Mail Stop 3-9 May 4, 2005
David Gao
Beijing Med-Pharm Corporation
1180 Main Street
Coventry, CT 06238
Re: Beijing Med-Pharm Corporation
Registration Statement on Form S-1
Amended April 19, 2005
File Number 333-121957
Dear Mr. Gao:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects and welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
General
1. We note that you have requested confidential treatment
regarding
information contained in the cover letter that accompanies your
amended filing. You should note that we are not opining at this
point as to the adequacy of your redactions and basis for the
confidential treatment request. Questions as to whether the
information is properly subject to a confidential treatment
request
will be resolved when and if a FOIA request for the material is
made.
Overview, page 6
2. You state here and other places in the prospectus that you
charge
clients a fixed contractual fee with respect to some of the
services
you render. In the risk factors and MD&A sections, you should
describe the inherent risks in connection with these arrangements,
namely, the risk of cost overruns, scope miscalculations, etc.
3. After your discussion of the proposed Wanwei acquisition, you
should state that the offering will close regardless of whether
the
acquisition occurs.
Our Opportunity, page 7
4. You state that upon acquiring Wanwei, you will be able to
differentiate yourself by offering a complete suite of
distribution
chain services. We note that several other companies offer a
similar
solution, as stated in the Competition subsection of the
prospectus.
In addition, it does not appear that your offering may be properly
characterized as complete, as there are other services you could
provide. Please revise the disclosure to eliminate your claims
regarding differentiation and your offering being complete.
Our Strategy and Solution, page 8
5. You purport to be pioneering a new business model, based on the
fact that the company will be foreign owned. While being foreign
owned may make you different from your competitors, we do not
understand why this fact creates a new business model. Please
revise
or advise.
We have a history of operating losses..., page 10
6. You state here that you plan to use $3.0 million to acquire
distributors over the next 24 months. Please state in MD&A how
you
arrived at this figure and if you have any potential acquisition
opportunities at the letter of intent or similar stage presently.
We may be unsuccessful in attracting..., page 7
7. Please change the title of this risk factor to conform to the
disclosure that appears in its text.
If we are unable to satisfy the regulatory requirements..., page
16
8. You state that during the Wanwei audit, your auditors
identified
timing problems concerning the proper recording of expenses.
Please
state the impact these problems had and could have on your
financial
statements.
We are a holding company with no operations of our own and depend
on
our subsidiaries for revenue, page 16
9. We note your response to comment 27. However, our comment is
reissued. Please revise to quantify BMP China and Wanwei`s
losses.
Selected and Summary Financial Data, pages 7 and 22
10. We note that the company has labeled certain columns of this
information as "Audited." Please clarify whether the auditor was
engaged pursuant to SAS 42 to report on this information or
whether
the information included in those columns was derived from audited
financial information.
11. Please clarify why you refer to data for your wholly-owned
operating subsidiary, BMP China for the fiscal years 2000, 2001,
2002
and 2003 rather than the company. The financial statements of BMP
China are not included in the filing.
12. Please provide 5 years of balance sheet data in the selected
financial data as required by Item 301 of Regulation S-K.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Critical Accounting Policies and Significant Judgments and
Estimates
Revenue Recognition and Accounts Receivable and Bad Debts, page 26
13. We noted your revised disclosure as a result of our comment
number 38. Please disclose more about your estimate of discounts
and
volume rebates and allowance for doubtful accounts such as a) the
nature and amounts you have accrued for these estimates at the
balance sheet date, b) the effect that could result from using
other
reasonably likely assumptions than what you used to arrive at each
accrual such as a range of reasonably likely amounts or other type
of
sensitivity analysis, and c) quantify the amount of changes in
estimates that you recorded during each period. If product
returns
effect your commission income (see comment below under financial
statements, and represents a critical accounting estimate, provide
similar disclosures as in the preceding sentence for product
returns.
Our Business, page 35
14. We note your response to comment 44. Please explain your
reasons
for your belief that you are not substantially dependent on any of
the independent representatives in China. For example, if your
belief is based on your ability to find replacements easily, then
include the number of companies capable of providing these
services.
15. We note your response to our prior Comment 45 in which we
asked
you to explain the nature of the relationships with your
independent
sales and marketing representatives. Please expand the disclosure
to
state the terms of your agreements with these entities.
16. We note the chart on page 41 disclosing clients from whom you
derived 10% or more of your revenue. Directly below the chart,
please state that while Wanhui Shuanghe historically accounted for
a
significant amount of your business, your agreements with Wanhui
Shuanghe have terminated and your revenue has declined as a
result.
Our Product Portfolio, page 32
17. We note our prior Comment 55 in which we asked you to name the
manufacturers of Septopal 30, Septocoll E and Fem 7, and the owner
of
Shuganyiyang and file as exhibits to the registration statement
agreements with these parties, as required by Item 601(b)(10) of
Regulation S-K. We note that you derived substantial revenue from
Biomet Merck, likely under the agreement with that company
pertaining
to Septopal 30 and Septocoll E. It appears that this agreement is
a
material contract and should be filed as an exhibit. Please file
it
or provide a detailed analysis as to why you do not have to file
it
under Item 601(b)(10).
Wanwei Product Portfolio, page 44
18. We note our prior Comment 61 in which we asked you to state
for
whom Wanwei distributes the products listed, and the terms of the
agreements with those parties. Please disclose the terms of the
agreements.
Regulation of the Pharmaceutical Industry in China, page 46
19. We note our prior Comment 64 and your response. Please state
whether or not you are currently in compliance with each of the
laws,
rules and regulations you mention in this section. Also, describe
any incidence of noncompliance over the past three years.
The Selling Stockholders and Plan of Distribution, page 49
20. We note your responses to our prior Comments 67, 68 and 69 in
which we asked you to identify the natural persons having
investment
and voting power over the securities and name any broker-dealer
selling stockholders as underwriters. Upon obtaining the
information
you are compiling regarding the issues raised, please comply fully
with these comments.
Experts, page 70
21. Please identify the company`s accountants for which the
financial
statements are included in the filing in reliance on their
reports.
Tell us why you identify Beijing Med-Pharm Market Calculating Co.
Ltd`s financial statements as being included on Grant Thornton`s
reliance as they don`t appear to be included in the filing.
Beijing-Med Pharm Corporation and Subsidiary
December 31, 2004 Financial Statements
Financial Statements
Statement of Operations, page F-3
22. We note your response to our comment number 77. Based on your
response, it appears that you have all service related revenue.
As
such, please include a line item for cost of service as required
by
Rule 5-03(b)2 of Regulation S-X.
Note 1. Significant Accounting Policies
Revenue Recognition, F-6
23. We note your revised disclosure as a result of our comment
number
79. However, it is unclear why delivery is the appropriate time
to
recognize revenue. Please explain to us and revise your policy to
clarify the delivery you are referring to (i.e. delivery by the
manufacturer to the distributor or the delivery by the distributor
to
the distributors ultimate customer) and why that is the
appropriate
point to recognize revenue. Disclose to what extent the
commissions
recognized are affected by subsequent product returns by the
distributor or by the distributor`s ultimate customer and how this
is
considered in your revenue recognition policy. Furthermore, please
tell us how the termination provisions discussed are considered in
your decision to recognize revenue.
Earnings Per Share, F-7
24. Please tell how you considered the January and February 2004
transaction in the context of SAB Topic 4.D. regarding the nominal
issuances of stock and the need for shares to be reflected as
outstanding for all periods presented.
Note. 2 Acquisition, page F-7
25. Refer to your response to comment 82. Please revise your
disclosure to incorporate the additional information discussed in
your letter, in particular the information regarding the dates
each
entity was incorporated and the nature of each transaction
particularly the nature of the relationship that resulted in your
accounting for the BMP China acquisition at historical cost. With
respect to that acquisition, disclose more about the procedural
guidance that you followed for recording the acquisition as
outlined
in paragraphs D14 through 17 so an investor can determine whether
or
not the financial statements include BMP China for all years
presented. Further, with respect to the January 2004 acquisition,
provide the disclosures required by paragraphs 51 and 52 of FAS
141
as it relates to your acquisition of Just Great Coffee for
accounting
purposes.
Beijing Wanwei Pharmaceutical Co., Ltd.
December 31, 2004 Financial Statements
Notes to the Financial Statements
1. Significant Accounting Policies
Reporting Entity, page F-19
26. We note your response to our comment number 83. However, it
is
unclear why no such costs exist. Please clarify in your response
why
no costs are allocable from Wanhui Pharmaceutical Group to the
Company. Include specifically the items discussed in Question 1
and
2 of SAB Topic 1.B.
Segment Information, page F-21
27. Please provide revenues by product as required by paragraph 37
of
FAS 131.
Note 9 Major Suppliers, page F-21
28. We note your response to our comment 89. However, it is
unclear
how your disclosure complies with Rule 4-08(k) of Regulation S-K.
Disclosure on the face of the financial statements of the amounts
of
related-party items and transactions that are material
individually
or in total is required. It appears that the transactions with
Wanhui Group and its affiliate would be considered material. As
such, please disclose the amount of the cost of sales and any
other
expenses with your parent on the face of the financial statements.
Pro Forma Financial Statements, F-25 through F-29
29. Please remove the pro forma statement of operation for
December
31, 2003 as only the most recent year should be presented pursuant
to
Article 11 of Regulation S-X.
30. Please disclose your estimate of the amount of each
identifiable
intangible asset and its estimated useful life. Include a pro
forma
adjustment for amortization of these assets.
Recent Sales of Unregistered Securities, page II-2
31. We note your response to our prior Comment 91. You state that
certain of the offerees and investors did not have prior
relationships with the placement agent but were business
associates
and friends of investors that were referred to the placement agent
in
connection with the private placement. Supplementally, for each
of
these offerees, tell us the circumstances concerning how the
offeree
was identified, initially contacted and offered securities. Also,
provide to us your legal analysis of why any or all of this
activity
did not constitute a general solicitation.
* * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. We may have
additional comments after reviewing your amendment and responses
to
our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
You may contact Tabitha Akins at (202) 824-5547 or James
Rosenberg at (202) 942-1803 if you have questions regarding
comments
on the financial statements and related matters. Please contact
Michael Reedich at (202) 942-1815 or me at (202) 942-1840 with any
other questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Joanne Soslow, Esq.
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103
??
??
??
??
1