UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
August 22, 2019
Nancy R. Phelan
Chief Executive Officer
Adhera Therapeutics, Inc.
4721 Emperor Blvd., Suite 350
Durham, NC 27703
RE: Adhera Therapeutics, Inc.
Schedule TO-I filed August 20, 2019
Filed by Adhera Therapeutics, Inc.
File No. 5-36676
Dear Ms. Phelan:
We have reviewed the above-captioned filing, and have the following
comments. Where
indicated, the Schedule TO should be amended in response to these comments. If
you disagree,
we will consider the explanation as to why a comment is inapplicable or a
revision is not
necessary. In some of our comments, we may ask for information so we may better
understand
your disclosure. After reviewing this information, we may raise additional
comments.
Please understand that 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. We welcome
any questions
you may have about our comments or any other aspect of our review.
Offer to Exchange | Exhibit (a)(1)(A) to Schedule TO
1. We noticed the disclosure that indicates the tender offer relates only to
holders of the Series
E and Series F convertible preferred stock, and, as stated in bold typeface,
"the offer does not
relate to any other shares of preferred stock..." Rules 13e-4 and 14e-1(b),
by their terms,
apply on a class-by-class basis to regulate issuer tender offers. While the
term "class" is
undefined in Rule 13e-4(a), that rule provision ascribes the same meaning to
the term as
given in the Securities Exchange Act of 1934 and rules promulgated
thereunder. The issuer
tender offer, therefore, must be extended to all holders of the class of
preferred stock as
distinguished from any particular series in order to comply with Rule
13-4(f)(8)(i). Please
revise the issuer tender offer to include all preferred shareholders, or
advise. You may refer
to Section 12(g)(5) under the Exchange Act for further guidance on the
meaning of "class."
2. To the extent that the issuer tender offer is extended to all holders of the
class of preferred
stock, please confirm that at least twenty full business days will remain in
the tender offer
period. See Rule 13e-4(f)(1)(i) and Rule 14e-1(a) of Regulation 14E.
Nancy R. Phelan
Adhera Therapeutics, Inc.
August 22, 2019
Page 2
3. Please refer to the following statement: "We may amend or terminate the
Offer at any time
with requisite notice..." Please revise to remove the implication that the
issuer tender offer
may be terminated at any time and for any reason given that such an offer
would be viewed
as illusory and in contravention of Section 14(e). For example, please
revise to state, if true,
that the issuer tender offer may only be terminated pursuant to the
conditions described in
section 10 of the Offer to Exchange.
4. To the extent that the issuer tender offer is extended to all holders of the
class of preferred
stock, please provide us with a brief legal analysis regarding the
availability of the Rule
506(b) exemption upon which the issuer has relied to conduct the exchange
offer or,
alternatively, any other exemption upon which the issuer would now seek to
rely. To the
extent the exemption upon which the issuer would rely to conduct the
exchange offer to all
holders of preferred stock, please confirm that the Offer to Exchange will
be amended to cite
to such exception and delete the reference to Rule 506(b) of Regulation D.
5. The amount of consideration offered to shareholders, sometimes referred to
as the "price" the
issuer is offering to shareholders in exchange of their securities, is
considered material
information. See Exchange Act Release 43069 (July 24, 2000)(interpreting the
term
"material" under Section 14(e) of the Exchange Act to include the offer
"price"). In order to
comply with Item 4 of Schedule TO and corresponding Item 1004(a)(1)(i) of
Regulation M-
A, the amount of consideration must be disclosed. At present, the issuer has
used a formulaic
expression instead of a fixed offer price in an apparent attempt to comply
with Section 14(e),
Item 4 of Schedule TO, and Item 1004 of Regulation M-A. Because the offer
price may vary
on a day-to-day basis, and even be further altered at closing due to the
"Adjustment
Mechanism," the existing pricing mechanism may not only be inconsistent with
the cited
disclosure provisions, but also Rule 14e-1(b) of Regulation 14E that
requires ten business
days to remain in the offer period following any change in offer price.
Please revise the offer
price so that it is fixed, or provide us with a legal analysis explaining
why the existing pricing
mechanism is not in conflict with the applicable provisions that regulate
disclosure of price.
6. Please refer to the following statement made in bold typeface: "We are not
making the Offer
to, and will not accept any tendered shares of Preferred Stock from, holders
of Preferred
Stock in any jurisdiction where it would be illegal to do so." Please revise
to remove the
implication that holders of preferred stock could not otherwise participate
in the issuer tender
offer if holders of preferred stock residing in a jurisdiction where the
offer is prohibited
participated from a jurisdiction where the offer is permitted. Refer to Rule
13e-4(f)(8)(i).
Alternatively, please revise to limit the restriction to only U.S. "states"
instead of all
jurisdictions for conformity with regulatory text within Rule
13e-4(f)(9)(ii).
Conditions to the Offer, page 2
7. Please refer to the following disclosure on page three: "...we may assert
one or more of the
conditions regardless of the circumstances giving rise to any such
conditions." While no
objection can be made regarding the inclusion of offer conditions, the
inclusion of language
Nancy R. Phelan
Adhera Therapeutics, Inc.
August 22, 2019
Page 3
within such conditions or any narrative regarding their invocation must
refer to objective
criteria under which the conditions can be asserted. To the extent the offer
conditions can be
asserted based upon subjective criteria, such as actions or inaction within
the issuer's control.
the offer could be considered illusory and in contravention of Section
14(e). Please revise.
3. Withdrawal Rights, page 7
8. Please refer to the following statement: "All questions as to the form and
validity (including
time of receipt) of any notice of withdrawal will be determined by the
Company, in its sole
discretion, which determination will be final and binding, subject to the
judgment of any
court that might provide otherwise." Please revise to expressly indicate
that security holders
may challenge the issuer's determinations in a court of competent
jurisdiction. At present,
the disclosure does not account for this possibility and instead only
indicates that a court
might have a different opinion that could otherwise supersede the issuer's
"final" and
"binding" determination. Please make conforming changes to section 10 where
the similar
but unqualified reference to "final and binding" is made in the context of
offer conditions.
4. Acceptance of Preferred Stock and Issuance of Shares, page 7
9. Please refer to the following statement: "The Shares to be issued will be
delivered promptly
following the Expiration Date, subject to any restrictions relating to such
Shares." The
qualification regarding the otherwise anticipated prompt delivery of the
Shares is inconsistent
with the requirements of Rule 13e-4(f)(5) and Rule 14e-1(c). Under those
provisions, the
offer consideration must be delivered promptly which the Commission has
interpreted to
mean with limited exception no later than three business days after
offer expiration. See
Exchange Act Release No. 43069 (July 24, 2000). Please revise to remove the
implications
that in some instances, Shares may be delivered later than the codified
standard, or advise.
10. The "Subsequent Offering Price," as described on the cover page of the
Offer to Exchange,
seemingly may be paid more than one year after the "closing of the Offer."
To the extent
such Subsequent Offering Price constitutes part of the offer consideration
- as suggested by
the cited title of this contingent payment - please reconcile how such a
payment may even be
offered given the prompt payment requirements of Rules 13e-4(f)(5) and
14e-1(c), or advise.
9. Financial Information regarding the Company, page 15
11. Item 10 of the Schedule TO filed by the issuer indicates a determination
has been made to
incorporate the required financial information by reference.
Notwithstanding the decision to
also Summary Financial information in the Offer to Exchange, not all of the
financial
information required by Instruction 6 to Item 10 of Schedule TO and
corresponding Item
1010(c) of Regulation M-A appears to have been provided. Please revise or
advise.
Nancy R. Phelan
Adhera Therapeutics, Inc.
August 22, 2019
Page 4
10. Conditions; Termination; Waivers; Extensions; Amendments, page 19
12. The representation that the issuer's failure "at any time" to exercise any
of the rights
conferred by the conditions "shall not be deemed a waiver of any such
right" suggests the
issuer may become aware that an offer condition has been triggered or
otherwise has become
incapable of being satisfied yet the tender offer may proceed without
making a disclosure.
As stated elsewhere in the Offer to Exchange, however, the issuer must
amend the offer to
disclose material changes. To the extent the issuer becomes aware of any
offer condition
becoming operative in a way that would enable it to terminate the offer or
otherwise cancel
its obligation to accept tenders, and the issuer elects to proceed with the
offer anyway, we
view that decision as being tantamount to a waiver of the condition. If a
material condition is
waived, a material change has occurred to the offer document within the
meaning of Rule
13e-4(c)(3). Please revise the closing paragraph to remove this
inconsistency with respect to
the issuer's stated understanding of its planned treatment of material
changes.
Closing Comments
We urge all persons who are responsible for the accuracy and adequacy of
the disclosure
in the filing reviewed by the staff to be certain that they have provided
all information
investors require for an informed decision. Since the issuer is in
possession of all facts
relating to its disclosure, it is responsible for the accuracy and adequacy
of the disclosures it
has made notwithstanding any review, comments, action or absence of action
by the staff.
Please direct any questions to me at (202) 551-3266.
Sincerely,
/s/ Nicholas P. Panos
Nicholas P. Panos
Senior Special Counsel
Office of Mergers &
Acquisitions
cc: Lawrence Remmel, Esq.
Michael Campoli, Esq.