital Partners L.P. | X | |||||||
BioHedge Holdings Limited | X | |||||||
Rockmore Investment Master Fund Ltd. | X | X | X | |||||
Crescent International, Ltd. | X | X | ||||||
Rodman & Renshaw, LLC | X | X | X |
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(1) May 15, 2006 PIPE: $8,235,000 investment. Registration Statement effective – June 23, 2006
Common Shares outstanding prior to transaction: 31,217,277
Common Shares outstanding prior to transaction held by persons other than selling shareholders and affiliates: 21,638,992
Common Shares which were issued or issuable subject to the transaction: 2,470,500
Percentage of total issued shares held by non-affiliates of the Company and selling shareholders issued in offering: 11.4%
$6.79 Market price prior to transaction
$1.02 Market price on July 21, 2008
(2) September 29, 2006 Convertible Debenture: $25,000,000 investment. Registration Statement effective – November 17, 2006
Common Shares outstanding prior to transaction: 31,716,279
Common Shares outstanding prior to transaction held by persons other than selling shareholders and affiliates: 21,643,992
Common Shares which were issued or issuable subject to the transaction: 14,626,754
Percentage of total issued shares held by non-affiliates of the Company and selling shareholders issued in offering: 67.6%
$2.37 Market price prior to transaction
$1.02 Market price on July 21, 2008
(3) February 28, 2007 Convertible Debenture: $24,900,000 investment. Registration Statement effective – May 14, 2007
Common Shares outstanding prior to transaction: 32,750,090
Common Shares outstanding prior to transaction held by persons other than selling shareholders and affiliates: 21,951,502
Common Shares which were issued or issuable subject to the transaction: 17,165,847
Percentage of total issued shares held by non-affiliates of the Company and selling shareholders issued in offering: 64.5%
$3.83 Market price prior to transaction
$1.02 Market price on July 21, 2008
(4) January 18, 2008 Convertible Preferred Stock PIPE: $8,729,000 investment. Registration Statement effective – April 14, 2008
Common Shares outstanding prior to transaction: 43,180,576
Common Shares outstanding prior to transaction held by persons other than selling shareholders and affiliates: 23,111,277
Common Shares which were issued or issuable subject to the transaction: 8,336,668
Percentage of total issued shares held by non-affiliates of the Company and selling shareholders issued in offering: 36.1%
$2.63 Market price prior to transaction
$1.02 Market price on July 21, 2008
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Comparison of registered shares to outstanding shares
| 4. | We note your response to our prior comment 7 and reissue that comment in part. Please explain to us how you have calculated the number of shares registered for resale by the selling shareholders or affiliates of the selling shareholders in prior registration statements. We note that in the Form S-3 declared effective April 17, 2008, file no. 333-149045, you registered for resale 2,808,987 shares of common stock held by BAM Opportunity Fund LP. In the table you have provided in response to our prior comment 7, however, you state that you registered for resale 1,123,595 shares of common stock for BAM Opportunity Fund LP in prior registration statements. |
Response:
Our previous calculation was incorrect as it pertained to the number of common stock shares registered for resale by the selling shareholder or affiliates of the selling shareholder in prior registration statements. We did not include the underlying common stock shares registered on behalf of the issued warrants to the selling shareholders in prior registration statements. We have corrected this error and it is reflected in our Response No. 5 below (last column).
| 5. | In the table you have provided in response to our prior comment 7, please disclose which transactions apply to the shares registered for resale by the selling shareholders or affiliates of the selling shareholders in prior registration statements. |
Selling Security Holder | May 2006 PIPE | September 2006 Debenture | February 2007 Debenture | January 2008 Preferred PIPE | Total shares registered for resale by the Selling Shareholder in prior registration statements | |||||
Midsummer Investment, Ltd. | 4,488,559 | 1,791,516 | 6,280,075 | |||||||
Lloyd I. Miller | 688,286 | 688,286 | ||||||||
Whitebox Convertible Arbitrage Partners, LP | 1,683,210 | 472,145 | 2,155,355 | |||||||
Whitebox Hedged High Yield Partners, LP | 1,683,210 | 671,868 | 2,355,078 | |||||||
Whitebox Intermarket Partners, LP | 1,683,210 | 112,045 | 1,795,255 | |||||||
Pandora Select Partners, LP | 392,751 | 156,783 | 549,534 | |||||||
Whitebox Special Opportunities Fund, Ltd. | 199,723 | 199,723 | ||||||||
GPC LIX, LLC | 280,536 | 112,045 | 392,581 | |||||||
Guggenheim Portfolio Company XXXI, LLC | 168,322 | 66,907 | 235,229 | |||||||
UBS O’Connor LLC fbo O’Connor PIPES Corporate Strategies Master Limited | 300,000 | 688,286 | 988,286 | |||||||
Cranshire Capital, L.P. | 150,000 | 516,214 | 666,214 | |||||||
BridgePointe Master Fund Ltd. | 1,032,429 | 1,032,429 | ||||||||
BAM Opportunity Fund LP | 2,808,987 | 2,808,987 | ||||||||
RRC Bio Fund, LP | 299,625 | 299,625 | ||||||||
Hudson Bay Fund, LP | 35,580 | 35,580 | ||||||||
Hudson Bay Overseas Fund, LTD | 58,052 | 58,052 | ||||||||
Diamond Opportunity Fund, LLC | 90,000 | 206,486 | 296,486 | |||||||
GCA Strategic Investment Fund Limited | 1,032,429 | 1,032,429 | ||||||||
Rosalind Capital Partners L.P. | 73,032 | 73,032 | ||||||||
BioHedge Holdings Limited | 29,025 | 29,025 | ||||||||
Rockmore Investment Master Fund Ltd. | 561,070 | 284,950 | 846,020 | |||||||
Crescent International, Ltd. | 90,000 | 481,800 | 571,800 | |||||||
Rodman & Renshaw, LLC | 600,001 | 330,918 | 930,919 |
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Response:
| 6. | Please confirm to us the amount of time that has passed since the selling shareholders or their affiliates completed the resale of the shares registered for resale in prior registration statements. |
Response:
To our knowledge, none of the Selling Shareholders hold any shares that were issued under the prior registration statements. Please be further advised that approximately 15,358,037 common stock shares covered by the prior registration statements remain unissued and therefore are available for future issuance under convertible securities and/or warrants. However, all such shares when issued will be subject to resale without restriction under Rule 144, as opposed to pursuant to the prior registration statements, in connection with such issuances at the time of conversion or exercise.
If you have any questions, please contact the undersigned at 212-370-1300, or Samuel S. Duffey, the Company’s General Counsel, at 941-918-1251.
| Very truly yours, | ||
| ELLENOFF GROSSMAN & SCHOLE LLP. | ||
| By: | /s/ David Selengut | |
| David Selengut | ||
| cc: | Francis E. O’Donnell, Jr., M.D. |
Samuel S. Duffey, Esq.
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